What is the difference between a foundation and a charity?

Melinda and Bill Gates

The difference between a foundation and a charity is essentially one of funding. Private foundations such as the Bill and Melinda Gates Foundation are funded by wealthy individuals. The foundation referred to is funded by the world’s third wealthiest individual, Bill Gates (as at the date if this post). A foundation distributes money to good causes including charities. The foundation’s funds are or should be stable because the money is invested and expenditure does not wind down the capital unless the foundation is being wound up as is the case with the Animal Welfare Trust which is a 501 (c)(3) private operating foundation devoted to promoting the well-being of the animal community.

Melinda and Bill Gates

Melinda and Bill Gates. Photo in the public domain. They run the Bill and Melinda Gates Foundation.

On their website they provide an important update in which they state that they have decided that they are unable to continue to operate the trust on a longer term basis. As I understand it the problems relate to funding and their inability to hire professional staff to sustain operations going forward. It is being wound down by spending the remaining capital and they no longer accept unsolicited grant proposals. It should closed in 2021, which would be their 20th anniversary year.

A charity is also a non-profit organisation which may receive funds from a foundation. A charity’s primary purpose is to raise money through donations, grants and gifts, and to invest the money where appropriate and spend it on charitable purposes. The purposes will be stated and registered with the appropriate authorities.

Essentially the difference is that charities spend money but foundations give money. That would be my or at least one interpretation of the difference. Most animal charities are highly active in promoting animal welfare. For example, cat rescue organisations are sanctuaries for unwanted cats and these non-profits act as agencies to rehome unwanted cats plus treat the animals for health and welfare issues where appropriate. They receive their funds from donations and I would have thought that they would on occasions receive funds from appropriate foundations.

PETA is a charitable organisation and the largest animal rights organisation in the world with more than 6.5 million members and supporters. Their funding comes from their members. Their work includes public education, animal rescue, lobbying for improved animal welfare legislation, protest campaigns, cruelty investigations and other activities to improve animal welfare across the board. Their policy appears to be to shock people into facing the reality of animal cruelty and abuse and to jolt them into changing their opinions and snap them out of apathy.

For obvious reasons I have referred to animal welfare foundations and charities but of course the answer could make reference to any aspect of human activity and endeavour.