This article was originally posted on March 25, 2015. Last updated on October 14, 2020.
If foundations are an important part of your fundraising portfolio, you’re not alone. In a reader survey, 92% of Grantseeker Monthly readers said they raise funds from Canadian foundations. But what exactly does everyone mean when they use the word foundation?
Charity designations: What is a private or public foundation?
In Canada, charities can register under one of three designations: charitable organization, public foundation, or private foundation. At the date of writing, the Canada Revenue Agency’s Charities Listings website shows that of the 86,213 charities currently registered in Canada, 5,384 are designated as private foundations while 5,111 are as public foundations.
Two of the key differences between public and private foundations lie in how they are governed and their source of income. A public foundation must have more than 50% of its directors, trustees, or like officials at arm’s length from one another, and typically their funding is received from a variety of arm’s length donors. This is not the case with private foundations.
Examples of public foundations include community foundations like the Vancouver Foundation, hospital foundations such as St. Michael’s Hospital Foundation, and organizations that facilitate giving like CanadaHelps.
Examples of private foundations include corporate foundations like the RBC Foundation, family foundations such as The T. R. Meighen Family Foundation, as well as many local charities like the Street Church Mission of Prince George.
‘Foundation’ is not synonymous with ‘Funder’
When fundraisers think about foundations in Canada as a potential revenue or donor stream, they are not referring to every registered Canadian foundation. You may have noticed that some of the private and public foundations we’ve named as examples - St. Michael's Hospital Foundation, CanadaHelps, and the Street Church Mission of Prince George - are not grantmaking organizations.
Registered foundations exist for a multitude of reasons besides (or in addition to) providing grants and donations. Only one third of Canadian foundations are actively making grants and donations to unrelated charities. These are what you often hear referred to as grantmaking foundations.
The foundation, like Lochness or Bigfoot, is a notoriously elusive creature
Pinning down the essence of a foundation has been an enduring challenge for fundraisers, discussed as far back as 1966 in the Canadian Universities’ Guide to Foundations and Similar Grant-Giving Agencies (the first edition of what is today known as Grant Connect). “The foundation is an elusive creature,” the authors remark in the foreword. “The word is frequently used in the name of an organization which is not philanthropic, and others which are philanthropic do not use the word at all.”
For example, the David Suzuki Foundation does not make grants despite the word foundation in its name, while EducationMatters – a public foundation that has distributed millions of dollars in grants and scholarships since 2003 – does not have the word foundation in its name at all.
To further complicate matters, some of the largest grantmaking foundations in Canada are not registered charities, let alone designated public or private. Examples of these would include the Ontario Trillium Foundation and the Alberta Law Foundation – neither of which is a registered charity.
Tips for zeroing in on your best potential funding partners
So, when fundraisers discuss their foundation donors, they are generally referring to an institution – usually a charity established as a private or public foundation but not always – that has an express objective of making grants or donations to unrelated organizations, in other words, grantmaking foundations.
Here are a few tips to keep in mind next time you’re on the lookout for your next foundation partner:
- Don’t judge a book by its cover: By evaluating potential funding opportunities by their name or charitable designation alone, you may be spending time applying to foundations that don’t ever give grants. Perhaps even worse, you may be missing out on potential sources of income for your organization.
- Remember that one of the best predictors of future behaviour is past behaviour: To get a sense of whether a foundation is a potential funder for your organization, have a look at what it’s done in the past. Most large foundations describe their partnerships online, and resources like Grant Connect can help you qualify a private or public foundation by showing you its giving history, as well as whether or not they are open to requests from new applicants.
- Invest in a trusted research tool: Why not have someone else do the inquiry for you? Since the very first edition of Grant Connect 54 years ago – the Guide to Foundations and Similar Grant-Giving Agencies – we’ve recognized the need for reliable data on grantmaking foundations. In Grant Connect you’ll find all private and public foundations in Canada (grantmaking and non-grantmaking) are classified according to behaviour by our researchers. Your search immediately zeroes in on the right funders.