A foundation is a nonprofit, nongovernmental organization with its own funds, managed by its own trustees and directors. It maintains or aids charitable, educational, religious or other activities serving the common good, primarily by making grants to other nonprofit organizations. Simply put, a foundation is a fund of private wealth established for charitable purposes.
The word foundation is thought to originate in medieval language: foundacioun or endowe n. Foundations are required to file a PF informational form with the Internal Revenue Service each year. The first three types are private foundations and subject to more scrutiny from the IRS. The community foundation is a public foundation. Foundations may not engage in certain activities.
For example, they may not control a business, make risky investments, influence elections or the legislative process, or accumulate assets without distributing them for charitable purposes. Foundations have existed in one form or another since the days of the ancient civilizations. Egyptians, Greeks and Romans had endowments for religious, educational and social purposes.
The Muslim world introduced the custom of the waqf or endowment as early as CE. During the Middle Ages, the church created endowments to support monasteries, universities and hospitals. The Elizabethan Statute of Charitable Uses is considered the legal framework for the concept of foundations as we know them today; the statute's preamble lists accepted charitable purposes.
Benjamin Franklin's Will provided for the establishment of two early American foundations in Boston and Philadelphia. Begun in , the foundations were meant to assist "young married artificers of good character" Bremner , As a result of industrialization and economic expansion, early 20th century America witnessed the development of large general purpose foundations. In , Mrs. Russell Sage established the first foundation of this type "for the improvement of social and living conditions in the United States" Smith , Andrew Carnegie and John Rockefeller established foundations in and Rockefeller's foundation was intended "to promote the well-being of mankind throughout the world" ibid.
