A foundation is an IRS designated not for profit organization which supports charitable activities that serve a common good in relation to a specific mission or cause, in turn supplying foundation grants. Foundation funding is many times created with endowments, or money donated or provided by individuals, families and corporations. They generally make grants and operate programs with the income earned from investing the endowments and often make grants for foundations at the local outreach level.
There are three types of popular foundations which all supply foundation grants: corporate foundations, public community foundations and independent foundations.
Corporate foundations are usually created and the foundation funding is provided by companies as separate and distinct legal entities and operated by a board of directors comprised of company officers. Corporations may establish private foundations with endowments, make periodic grants for foundations, or combine both methods to provide foundation grants. Some companies operate what is known as in house corporate gifting programs in lieu of foundation grants, which dissimilar to corporate foundations, fall under the full control of the parent corporation and thus are not required by federal law to follow the same IRS regulations. Many corporations maintain both foundations as well as foundation funding corporate giving programs.
Community and other public foundations are publicly supported foundations operated by, and for the benefit of a specific community or geographic region and often times offer foundation funding and foundation grants to smaller not for profit organizations at the community level fueled by foundation funding.
Community and other public foundations receive their funds from a variety of individual donors, and provide a vehicle for donors to establish grants for foundations without incurring the costs of starting a brand new foundation. Community and other public foundations are usually administered and managed by a governing body or committee which representative of community interests.
Independent foundations are by far the most common type of private entities providing smaller grants for foundations. They are more often than not founded by an individual, a family or a group of individuals or families who share a common cause. They may be donor operated or by many times by members of the donor’s family. This type of foundation which offers foundation grants is often referred to as a family foundation, otherwise known as an independent board.
Many colleges, universities, hospitals and various organizations that have small 501-C-3 charities also benefit from generous gifts from grants for foundations. Recently, the Ford Foundation surprised many of these smaller organizations with unannounced gifts of foundation funding that equaled over one half of one million dollars.
Money has to come from somewhere and in the interest of public good, the money always moves from larger foundation grants to smaller geographic specific organizations who sought grants for foundations to provide for the public good accomplishing a specific mission.