Independent Foundations

Private foundations make grants based on charitable endowments. The endowment funds come from one or a small handful of sources -- an individual, a family or a corporation. Because of their endowments, they are focused primarily on grantmaking and generally do not raise funds or seek public financial support the way public charities (like community foundations) must.

Private independent foundations are distinct from private family or corporate foundations in that an independent foundation is not governed by the benefactor, the benefactor’s family or a corporation. Of the largest private foundations in the United States, most are independent foundations, although they may have begun as family foundations or were converted from corporate foundations. There is no official IRS or legal definition of independent foundations, so it is difficult to arrive at statistics that are fully representative of the field.

Below is everything on our site for independent foundations. You can use the filtering options on the right to narrow these results.

The private foundation executive director was concerned. Members of her board were going to make grants to promote public housing and economic development but none of the groups involved were the typical 501(c)(3)s to which the foundation normally made grants. One possibility seemed to be making a grant to a local government agency, but the agency had no IRS tax-exemption letter. Would the foundation have to exercise expenditure responsibility?

Public foundations, community foundations and corporate giving programs may establish a matching gifts program that will match disaster relief gifts made by employees or other donors living in the U.S. or anywhere in the world, provided the grantees are public charities based in the U.S., and gifts are not made from a donor advised fund.

Matching gifts from donor advised funds or private foundations can be done, but grantmakers will have to comply with the rules applicable to these giving vehicles.

Grants to Public Charities from Private Foundations

For a private foundation, disaster relief grants to Section 501(c)(3) public charities based at home or abroad can be relatively straightforward, provided the grantee is not legally classified as a supporting organization.

If the grantee is a supporting organization, its IRS determination letter will indicate that it is classified under 509(a)(3) of the Internal Revenue Code.

For many foundation managers, meeting community, regional, or even global needs is a primary aspect of everyday business. But when disaster strikes, foundations may find the need to quickly provide relief while accurately navigating a new set of grantmaking rules. These guidelines outline the basic legal considerations of a variety of popular giving options for managers of public and private foundations and corporate giving programs.

In international grantmaking, private foundations often make grants to organizations (“Initial Grantees”) that, in turn, re-grant those funds to other non-public charity organizations or individuals (“Secondary Grantees”).

Since the terrorism attacks of September 11, 2001, grantmakers and other charitable organizations have become quite familiar with the work of the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) in the area of anti-terrorism concerns. OFAC has been one of the key U.S. government agencies seeking to shut down terrorism funding around the world and, in conducting that activity, has focused considerable attention on charities.

Private foundations wishing to make a cross-border grant must ensure that:

  • The grant is clearly for a charitable purpose, and
  • The grant counts as a qualifying distribution for the purpose of meeting the foundation’s annual distribution requirement.

The easiest way for a private foundation to satisfy both of these requirements is to choose a grantee that is recognized by the IRS as a public charity.

Developed by the Treasury Guidelines Working Group of Charitable Sector Organizations and Advisors

Since the November 7, 2002 publication by the United States Department of the Treasury of its “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-based Charities,”1 grantmakers have grappled with the problem of how to comply with their legal obligations under Executive Order 13224, the USA Patriot Act, and other laws and regulations that prohibit financial transactions with terrorists and their supporters.2 The Treasury Guidelines map out one route to compliance, but both grantmakers and operating charities have criticized them for failing

A plain-language guide to Executive Order 13224, the Patriot Act, embargoes and sanctions, IRS rules, Treasury Department voluntary guidelines, and USAID requirements.

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