Foundation is a nongovernmental, nonprofit organization that aids educational, social, charitable, religious, or other activities. Gifts of money from wealthy individuals and groups help establish and finance most foundations. Foundations are usually governed by one or more legally appointed administrators called trustees or directors. The trustees may administer the foundation by themselves or hire executives to manage the foundation’s work. Many foundations are called endowments, funds, nonprofit corporations, or trusts.
Foundations vary in the ways that they manage and spend their funds. They may support programs in a broad range of fields, or only in a specific area. Some foundations are designed to spend all their money within a specified period, such as a certain number of years following a donor’s death. Others operate in perpetuity (without time limit). Foundations that operate in perpetuity try to preserve their assets—such as stocks and bonds—while spending only as much money as the law requires. The legal requirement is sometimes called a payout rate.
Foundations are more common and influential in the United States than they are in most other countries. Major U.S. foundations include the Ford Foundation, the Bill & Melinda Gates Foundation, the J. Paul Getty Trust, and the Robert Wood Johnson Foundation. Other prominent foundations include the Lucie and André Chagnon Foundation and the Vancouver Foundation in Canada; the Ian Potter Foundation in Australia; the Gatsby Charitable Foundation and the Wellcome Trust in the United Kingdom; the Compagnia di San Paolo in Italy; and the Robert Bosch Foundation in Germany.
The Foundation Center, an independent organization headquartered in New York City, is the leading source of information about U.S. foundations. It maintains a directory of thousands of U.S. foundations and their grants. The directory is available online and in print form. The Canadian counterpart of the Foundation Center is Imagine Canada, with headquarters in Toronto. Philanthropy UK, headquartered in London, performs similar functions in the United Kingdom.
Kinds of foundations
Foundations differ in the ways that they are funded, organized, and managed. The two main categories are privately supported foundations and publicly supported foundations. Privately supported foundations receive funding from a single source, such as an individual, family, or business. Publicly supported foundations receive funding from a variety of sources. Private foundations include independent foundations, company-sponsored foundations, and operating foundations. The most common type of publicly supported foundation is the community foundation.
Independent foundations
are established by individuals or families and often bear their founders’ names. Examples include the Carnegie Corporation of New York, the Chagnon and Ford foundations, and the Lilly Endowment. The charters of many independent foundations allow them to make grants in a variety of fields, such as education, health, and social welfare.
Company-sponsored foundations
receive funds from profit-making businesses. The foundations are legally separate from the businesses, but usually operate under their control. The foundations are also separate from charitable giving programs administered directly by the businesses. Major company-sponsored foundations include the Alcoa Foundation, Fidelity Foundation, General Motors Foundation, and Merck Company Foundation.
Operating foundations
directly run programs determined by their charter or governing body. Operating foundations award few or no grants to outside organizations. For example, the J. Paul Getty Trust runs art museums and related programs.
Community foundations,
sometimes called community trusts, operate much like private foundations. But their funds come from many donors rather than from a single individual, family, or corporation. These foundations make grants for social, educational, or other charitable purposes in a specific community or region. Their boards of directors tend to represent the community served. Large community foundations include the Cleveland Foundation, the Marin Community Foundation, the New York Community Trust, and the Vancouver Foundation.
The work of foundations
Foundations support organizations and programs in a variety of fields. These fields include education, human services, health, arts and humanities, public and society benefit, environment and animals, science and technology, and international affairs. Most foundations define their purposes broadly, to allow trustees some degree of flexibility in how they distribute funds. For example, the charter of the Rockefeller Foundation states that its purpose is “to promote the well-being of mankind throughout the world.”
Education
is historically the largest category of foundation giving. Many foundation grants go to elementary schools, high schools, institutions of higher education, and libraries.
The Gates Foundation and the Lilly Endowment are prominent foundations in this field. In the 1950’s, the Ford Foundation and the Carnegie Corporation of New York collaborated to establish the National Merit Scholarship Corporation, which awards scholarships to outstanding high school students in the United States. The Carnegie Corporation also helped launch the educational television program “Sesame Street” in the 1960’s. Other important foundations that support education include the Annenberg Foundation, J. W. McConnell Family Foundation, and Walton Family Foundation.
Human services
covers youth development; legal, justice, and anticrime programs; housing and shelter; recreation and sports; food, nutrition, and agriculture; employment; and safety and disaster relief. The Annie E. Casey Foundation, the Chagnon Foundation, the W. K. Kellogg Foundation, the Lilly Endowment, and the Harry and Jeanette Weinberg Foundation rank among the leading foundations in this area.
Health
has traditionally been a major area of foundation giving. Most grants go to organizations involved with hospitals and medical care; medical research; mental health; and specific diseases, such as cancer or AIDS. Beginning in 1915, the Rockefeller Foundation led a successful 30-year effort to develop and administer a vaccine to prevent yellow fever. In the 1970’s, the Johnson Foundation played an important role in developing the 911 emergency medical service system throughout the United States. Other major contributors to health organizations include the Duke Endowment, the Gates Foundation, the Kellogg Foundation, the Albert and Mary Lasker Foundation, the Robert W. Woodruff Foundation, Canada’s SickKids Foundation, and Australia’s Heart Foundation.
Arts and humanities.
Foundations play a leading role in supporting the arts and humanities. Most grants go to performing arts groups, museums, and organizations involved with media and with historic preservation. Funding provided by foundations associated with financier and art collector Andrew W. Mellon helped build and maintain the National Gallery of Art in Washington, D.C. Foundations active in the field of arts and humanities include the Annenberg Foundation, the Ford Foundation, the J. Paul Getty Trust, the Andrew W. Mellon Foundation, and the Wallace Foundation.
Public and society benefit,
sometimes known as social welfare, includes civil rights, social action, community improvement, and public affairs. It also includes grants to promote philanthropy and volunteerism. Many foundations grant money to federated giving programs, such as the United Way, the Jewish Federation, and the Catholic Appeal. Important foundations in this field include the Ford Foundation, the Kellogg Foundation, the John D. and Catherine T. MacArthur Foundation, the Charles Stewart Mott Foundation, and the Pew Charitable Trusts.
Environment and animals
programs promote the protection of natural resources, botanical and horticultural projects, pollution control, and wildlife preservation. Foundations that fund efforts to conserve natural resources include the McConnell Family Foundation, the Gordon and Betty Moore Foundation, the David and Lucile Packard Foundation, and the Turner Foundation.
Science and technology
receive a relatively small percentage of foundation grants. But some science-related grants—for example, in engineering education or biomedical research—may be included in other categories. The W. M. Keck Foundation funded Hawaii’s Keck Observatory and created the Keck Graduate Institute of Applied Life Sciences in California. The Packard Foundation established and funded the Monterey Bay Aquarium Research Institute, a marine research facility in California. The Gates Foundation has funded research on the human genome (complete set of genes in a cell).
International affairs
usually interest a relatively small percentage of foundations. But certain world events—such as a natural disaster or a major political change—can have a dramatic effect on the amount of support they provide. The principal funding areas include economic development and relief services; security and arms control; educational and cultural exchanges; foreign policy issues; and human rights.
In the 1940’s, the Rockefeller Foundation—later joined by the Ford Foundation and others—began funding research centers in Mexico and, in the 1960’s, the Philippines and elsewhere. Scientists at these centers developed much better-yielding rice and wheat varieties. Widespread use of these varieties led to the “green revolution,” a huge increase in the capacity of poor nations to feed themselves.
Other foundations concerned with international affairs include the Central European University Foundation and the Open Society Institute. Both are funded by the Hungarian-born American financier George Soros. The Ford Foundation has grant-making programs in many countries throughout the world.
History
Early organizations that resembled foundations emerged in ancient Rome and in Ancient Greece. The Greek philosopher Plato established a fund to support his academy. Many Roman emperors set up municipal foundations for the relief of the poor. During the Middle Ages, which lasted from about the A.D. 400’s through the 1400’s, the Roman Catholic Church administered private funds for hospitals, schools, and other charitable causes.
Similar organizations were established in the United States in the late 1700’s and early 1800’s. In 1790, the will left by the American statesman Benjamin Franklin established funds for the poor in Boston and Philadelphia. In 1846, funds left by the British scientist James Smithson were used to found the Smithsonian Institution “for the increase and diffusion of knowledge among men.” The first modern American foundations were the Peabody and Slater funds. George Peabody, an American banker, founded the Peabody Education Fund in 1867 to aid public education in the southern United States after the American Civil War (1861-1865). John Fox Slater, a manufacturer, founded the Slater Fund in New York in 1882 to help educate former slaves in the South.
Andrew Carnegie, one of the greatest steel manufacturers in the United States, spread the idea in the late 1800’s that people with large fortunes should give away part of their wealth for the betterment of humanity. Carnegie established several funds, including the Carnegie Endowment for International Peace, the Carnegie Foundation for the Advancement of Teaching, and the Carnegie Corporation of New York. Many other wealthy people—such as John D. Rockefeller, Henry Ford, Andrew W. Mellon, J. Paul Getty, Julius Rosenwald, David and Lucile Packard, Bill Gates, and Warren Buffett—have worked to follow Carnegie’s example.
