A Brief Overview of Foundations

What is a private foundation

Foundations are really popular amongst the philanthropists.

These help them in establishing organizations and funds through which they can give something back to the society. So in that regard, the foundations can be thought as deeply rewarding and satisfying investments. However, on the downside, the process involved behind establishing a foundation is somewhat complex and pretty expensive at times.

Foundations are non-profit organizations that allocate their assets to the realization of general interest purposes, thus benefiting diverse groups. Among its objectives are the defense of human rights, assistance and social inclusion of the most disadvantaged, cooperation for development, promotion of volunteering or the creation of educational, cultural, scientific, sports, Health and labor, among many others. Foundations, therefore, work selflessly for the good of society, promoting the solidarity and well-being of all the groups that comprise it.

So what is a private foundation?

What is a private foundation

Private Foundation Grants

A private foundation is first and foremost an organization that has been established solely for the social well being of others. It can be classified as a non-profit entity that is usually under the control of a single individual or family. This is in stark contrast to the public charity where there are a lot of investors and stakeholders involved. Causes such as animal rights protection, educational grants or funds for scientific research are usually the motivations behind setting up a private foundation. Some of these private foundations might then go on and make donations to the charities that are already in place.

The Salient Features

There are several standout features of the private foundations that can attract the attention of the donors and opt for this option. Some of these features we will now discuss briefly.

First of all we have the most obvious advantage is that those who set up the foundations have a greater degree of control than those who are involved with other forms of charities. Usually the person who sets up the foundation is part of the governing body and can decide when and where the grants from the foundation should be awarded. They also have a greater say in determining the bylaws and other governing matters.

Another very standout advantage of opting for the private organizations is regarding the tax advantages. Investments in private organizations have income tax deductions which makes it a very prominent tool for estate planning. And the other perk is that whenever the foundation invests in some asset, it is allowed to grow with tax exemption.

As the creators of the private foundation have a lot of leeway regarding the rules and regulations, they do not have to specify the beneficiaries who become eligible for the grants and gifts. The board members can, at any time, review their policies and change their direction as the conditions change over time. This flexibility has great allure for the private donors who then prefer to go for the establishment of private foundations.

Before you can actually proceed to the development of a foundation you need to lay down some ground work.

There are some fundamental questions that need to be thought about like where will the initial funding come from? Who will be in charge of the administrative affairs? And furthermore, how will the foundation be made to sustain over a certain period of time? These are all the things that you need to be prepared for before you take any further steps.

The Foundation is a private institution recognized by law and whose purpose is to provide the Society with certain services considered to be of public interest.

They arise by the will of one or more persons, called founders or institutes, who ascribe a certain heritage to the fulfillment of an end of general interest.

In order for the legal structure of the Foundation to arise, the following requirements must be met:

– The will to constitute it, duly expressed through a will or public deed.
– The patrimony or economic endowment that allows the fulfillment of the end that is proposed.
– The aim pursued, which should always be of general interest.
– The Statutes or rules of internal organization

When is it considered that a Foundation is care?

A Foundation is welfare when its purpose is directed to the satisfaction of needs within the areas of action of Social Services.

Who governs Foundations?

The governing body of a Foundation is called a Board of Trustees, composed of one or more persons designated by the founder, whose main task is to represent the Foundation and enforce the purposes for which it was created.

Who protects the Foundations?

The guardianship body is called Protectorate, whose mission is to ensure that the Foundations adapt their actions at all times to fulfill their general interest purposes.

At present, the Protectorate of Foundations is exercised by the Central State Administration and by the Autonomous Administrations in those Autonomous Communities that have assumed this competence.

In the Administration of the State, the Protectorate of the welfare Foundations is attributed to the Ministry of Social Affairs, being exerted by the General Direction of Social Action.

How are Foundations financed?

The Foundations are financed through the income generated by their assets and by the contributions, legacies and donations they receive.

If the Foundation is a public initiative, the greatest economic contribution will be made by the corresponding administration.

A foundation has founders who give it a heritage. He must try that the ends that were decided in his social object are made. You must also take care of your heritage as a means to achieve the goals.

A foundation must be non-profit making, which means that it is an entity that does not claim economic benefit and usually reinvest the surplus of its activity in social work. This does not prevent the legal person from engaging in trade and lucrative activities that enrich their heritage.

Initially it was necessary to approve an annual budget which has been replaced by presenting a plan of action with which it facilitates in a great average the management of these entities.

Government requirements and operation of a Foundation:

Within the internal structure we can distinguish the governing body and representation or patronage and the management team. All this can vary depending on the government of each autonomous community.


Foundations are an excellent option to avail in order to satisfy your philanthropic needs and urges. They allow you to establish a long lasting organization that will go on to help the deserving people of the community. However, in order for establishing a successful foundation, you need to be well rehearsed regarding the rules and bylaws from the inception of the idea to the day to day running of the organization.