Sections of this topic
If you’ve started down the yellow brick road to nonprofit foundations funding, then get set to meet some different characters (foundations) along the way – specifically: Private, Corporate, Family, and Community Foundations.
Much of the information below comes from the wizards at the MIT Office of Foundation Relations; I’ve added the bulleted items in italics. You can download the MIT summary at MIT Resources
Private Foundation
• Nongovernmental, non-profit, self-governed organization
• Funds (usually from a single source, such as one individual, family, or corporation) and programs managed by its own trustees or directors
• Often is a large, complex, professionally managed organization
• Must “payout” approximately 5% of the market value of its assets each year
• Must pay a yearly 1-2% excise tax on its net investment income
• Usually have formal grant application and reporting procedures
Corporate Foundation
• Assets are derived primarily from contributions of a for-profit business
• Funding comes from an initial endowment and/or periodic contributions
• May maintain ties to the parent company but is an independent entity
• Abides by the same rules and regulations governing private foundations
• Often have formal grant application and reporting procedures
Family Foundation
• Technically, not a legal term; refers to any independent private foundation whose funds are managed or strongly influenced by members of the donor’s family
• Family members often serve as officers or board members
• Family members often have a significant role in grantmaking decisions
• Comprise ~40-45% of all private and community foundations
• Most are small, informal organizations
• Usually do NOT have formal grant application and reporting procedures
Community Foundation
• Serves a specific geographic community or region (e.g., The Boston Foundation)
• Usually focuses mainly, if not exclusively, on local needs
• Usually a “public charity” (raises a significant portion of its funds from the public each year), not a “private foundation”
• Funds usually derived from many donors but managed in a single endowment
• Income from the endowment is used to make grants
• Make grants from donor-advised funds that reflect the donors’ interests
• May make grants from discretionary funds to support key regional initiatives
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Lynn deLearie, owner of Lynn deLearie Consulting, LLC, helps nonprofit organizations develop, enhance and expand grant programs and helps them secure funding from foundations and corporations. She can be contacted at [email protected]..
