Many people might not be aware of any differences between private and public foundations. Provided that they are aware that some differences exist, however, many individuals have preconceived notions about either kind of foundation. While these notions are often based on myths and assumptions, the following elements will facilitate the distinction between the two types of foundations for any individuals who may still be baffled over differing legal terms.

Firstly, the reporting regulations required of private foundations differ greatly from public foundations. Private foundations are often very carefully monitored by the government and the IRS in particular. These organizations are often required to submit extensive and detailed reports about fund-raising campaigns, events, and activities the foundation takes part in. Public organizations are not required to do so as they conduct their activities under the surveillance of the mass public as a whole.

Regulations imposed on both private and public foundations also differ. While private foundations face numerous limitations, including the distribution of at least five percent of the value of its assets, higher taxes on annual income, and a wider degree of scrutiny from regulating committees, public foundations are not subject to the same policies. Also, private foundations often limit their membership to individuals who are considered worthy of owning stock in their organization whereas public foundations allow anyone and everyone to own stock and effectively deduct contributions.

Additionally, public stocks have a great degree of deductibility when it comes to reporting member contributions. For example, although private foundations often limit cash gifts and property deductions, limiting their deductibility to a cost basis.

While there are many advantages and disadvantages to contributing to both public and private foundations, many more individuals find beneficial outcomes when investing in a public cause with a greater degree of freedom and movement within the organization. In any case, situations are often unique in nature; therefore, it is crucial to determine your best interests and needs before you consider contributing to any foundation.

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