Private foundations are further classified into subcategories, depending on how they’re managed and funded. While these are not so important for tax purposes, these classifications serve to differentiate one foundation from another and to explain how the foundation works.
Independent foundations – there foundations are usually funded by a single benefactor, which would be a single individual or an organization. Unlike other types of private foundations, the benefactor simply provides funding and doesn’t govern the foundation.
Family foundations – these foundations are funded by a family of benefactors. With family foundations, one member of the family usually holds a seat at the board and has a say in how the foundation is run.
Corporate foundations – these foundations are funded by a corporation, which is usually the same corporation that created said foundation. As per federal law, corporate foundations are to be treated as a separate entity to the foundation that created and funded it. Corporations usually start foundations not only for branding purposes, but for philanthropy as well. Since the foundation and the corporation are two different entities, it is possible to have corporate employees be beneficiaries of the foundation. For example, employees of the corporation can avail of educational grants for their children.
International foundations – these are foundations whose programs and activities usually cross borders. This can also refer to foundations of International companies who have foundations set up in several countries.
Private operating foundations – while some charitable organizations often create grants or offer funding for other charities, private operating foundations use their resources for their own philanthropic endeavors. However, they may still make grants for certain causes. These foundations are required by law to spend a portion of its assets every year on charitable events.