Whether you’re just starting out, or a seasoned pro, it’s good to know what kind of nonprofit foundations exist and how they differ. In this post, we’ll help you understand what a private foundation is and who they might partner with in their communities.
What is a nonprofit foundation?
A nonprofit foundation is an organization that supports charitable acts for the good of the nonprofit sector and the constituencies nonprofits serve. Foundations grant nonprofit organizations funding for general or operating support, or for program development or project support. The three basic types of foundations are community, corporate, and private foundations. In this post, we’ll focus on private foundations.
Tip: some foundations will grant funding to a broad range of missions and causes, while others may be more limited to specific nonprofit missions or organizations located in a specific geographic location.
What is a Private Foundation?
Private foundations use a single source of funding from which to make grants, usually from an individual, family or a business. The foundation will invest the majority of the endowment, earning dividends and interest on its investments. The IRS requires private foundations to make grants equal to at least five percent of its investment assets each year and pay a two percent excise tax on net investment earnings.
Private foundations are concerned with making a difference in the community or around a particular issue. They typically have guidelines that will let the public know what they are attempting to accomplish through their grantmaking. While the guidelines are very helpful in learning about a foundation’s interests and priorities, it is also very important to carefully examine a foundation’s grants list, which is part of their annual IRS Form 990 PF filing. This information is readily accessible for free with Guidestar.
Private foundations range in size from very large foundations that give away nearly $100 million a year, such as McKnight Foundation in Minnesota, to mid-size foundations like The F.B. Heron Foundation in New York whose annual giving is approximately $13 million. Finally, they can also be smaller family foundations, such as Samuel S. Fels Fund in Pennsylvania whose total annual giving is about $2 million. The very large, mid-sized and even small foundations generally have staff that review proposals and make recommendations to their trustees.
Whether you are new to grantwriting or a seasoned pro, we want to make sure you’ve got all the information and resources you need to succeed in their charitable missions. Check out our Grantwriting Basics posts for more essential information about grantwriting.