Legal Definitions - private foundation

A private foundation is a type of charitable organization that is funded by a single source and makes grants to other charitable organizations. It is generally exempt from taxation.

There are two types of private foundations:

• Private nonoperating foundation: A charitable organization that derives its income from investments rather than contributions and makes grants to other charitable organizations.
• Private operating foundation: A private foundation that conducts its own charitable program rather than making grants to other charitable organizations.

For example, the Bill and Melinda Gates Foundation is a private nonoperating foundation that makes grants to other charitable organizations to improve global health and education. On the other hand, the Ford Foundation is a private operating foundation that conducts its own charitable programs to promote social justice and human welfare.

These examples illustrate the definition of private foundation by showing how they are funded by a single source, exempt from taxation, and make grants or conduct their own charitable programs to further their particular charitable purpose.