Key Term

What is Public Foundation?

Definition

A public foundation is a tax-exempt charitable organization that typically receives its funding from multiple sources, including the general public, government agencies, corporations, and other foundations. Unlike private foundations, public foundations must pass the public support test, demonstrating that at least one-third of their donations come from a broad base of public support rather than a single family or source.

Significance

Public foundations play a crucial role in the charitable sector by serving as intermediaries between donors and charitable causes. Their broad funding base ensures greater accountability and community involvement, while their public charity status offers donors more favorable tax benefits compared to giving to private foundations. Public foundations often have deep knowledge of community needs and can effectively pool resources from multiple donors to create greater impact, making them valuable partners in strategic philanthropy and community development.