Foundation

A foundation is a non-profit corporation or trust established to make grants to organizations that support charitable, educational, scientific, religious, or other activities serving the public good. They are distinct from public charities in that they primarily derive their support from a single source, like an individual, family, or corporation, rather than from the general public.

Foundations play a crucial role in funding research, providing scholarships, supporting arts and culture, and addressing social issues. Their long-term perspective and ability to take risks often allow them to fund innovative projects that might not be supported by traditional funding sources.

There are several types of foundations, including private foundations, corporate foundations, and community foundations. Private foundations are typically funded by an individual, family, or small group of donors. Corporate foundations are established by businesses to manage their philanthropic giving.

Community foundations are public charities that receive donations from a variety of sources within a specific geographic area. They focus on addressing the needs of their local communities through grantmaking and other initiatives.

The legal and regulatory framework governing foundations varies depending on the jurisdiction. In the United States, private foundations are subject to stricter regulations than public charities, including excise taxes on their investment income and limitations on their activities.

Foundations manage their endowments to generate income for grantmaking while preserving the principal. Investment strategies vary depending on the foundation's risk tolerance, time horizon, and grantmaking goals.

The history of foundations dates back to the early 20th century, with the establishment of organizations like the Carnegie Corporation and the Rockefeller Foundation. These early foundations pioneered the concept of strategic philanthropy and played a significant role in shaping the modern non-profit sector.

Foundations are increasingly focused on impact investing, which involves making investments that generate both financial returns and positive social or environmental outcomes. This approach allows foundations to leverage their resources to address pressing global challenges while also growing their endowments.