What is a Foundation?
What is a foundation?
Please be aware that "foundation" is not a legal term. If an organization has the word in its name, do not assume it makes grants.
Broadly speaking, a foundation is a nonprofit corporation or a charitable trust that makes grants to organizations, institutions, or individuals for charitable purposes such as science, education, culture, and religion.
There are two foundation types: private foundations and grantmaking public charities.
- A private foundation’s money comes 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 application, Foundation Directory, the private foundations you see are all active grantmakers.
- A grantmaking public charity (sometimes called a "public foundation") gets its money from many different sources, such as foundations, individuals, and government agencies. An example of a grantmaking public charity is the Save the Children Federation. Most community foundations are also grantmaking public charities.
All U.S. tax-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.
Private foundations must list all grants paid in that year. Some public foundations will list their grants voluntarily. Find out more about how this information can help you find grants.
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.
Have a question about this topic? Ask us!
Candid's Online Librarian service will answer your questions within two business days.
Ask usExplore resources curated by our staff for this topic:
Staff-recommended websites
-
Nonprofit Quarterly
Foundation Payout Depends on How You Average
Have you ever wondered how foundations determine how much they can and should spend in a particular year in grants, loans, and administrative costs?
-
National Philanthropic Trust
History of Philanthropy
A chronological history of philanthropy in the United States, from 1600-present. This ongoing research project of National Philanthropic Trust will document seminal moments in the history of philanthropy.
-
Legal Issues in Grantmaking
Learn Foundation Law
Five online classes covering legal issues for private foundations focusing on advocacy and lobbying, electioneering rules, expenditure responsibility, program-related investments, and anti-bribery/anti-corruption rules.
-
Staff pick
IRS
Private Foundations
IRS definition of a private foundation.
-
Staff pick
The Foundation: A Great American Secret-How Private Wealth Is Changing the World
Fleishman's study is based on interviews with senior officers or trustees at approximately 100 of the (mostly) largest foundations. He explains how foundations operate in practice, some of the motivations for donors, and the unique--often paradoxical--place that foundations have in American society.
-
Staff pick
Minnesota Council on Foundations
What Every Grantmaker Should Know
Gives a concise and useful overview of grantmaking foundations, with a particular focus on IRS requirements and grantmaker responsibilities. Addresses key legal issues including self-dealing, excess benefit transactions, compensation, conflicts of interes
-
IRS
What is the difference between a private foundation and a public charity?
IRS definitions.