Charity vs Foundation
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Although the terms Charity and Foundation may seem similar, there are key differences between them. Both types of organizations are involved in social causes, such as providing relief to people affected by diseases and natural disasters, or working for the upliftment of the poor and the illiterate. However, the main distinction lies in the fact that charities are set up to assist those in need, while foundations typically fund other organizations, such as charities.
Key Takeaways
- Charities are organizations involved in fundraising activities and receive money from the public, government, and foundations.
- Foundations have a fixed source of funding and provide money to other charities in the form of grants.
- Charities and foundations are taxed differently by the Internal Revenue Service (IRS).
What is a Charity?
Charities are constantly involved in fundraising activities in order to meet their expenses. They receive money from the general public, government, and foundations that have the specific purpose of finalizing charities to distribute grants. Out of all organizations involved in work related to public welfare, nearly half are charities. For tax purposes, the IRS classifies charities as all non-profit organizations that are not foundations. There are close to a million charities operating in the US at present, and private foundations generally help these charities by giving them grants without interfering with the administration of their programs.
What is a Foundation?
Private foundations have a fixed source of funding and provide money to other charities in the form of grants, rather than carrying out noble operations on their own. A foundation is free of financial worries, unlike a charity. In contrast to public charities, private foundations can be controlled by a single family or even an individual, such as the Bill Gates Foundation.
Difference Between a Charity and Foundation
Both charities and foundations are involved in public welfare programs, but charities administer the programs while foundations provide them with funds. They are also taxed differently by the IRS. Foundations have a fixed source of funding, while charities are constantly grappling with a lack of funds and are actively involved in fundraising.
