8 Types of Charitable Foundations To Know
By Indeed Editorial Team
Published April 13, 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Working with charitable foundations is a great way to give back to the community and contribute to causes that might need help. Charitable foundations offer money and support to social causes and areas of a community that are in need of assistance from outside sources. There are many different types of charitable foundations, so it can be helpful to know about each type to determine which might be ideal for you to work with. In this article, we define what a charitable foundation is and explore a list of eight types of charitable foundations.
What is a charitable foundation?
A charitable foundation is an organization that is created to raise funds for charitable purposes, like donations and grants. Charitable foundations provide great support to organizations and communities that need help in terms of funding, support or awareness. A charitable foundation is typically exempt from taxes and gets funding from a variety of sources, depending on whether they operate as a private or public foundation. Many charitable foundations exist to serve a specific community or to respond to a particular cause, which means there are several different types of charitable foundations.
Related: 27 Types of Nonprofits (With FAQs)
Characteristics of a charitable foundation
A charitable foundation has many defining characteristics that sets it apart from a for-profit business or organization. Perhaps the most well-known characteristic is that charitable foundations exist to provide charitable support to people in need, meaning they do not focus on making a profit. Another key characteristic of charitable foundations is that they can typically deduct the contributions they receive from their taxes. Charitable organizations also have specific guidelines for accepting grants and payments, such as ensuring they're not used for personal benefit or private gain.
Additionally, their fundraising efforts are not legally allowed to be used for election campaigns for public office.
8 types of charitable foundations
Here are eight different types of charitable foundations:
A public charity is an organization that primarily offers grants and gets their support from the public. This means that public charities often receive their funding from multiple sources, like individual citizens, private foundations and government agencies. A public charity can also earn funding from fees they can charge for certain charitable services, like cleaning up a public space or holding charity events. Public charitable organizations can include facilities like hospitals, churches and organizations that provide financial donations or other services to their community.
A private foundation is a charity that is run by an individual, a family or a corporation. Private foundations typically get their financial support from sources like the family who owns the foundation, the corporation running the foundation or other private sources who donate in order to keep the foundation in business. Because a private foundation usually receives funding, they're required to pay out a certain percentage of their earnings in grants and charitable activities. There are three types of private foundations, which are independent, family and corporate.
A community foundation is a charitable foundation that focuses on giving grants to programs in a specific community. This might include providing funding for after school programs, educational programs at community centers and events that promote concepts that benefit the community as a whole, such as public health or environmental sustainability. Community foundations can also offer support through grants such as scholarships, giving circles or programs that allot funds to families or organizations in a community that require financial support.
A corporate foundation, or company-sponsored foundation, is a charitable organization that is established and funded by a corporation. Because they receive funding from the corporation that runs them, corporate foundations typically have extensive options for charity and often create initiatives that help them distribute funds to communities or programs in need. Corporate foundations also frequently donate to causes that relate to their industry in order to support employees in the field. Another way corporate foundations engage in charity is by taking part in corporate giving programs that provide grants and donations to other charitable organizations.
An independent foundation is a type of private foundation that typically receives funding from a single source. This source might be an individual or a group that provides endowments to the foundation to fund its charitable initiatives. Because independent foundations have stable funding from a single source, they do not usually engage in fundraising or other forms of seeking public support. Many independent foundations start as family foundations or corporate foundations and transition to functioning as an independent foundation after a few years of operation.
A grant-making foundation is a charitable organization that functions as a public foundation and focuses on organizing and distributing grants. Grant-making foundations can also sometimes operate as public charities, as they can provide support to public organizations and communities and receive their funding from fundraising and public events. The main purpose of a grant-making foundation is to create grants that they can offer to members or groups in a community that need financial support.
Related: How To Become a Grant Writer
A supporting organization is a type of public foundation that provides support to another charity or foundation. When a supporting organization attaches itself to another organization by partnering with it or offering it support, the supporting organization takes on the public charity status of whichever organization it contributes to. This means that a supporting organization can function in multiple public sectors and serve a wide array of foundations and communities, as long as their support adheres to legal guidelines.
An arts foundation is a charitable organization that's dedicated to supporting the arts. This might include actors, musicians, visual artists and anyone who creates art or performs for a living. While many arts foundations are privately funded by donors, there are also public arts foundations that engage in fundraising and operate as public foundations. Arts foundations give support to artists by providing grants and scholarships that can fund artistic projects and performances.
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