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Foundations and charities are based on the philanthropic principle to help those in need through voluntary actions of donating money, property, or services. Although both entities are nonprofits and have some similarities, they also have basic differences.
Similarities and Differences
Foundations and charities are similar because they are set up as benefactors for the common good of all. Charities rely on generous donations from people, and funding grants from the federal government and foundations. Foundations are generally traditionally set up as either a charitable trust or a nonprofit organization. Those established as a charitable trust with the purpose to fund charities who actively relate with clients. Nonprofit foundations play a more active role in their funds disbursements for clients. Both must show evidence of their exclusive purpose for charity to be considered nonprofits for IRS tax exclusions.