Private Foundations vs. Public Charities

You have a vision and a passion to make a difference in the world, be it in your own backyard or halfway around the world. Surprisingly profound changes can result from the efforts of a single person. And to get started, you want to set up a nonprofit organization.

The two most common types of nonprofit organizations started by individuals are public charities and private foundations. There is a significant difference is the way each is funded. Understanding this difference is a first step in deciding which vehicle is best suited for your needs.

• Public Charities are organizations that normally receive at least a third of their annual support in the form of donations from the general public. This means they rely on ongoing fundraising activities to support their exempt activities.
• Private (Non-Operating) Foundations are organizations that are typically funded by a single individual, family or business. While private foundations are allowed to conduct very limited fundraising activities, most do not because it is difficult for foundations to raise money from anyone outside the donor’s immediate family (or those involved in the family business).

So in a nutshell, if you are providing most or all of the funding, consider a private foundation. Foundation Source can help you with that. If a significant portion of the funding will be coming from the general public, then consider a public charity. Foundation Source does not provide services for public charities.