The most common private foundation is a grant-making foundation. A grant-making foundation is a non-profit organization funded by one individual, married couple, family or corporation. The private foundation’s assets are called an endowment. The endowment is invested to generate income for the foundation, which it uses to fund its operations and make grants.
Unlike a public charity, a private foundation does not conduct its own charitable operations. It makes grants to fund a public charity’s charitable operations or to fund a specific program.
A private foundation can be an effective way to fund a select cause or group of causes over a period of time. Establishing a foundation can also encourage others to participate and/or make donations to the foundation or otherwise support the cause. Tax benefits are another reason for starting a private foundation.