Foundation (nonprofit)
A foundation, in the context of nonprofit organizations, is a nongovernmental entity dedicated to funding charitable initiatives that address various social issues such as poverty, education, healthcare, and scientific research. They can be classified into two primary types: private foundations and public charities. Private foundations are typically funded by a small group of individuals, families, or corporations, and may either grant funds to other charities or engage directly in charitable activities themselves. Conversely, public charities raise funds from a diverse range of sources, including individual donations and government support, and they may also distribute funds or undertake charitable work directly.
The concept of foundations has deep historical roots, tracing back to ancient societies where organized charity efforts began to address community needs. This evolution continued through the Middle Ages and into modern times, with formal regulations and structures emerging in the 1600s in places like the United Kingdom and later in the United States. Today, foundations play a significant role in philanthropy, with some of the largest organizations, such as The Gates Foundation and United Way, mobilizing vast resources to tackle global challenges and improve community welfare.
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Foundation (nonprofit)
A foundation is a nongovernmental, nonprofit organization that funds charitable causes such as poverty relief, scientific research, educational advancement, and medical services. The term foundation can refer to multiple types of nonprofit organizations. Private foundations are funded only by a small group of entities, such as one or two individuals, families, or corporations. Some private foundations only fund other agencies that provide charity to people in need. Other private foundations may perform the charity themselves. Foundations that qualify as public charities, meanwhile, accept donations from many sources—including individuals, government agencies, and private foundations—and donate their funds to other public charities or perform the charity on their own.
The type of charity that foundations provide to people in need originated in ancient times, when the Hebrew people of Israel paid a mandatory tithe to people experiencing poverty. Organizations aiding the public began appearing in different countries in later centuries and had developed more fully by medieval times. The United Kingdom started creating laws governing charitable giving in the 1600s, while the United States began regulating charity funding in the early 1900s. Some of the largest and most successful charitable foundations in the world in the 2020s included the United Way, Habitat for Humanity International, Goodwill Industries International, Direct Relief, The Gates Foundation, and the United Nations Foundation.
Background
The history of charity can be traced to ancient times, at least to the mid-2000s BCE. At this time, the Hebrews of Israel were forced to pay a tithe, or tax, from their earnings to help people experiencing poverty of their communities. In the 300s BCE, the Greek philosopher Plato founded the Academy in Greece. This was a school of higher learning staffed by volunteers who worked not for compensation but simply to educate the public. The tradition of providing charity for people in need continued in the Roman Empire of the late BCE era, as when Emperor Augustus set aside funding for about 2,000 needy people.
Charity had advanced considerably as an institution by the 1500s and 1600s. In this era, the collection of funds for people experiencing poverty and others in need of social assistance transitioned from a medieval to an early modern model. The Protestant Reformation in Europe ended the Roman Catholic Church's authority over most aspects of society. No longer was charity an exclusive business of religious institutions.
The rise of cities in Europe allowed individuals of different cultures and philosophies to come together and form their own organizations dedicated to providing financial relief to those in need. These charities were centered in cities where the plight of the poor was the worst. Various such organizations began appearing in different locations around the world into the 1600s. This expansion of secular charities led to philanthropic foundations becoming the interest of the state rather than only of the church.
Several events in the 1600s demonstrated how charitable foundations were becoming more organized in the early modern era. In 1601, the Parliament of England passed the Charitable Uses Act, which defined the various causes considered by the government to be charitable. In 1643, Harvard University organized the first American fund-raising campaign.
The United States would become the site of several landmark developments in the history of charitable foundations. The Revenue Act of 1913, for instance, exempted charitable institutions from paying government taxes. In 1914, the Cleveland Foundation in Ohio became the first community foundation in the world. Community foundations endeavor to revitalize specific urban areas in certain countries or around the world. In 1935, the US Congress allowed corporations to deduct their contributions to charitable causes from their taxable income. With the introduction of these government regulations to charities, nonprofit foundations grew around the world until they had become multibillion-dollar organizations by the twenty-first century.
Impact
The general term foundation refers to any charitable, nonprofit organization that donates funds to entities providing services and relief to people in need. Several types of charitable foundations exist. One type is a private foundation. The funds of private foundations are supplied by only a few sources, such as a small group of individuals, a family, or a corporation. Trustees or directors manage the funds of private foundations. In United States law, private foundations must pay out at least 5 percent of their total assets to charitable funds every year.
Private foundations that only make grants, or money payments, to other charitable organizations for the performance of charity are called private non-operating foundations. They perform no actual charity work themselves. Private operating foundations make grants to their own sub-organizations that do perform charity.
One of the largest private foundations in the world in the mid-2020s was The Gates Foundation. This organization began in 2000 and within twenty plus years had accumulated assets worth about $60 billion. The foundation focuses principally on operating health programs around the world to help eradicate such diseases as malaria, polio, tuberculosis, and human immunodeficiency virus (HIV) in underdeveloped nations.
Another type of nonprofit foundation is called a public charity. Unlike private foundations, public charities are funded primarily by donations from the public as well as by other entities such as government agencies and corporations. Public charities may make grants to other charitable organizations or may perform the charitable activity themselves. Some of the largest public charities in the United States are the United Way, Salvation Army, and Feeding America, all of which provide food and other domestic necessities to people in need.
St. Jude Children's Research Hospital, meanwhile, uses grants to study medicine that could eliminate deadly childhood diseases. Direct Relief, founded in 1948 in California, provides humanitarian assistance to areas afflicted by poverty or natural disasters. Other large American foundations and public charities that work either domestically or internationally include Goodwill Industries International, Boys & Girls Club of America, Habitat for Humanity International, the American Red Cross, and the United States Fund for UNICEF, which supports the United Nations Children's Fund.
Bibliography
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"1500–1750: New Meaning in a Changing World." National Philanthropic Trust, historyofgiving.org/1500-1750. Accessed 16 Dec. 2024.
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"The 100 Largest U.S. Charities." Forbes, www.forbes.com/top-charities/list/. Accessed 16 Dec. 2024.
“Statement from CEO Mark Suzman about Melinda French Gates.” Bill & Melinda Gates Foundation, 13 May 2024, www.gatesfoundation.org/ideas/media-center/press-releases/2024/05/melinda-french-gates. Accessed 16 Dec. 2024.
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