For individuals seeking to create a lasting impact in their communities and those who want to leave a legacy by committing themselves to a specific cause or financially supporting one, understanding the distinction between a non-profit and a foundation is critical.
Both non-profits and foundations can have philanthropic ends. However, they operate differently. Speaking with your attorney, who can help you create, establish, and maintain your legacy, is always the way to go.
Non-profits
Nonprofit organizations dedicate themselves to advancing a charitable mission. These rely heavily on donations, grants and fundraising to support their operations. Most importantly, they are tax-exempt under the IRS, which lets donors make tax-deductible donations.
Foundations
On the other hand, foundations typically fall into two categories: private and public. An individual, family, or corporation usually starts a private foundation, and it often contributes to non-profit organizations.
A public foundation raises money from various sources and redirects that money to support specific causes. Like non-profits, foundations are also tax exempt, which allows donors to help in a tax-deductible way.
Choosing one or the other
If you are wondering which one to choose, converse with your attorney. However, the choice between a nonprofit and a foundation depends mostly on your goals.
- If you want to operate an organization that directly serves a community or population, creating a non-profit may be the ideal way to do it.
- If you want to fund a variety of causes without managing operational activities, a foundation might be the better option.
Both options offer unique advantages. Starting a non-profit can provide a fulfilling way to give back to your community or a specific portion of the population, yet a foundation can leave a lasting legacy that influences charitable causes for generations to come.