Foundations
The Foundation Center has several online training sessions, some of which are free. For a schedule of these trainings, see the Suggested online source section below.
VIII. B. Principle–Financial Accountability
A charitable organization is accountable to its funders, its constituencies, and the public, both as to the sources and uses of funding.
Practices
3. Unless the gift instrument says otherwise, consider the following when determining accumulation and spending of growth in endowments of nonprofits. The nonprofit must act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and consider such issues as the duration and preservation of the endowment fund; the purposes of the institution and the endowment fund; general economic conditions; the possible effect of inflation or deflation; the expected total return from income and the appreciation of investments; other resources of the institution; and the investment policy of the institution.
Private Foundation Law Made Easy (2008) by Bruce Hopkins.
Frequently Asked Questions about Foundations
A community foundation is a tax-exempt public charity that can assist a community in maintaining and improving the quality of life enjoyed by its citizens. Contributions from individuals, corporations, government sources, and other organizations are used to create a collection of permanently endowed funds within the foundation. Community foundations distribute income from the endowments throughout the community by making grants to various organizations and projects that will benefit the community and reflect the wishes of the donors. Though the word "foundation" is in the community foundation name, its tax treatment is not that of a private foundation but of a public charity. The Iowa Council of Foundations has information on what community foundations are doing in Iowa.
Every US and foreign charity that qualifies under Internal Revenue Service Code section 501(c)(3) as tax-exempt is a private foundation unless it demonstrates to the IRS that it falls into the public charity category. According to The Foundation Center, a private foundation is a nongovernmental, nonprofit organization having a principal fund managed by its own trustees or director. Generally, a private foundation is a fund of private wealth established for charitable purposes. The principle function of most private foundations is to make grants to other nonprofit organizations, qualified individuals, and government entities. On the Form 1023 application for exemption Part X, you work through factors to determine if the nonprofit can get public charity status. Generally, tax treatment for a private foundation is less favorable than for a public charity.
The community foundation’s governing body approves all grants. Contributions to a community foundation represent irrevocable gifts subject to the legal and fiduciary control of the community foundation’s governing body. -- Council on Foundations
