The foundation is a non profit company that helps to support charitable activities in order that they may help those in need. A foundation is generally created with donations or endowments, which is money given by families, corporations or as part of private philanthropy. Most of the time, this type of foundation will run programs from the income which has been earned by investing endowments.

There are a few foundations which have a great deal of discretion in terms of which of the charitable organizations to whom their grants might be given. Some, in contrast, are certainly limited by the donors mandate and some will be just allowed to give funds to a certain cause. Still others have to limit the "grant making" to a particular geographical area.

Basically, you'll find 3 kinds of grant making foundations: The Independent Foundation will be the one that is most often seen, of privately run organizations. They may be usually begun by a person, the family and even groups of individuals and has to be run by a donor themselves or their close relatives; a type sometimes called a family foundation or one run by a third party independent board.

Next are Corporate Institutions and they are funded and created by a business as separate entities, overseen by the board of directors most often made up of officials within the company. A corporation may build private institutions with donations or endowments, make a contribution from a profit, or take several of both ways to provide foundation resources.

The foundation companies sometime run in-house programs, unlike another corporate businesses, and also are under total control of the company and are not necessary to abide through the same IRS rules. The third is a Public and/or Community Foundation, which is supported publicly and is funded by, and as a benefit to, a particular geographic region or local community.

Foundations are regulated by laws and rules that will be much stricter than they can be for public charities, that are generally funded by raising money from the general public so that you can operate and run the programs and institutions. While both might use the term "foundation" in their title or name, completely different regulations apply to each one.

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