We have already known a lot of charity entities in the world. They always had different operating under different business types; foundations, nonprofit organizations, or charities participate in our daily activities. We may use these terms incorrectly and interchangeably. Although all the organizations mentioned are to help the less fortunate in society, they differ in organization, governance, and funding sources, as described below.
Nonprofits
The nonprofit organization is a charitable entity with specific social goals that uses its income and surplus to fund operations, rather than benefiting members, shareholders, employees, or leaders of the organization. The remaining profit is further used to achieve its goals. Nonprofit organizations accept donations from governments, foundations, institutions, and individuals, to name a few. These funds are then used for the charity work set. They can conduct activities in research, religious, educational, and even scientific environments and are tax-free.
Foundations
A foundation is an organization that does not qualify as a public charity. They are very similar to nonprofit organizations, except that the funds for foundations usually come from family or corporate entities. In contrast, the funds for nonprofit organizations generally come from their income.
Technically speaking, donations can be made to private foundations, but many foundations do not accept it. As an alternative, they use the funds initially used for investment and allocate the funds generated from these investments. The foundation will also donate these funds to other nonprofit organizations in the form of gifts or grants.
Private foundations have the following subsets: operational and non-operational. Private non-operating foundations donate to other charitable organizations, which is a more common form. The foundation also does not directly execute charitable programs or services. Privately operated foundations allocate funds to their own projects that exist for charitable purposes.
Summary of Nonprofit VS. Foundation
A nonprofit organization refers to a charitable organization with specific social goals that use its income and surplus to fund operations, rather than benefiting members, shareholders, employees, or leaders. They receive funds from governments, foundations, institutions, and individuals, and do not donate to other charities. On the other hand, a foundation refers to a charitable organization that raises funds from its founder. It can be a corporate entity or a family. They can get funds from private foundations, companies, governments, individuals, companies, or families. However, both of them play a significant charitable role in society.
To be better understand the difference between a non-profit organization and a private foundation. We are here to help you. Don’t hesitate to call our office:415-860-6288 (San Francisco), 917-397-0949 (New York) and 713-396-0107 (Houston), and e-mail us at [email protected].
