How do Community Foundations differ from private foundations?
A Community Foundation is supported by a broad and ever-widening group of unrelated individuals, families, corporations, and institutions. The only thing that connects all of our donors is a desire to improve local communities.
Because of their broad base of support, Community Foundations are classified by the IRS as publicly-supported charities. This gives Community Foundations tax advantages not enjoyed by private foundations.
Community Foundations are also allowed to treat all funds within their control (known as “component funds”) as part of a single corporation. This gives them administrative advantages over private foundations as well.
Private foundations, by contrast, are generally supported by a single individual, family, or business. Rarely does it make sense to establish a private foundation if the principal endowment is not large. Today, of course, the world’s largest foundations -Gates, Ford, Kellogg- are all still private foundations.
To prevent abuse and self-dealing, private foundations have been subjected by the IRS to numerous penalty taxes and legal requirements, since the 1970s.
Because Community Foundations are controlled by large, diverse, and unrelated boards of directors, and the possibility of abuse is slim, the IRS does not impose any tax penalties or burdensome legal requirements on Community Foundations.
← How do Community Foundations differ from private foundations?
- 20K in Grants Will Mark Community Foundation’s 20th Anniversary Celebration & Annual Reception
- Community Foundation Offers Over $400,000 in Scholarships to Area Students – Applications Are Now Online
- Hudson Valley Animal Shelter Fund Announces up to $13,000 in Grants Available in 2019
- Year End Giving – a note from CFOS President Elizabeth Rowley
- Community Foundation of Orange and Sullivan’s Make a Difference Fund Announces Recipients for 2018
- Museum Village Establishes Endowment Fund
- Community Foundation of Orange and Sullivan Announce Hudson Valley Animal Shelter Fund Grant Recipients
- Golf Outing Planned to Benefit Veterans with PTSD
- Forever Foundation Established within Community Foundation of Orange and Sullivan
- Pets Alive Establishes Endowment Fund within Community Foundation of Orange and Sullivan