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Philanthropy Basics

Philanthropy is the voluntary donation of goods, money, resources, or knowledge to a cause or organization working to increase the well-being of humankind.

What is philanthropy?

“Philanthropy is…”  [Yvideo]

Philanthropy in practice is the voluntary donation of goods, money, resources or knowledge to a cause or organization working to increase the well-being of humankind. Philanthropy reflects a diversity of donors in terms of race, ethnicity, gender, age and income. Philanthropy takes many forms, from volunteering to a multi-million dollar investments. 

What is a grantmaker?

Grantmaking refers to giving money or resources. Grantmakers are people, organizations or government agencies that provide monetary awards, grants, in-kind donations and support to nonprofits.

What is a nonprofit?

An nonprofit organization is a tax-exempt entity designated a 501(c)(3) by the tax code. They can be a church, charity, service organization or grantmaking foundation. When a surplus is created, the nonprofit must invest it to achieve their organizational mission instead of distributing it as profit or dividends. Although they are called nonprofits, they must make a profit to be sustainable, resilient and viable in the community.

What is a foundation?

A foundation is a 501(c)(3) nonprofit organization that donates funds, technical assistance, in-kind donations and volunteer time to other organizations. Foundations may also provide funding for their own programs to serve the public good. Foundations are often created with endowments which are money given by individuals, families or corporations. They generally make grants or operate programs with the income earned from investing the endowments.

The IRS also has a definition of foundations. The IRS categorizes most nonprofit organizations into two broad categories:

  • private foundations
  • public charities

Both categories are nonprofit organizations under Section 501(c)(3) of the tax code. A public charity receives funds from a variety of donors, including the general public, while a private foundation is generally controlled by a single donor. These two types or organizations are regulated differently by the law. Private foundations operate under more restrictions than a public charity.

What is a philanthropy-serving organization?

Arizona Grantmakers Forum is a philanthropy-serving organization. PSOs promote the growth of effective philanthropy to serve their communities. They accomplish this by:

  • Supporting and strengthening all types of philanthropy in a specific region or issue area
  • Providing educational opportunities and resources to grantmakers
  • Providing networking opportunities among grantmakers and between grantmakers and grantseekers
  • Serving as a resource to members and the broader community on issues affecting philanthropy
  • Communicating the value of philanthropy to local, state and national policymakers and the media
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