Difference Between Charity and Foundation

Charity vs Foundation

We come across many organizations that are involved in social causes such as religious organizations and those that work to provide relief to people afflicted with deadly diseases. There are some that work for the uplift of the poor and illiterate while there are many that work to provide relief to people involved in natural disasters such as floods and tsunamis. Two such organizations are charities and foundations. Though they are pretty much similar in nature, there are differences in their features and functioning that this article will attempt to highlight.

In general, private foundations have a fixed source of funding and they in fact provide money to other charities to carry out noble operations rather than on their own. The money they distribute is in the form of grants to different charities. On the other hand, charities are organizations that actually involved in fundraising activities all the time and keep on receiving money from general public, government as well as foundations that have the specific purpose of finalizing charities to distribute grants.

While a charity is all the time grappling with the eternal paucity of funds to meet its expenses, a foundation is free of worries in this respect. In sharp contrast to public charities, private foundations can be controlled by a single family or even an individual, for example Bill Gates Foundation.

Out of all organizations involved in works related with public welfare, nearly half are charities. For tax purposes, 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. Private foundations generally help these charities by giving them grants. They do not interfere with the administration of the programs these charities indulge in.

In brief:

Charity vs Foundation

• Charities and foundations are involved in public welfare programs

• Charities administer the programs while foundations provide them with funds

• Charities and foundations are taxed differentially by IRS

• Foundations have a fixed source of funding while charities are always grappling with paucity of funds and are actively involved in fundraising