If you are looking for U.S. grant funding, it's important to know the difference between a private foundation and a public charity.

Private foundations

A private foundation is a non-governmental, nonprofit organization or charitable trust. Its principal fund usually comes from a single source, such as an individual, family, or corporation. The fund is managed by the foundation's own trustees or directors. A private foundation does not solicit funds from the public.

More often than not, private foundations use their money to make grants to other nonprofit organizations. To qualify for and keep their U.S. tax exempt status under Section 501(c)(3) of the Internal Revenue Service Code, private foundations support charitable, educational, religious, or other activities serving the public good. That means if you want to apply for a grant from most private foundations, you need to have 501(c)(3) status or be fiscally sponsored by an organization that does.

All U.S. and foreign charities with 501(c)(3) status are automatically considered "private foundations" unless they demonstrates to the IRS that they have met the public support test. Broadly speaking, organizations that are not private foundations are public charities as described in the Internal Revenue Service Code.

Public charities

Funding or support for public charities generally comes, as the name implies, from the public. Public charities receive grants from individuals, government, and private foundations. Although some public charities give grants, most provide direct service or other tax-exempt activities.

Why should grantseekers know the difference?

Understanding a funder's giving history is an important part of figuring out who might give you money. Past grants can show you which funders care about what you do and how much money they tend to give.

A private foundation must disclose all grantees and grant amounts in its IRS Form 990-PF.

A grantmaking public charity must disclose grantees and grant amounts that are larger than $5,000 on its IRS Form 990. Finding data for smaller grants will depend on how much the funder is willing to share with the public on its Form 990, website, or other communication channels. Explore its website or search the Internet for the funder's name to find any news or press releases about grants that it made.

You can also find information about thousands of grantmaking public charities with Foundation Directory Online Professional (FDO), the highest level of access on Candid's searchable database. In the drop-down menu of the "Organization Type" field, click on "Non-governmental organizations (grantmaker)" to reveal another drop-down menu, and then select "Public charities (grantmaker)." Subscribe to FDO Professional for access anywhere, or use it for free at our 400+ Funding Information Network locations. Click here to learn more about how to use FDO.

A word about "foundation"

Don't assume that an organization with "foundation" in its name is a grantmaker. The word "foundation" has no legal definition.

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