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.

Beneficiaries of Assistance

Individuals or families are more apt to receive direct benefits from a charity. Generally, charities are set up with one, or a minimal number of services, such as homeless shelters, assistance with utility bills, or centers for domestic abuse. Besides individual people obtaining help, groups or organizations may also receive backing. Foundations receive requests from a multitude of charities; therefore, their boards may decide to support more than one type of charity. For example, as explained by Chairman Robert Rosenkranz Delphi Financial, Yale University has benefited from several grants awarded by the Rosenkranz Foundation as have Pierson College and the Federalist Society. Among the benefits to Yale University was the creation of 20 new courses in scientific method and quantitative reasoning.

Private Foundations

Because foundations are private, as defined by Foundation Center, “a private foundation… nongovernmental, nonprofit organization having a principal fund managed by its own trustees or directors” public charities seeking grants should have some idea of the organizations or causes each supports. For instance, if a charity operates a homeless shelter, it wouldn’t seek finding from a foundation whose goal is to improve university education. They can also receive information on the number of grants and dollar figures awarded. By researching a foundation’s history, a public charity is more likely to successfully apply for grants.

Foundation Center

When seeking information, the Foundation Center is the leading source of information for humanitarian foundations all over the world. It can help benefactors connect to the foundations that have the same sponsoring service goals. By maintaining an extensive and comprehensive database for U.S. and global programs, the knowledge accessible form the Foundation Center is unparalleled. The Center has been operating since 1956 and has more than 450 Funding Information Network sites across the world.

The world is a better place because of people who choose to share their resources with those less fortunate or who have experienced calamities. Private foundations supplement individual donations to the public charities that, in turn, directly support individuals and families. Whether it’s to improve education or handle emergency situations, without the support of foundations, charities couldn’t service the many people or programs they do every year.


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