What is the difference between a foundation and a charity?
Generally speaking, charities can be classified into two main forms: public charities and private foundations or trusts. In the UK, a legal definition for a ‘charitable foundation’ does not exist. Although they share many similarities, the key to their distinction lies in the way they gather funds for operational purposes. There’s also a difference in how the two operate. Private foundations tend to hand out grants to individuals who meet some criteria set out by the foundation. Charities, on the other hand, are more likely to act, such as providing cooked meals or entertainment for elderly people. This distinction is not a rule, however, but more of a general tendency. The definitive difference between a foundation and a charity lies in the way they gather funds.
Private foundations often collect their funds from a single key source, for example, a wealthy benefactor. This may be a wealthy family who believes in the cause or a corporation that wants to give something back. As such, the funds of a private foundation are controlled because they are dependent on a main source of income.