Foundations are usually created with donations or endowments received from companies, families or through individuals. The foundation is a non profit organization that arranges and supports activities in order to help people in need. Many times they run programs for charity from the income that has been earned by investing endowments.

There are a few foundations that have a great deal of discretion when it comes to which of the charitable organizations to whom their grants may be given. Some, however, are very limited by the donors mandate and some are only allowed to give funds to a specific cause. Still others have to limit the “grant making” to a particular geographical area.

One of the three basic types of foundations is the Corporate Foundation, which is funded and formed by a company as a separate legal entity, run by a board of directors that is made up of the company officials. They may also establish private institutions with donations or endowments and make periodic contributions or even combine both of these in order to provide resources. The foundation company may also operate internal programs, which unlike other corporations, are under total control of the company and do not have to adhere to the same IRS laws. A Public/Community Foundation is supported publicly by organizations operating for the benefit of a particular community or a specific geographic location. Finally, Independent Foundations are the most often heard of and are usually created by a family, a group of individuals or perhaps just one individual and are required to be run by the donor or their family.

Foundations are regulated by laws and rules that are much stricter than they are for public charities, which are generally funded by raising money from the public in order to operate and run the programs and institutions. While both might use the term “foundation” in their title or name, very different regulations apply to each one.

The IRS has some specific regulations when it comes to corporate and independent foundations. They are required to pay at least 5% of the year-end fair market value of their assets. Since the Internal Revenue Service regards the foundation of public and/or community as a private charity they are not subject to the same laws as a corporate or independent foundation.

Not so much a tangible thing but more of a concept is one way to define the term philanthropy. The word has Greek origins and means “love for mankind,” which is a fairly good description of the concept. It entails voluntarily giving, whether by money, support, etc., to improve the quality of life for those in need. It may be in the form of contributions from foundations, businesses or even individuals.

As shown in history as a chronicle of philanthropy, it is not a new concept. Surprisingly, it was around in the ancient cultures of Greece, Rome and the Middle East. As a matter of fact, contributions were made to Plato’s Academy and the Christian church in medieval times; they set up trusts to be used with benevolence. Beginning in the late nineteenth century, private foundations donated gifts totaling billions in support of education, the arts, medical research and many other causes.

Some people ask what is the best way to do good or show how thankful they are and others will just automatically write out a check for some non profit organization and call it philanthropy. Naturally, monetary donations are great, but one woman has reminded us that there are other ways, every bit as important. She tells a story of seeing a young boy digging in a dumpster for food. She took him inside, made him a peanut butter and jelly sandwich and sent him home. A short while later several more kids showed up at her door and everyone got a sandwich. Fortunately, her local community noticed and began to pitch in as well; showing that it only takes one person to make a real difference.

You may be surprised to learn that lower and middle-income donors are much more likely to make charitable donations to charities that benefit the poor than are upper-income households. One study examined giving trends among different income groups.

Studies on philanthropy have shown that about 38% of the overall giving was donated by households with incomes less than $70,000. Approximately 31% of the donations served the needs of poor people and about 23% went to the poor through non profit companies that served all levels of society. Roughly 8% was donated to charities that meet basic needs, such as shelter and food.