A foundation is a non-governmental entity that is established as a nonprofit corporation or a charitable trust, with a principal purpose of making grants to unrelated organizations, institutions, or individuals for scientific, educational, cultural, religious, or other charitable purposes. This broad definition encompasses two foundation types: private foundations and grantmaking public charities.
A private foundation derives its money from a family, an individual, or a corporation. An example of a private foundation is the Ford Foundation. Private foundations must meet a "payout requirement," meaning they have to give away a certain amount of their assets every year. That's why when you're looking for potential funders in our database, Foundation Directory Online, the private foundations you see are all active grantmakers.
In contrast, a grantmaking public charity (sometimes referred to as a "public foundation") derives its support from diverse sources, which may include foundations, individuals, and government agencies. An example of a grantmaking public charity is the Ms. Foundation for Women. Most community foundations are also grantmaking public charities.
Please be aware that "foundation" is not a legal term, so if an organization has the word in its name, do not assume that it is a grantmaking organization. For example, the Foundation Center is not a grantmaker.
All exempt organizations submit annual filings to the IRS. Private foundations file Form 990-PF; public foundations file Form 990, like other public charities. These filings are public documents and have valuable information about an organization's finances, board members, and key employees.
In addition, private foundations must list all grants paid in that year. Some public foundations will list their grants voluntarily. You can access these filings with our free tool, 990 Finder.
For more details about the different types of foundations and their history:
- Watch or attend Introduction to Finding Grants, our free class offered in-person or online.
See also our related Knowledge Base articles:
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