Foundation Types and Definitions

Private Foundations

Private foundations are nonprofit organizations whose funds come from one source, whether it is an individual, a family, or a corporation. There are four different types of private foundations.

Family Foundations  receive endowments from individuals or families. Family foundations show measurable donor or donor-family involvement, especially though participation on the foundation’s board of directors (e.g. Turner Foundation, Rockefeller Brothers Fund).

Operating Foundations  are private foundations that use the bulk of their resources to provide charitable services or run charitable programs of their own. They make few, if any, grants to outside organizations and, generally do not raise funds from the public (e.g. J. Paul Getty Trust).

Independent Foundation  funding is in the form of an endowment, and even though wealthy families start many private independent foundations, no family members control the grant making. Because of their endowments, they are focused primarily on grantmaking and generally do not actively raise funds or seek public financial support. These foundations are highly professionalized with carefully developed grantmaking strategies and criteria.  Their boards of directors often consist of people who are eminent in the fields of interest to the foundation. Of the largest private foundations in the United States, most are independent foundations, although they may have begun as family foundations (e.g. Ford, Rockefeller and MacArthur Foundations).

Corporate Foundations  or company-sponsored foundations are entities through which a corporation organizes and channels its philanthropic giving. The company-sponsored foundation is a separate, legal organization (501c3) subject to the same rules and regulations as other private foundations. The assets of the corporate foundation are derived from the assets or profits of its parent corporation or individuals closely associated with the corporation. Most corporate foundations maintain close ties with the donor company and the board of directors includes company executives (e.g. Bank of America Foundation, American Express Foundation).

Public Foundations
Legally classified as “public charities,” public foundations are publicly supported nonprofit organizations and receive assets from multiple sources. They can be funded by contributions from individuals, corporations, governmental units, private foundations and fees for service. A public foundation must continue to seek money from diverse sources in order to retain its public status. As distinguished from most public charities, public foundations focus more on grantmaking than on providing direct charitable services (e.g. Asia Foundation, UN Foundation, Vancouver Community Foundation).