Difference Between Private Foundations Vs. Ministries
To compare a private foundation and a ministry is to compare apples to oranges -- the terms are defining different aspects of an organization. An organization's legal structure is either a private or public foundation. Ministry, on the other hand, is a more subjective term that describes the purpose for which an organization is created.
Other People Are Reading
-
Definition of a Ministry
-
A ministry is an organization founded for the purpose of attending to the needs of others or promoting the Christian gospel. Ministries generally are non-profit, faith-based organizations. However, an organization can define itself as a ministry and be legally constructed in whatever way its founders choose.
Definition of a Private Foundation
-
According to the Foundation Center, a private foundation is a non-governmental, non-profit organization that has a primary endowment administered by its own trustees or directors. Private foundations support or assist benevolent, instructional, religious or other activities benefiting the collective good, in large part by making contributions to other non-profit organizations. A charity that qualifies under Section 501(c)(3) of the Internal Revenue Service Code as tax-exempt is considered a private foundation unless it demonstrates to the IRS that it belongs in a different class. Non-profit organizations that are not private foundations are considered public charities.
-
Public Charities
-
Most Christian ministries are in the category of public charities. Most public charities draw most of their funds from the public. They get grants from individuals, the government and private foundations. Though certain public charities award grants, most offer direct services or pursue other tax-exempt endeavors. By contrast, a private foundation generally draws its primary funding from a sole endowment furnished by an individual, family or corporation, and it usually makes grants. Private foundations do not seek funds from the public.
Advantages of Public Charities
-
Most active 501(c)(3) organizations are public charities. Public charity status is generally preferred because it fits the purposes of a variety of organizations and has definite advantages over private foundations. These advantages include higher donor giving limits for tax-deduction purposes, the ability to obtain funds from other public charities and private foundations, and a $25,000 income threshold before having to file Form 990. Private foundations must file Form 990-PF regardless of income.
Advantage of Private Foundations
-
Private foundation status is chosen for several reasons. The main reason is control. Private foundations can be controlled by individuals with common interests or who are related, and be funded by a fairly small group. One thing private foundations have in common with public charities is that they must be run exclusively for charitable objectives.
-
References
- Photo Credit handshake image by Stepanov from Fotolia.com
