Private foundation

A private foundation is a tax-exempt organization that does not rely on broad public support and generally claims to serve humanitarian purposes.

Unlike a charitable foundation, a private foundation does not generally solicit funds from the public or have the legal requirements and reporting responsibilities of a registered non-profit or charitable foundation. Not all foundations engage in philanthropy; some private foundations are used for estate planning purposes.

One of the characteristics of the legal entities existing under the status of "Foundations" is a wide diversity of structures and purposes. Nevertheless, there are some common structural elements that are the first observed under legal scrutiny or classification.

Some of the above must be, in most jurisdictions, expressed in the document of establishment. Others may be provided by the supervising authority at each particular jurisdiction.

The following foundations are set up under common law legal systems:

In Canada, the Canada Revenue Agency is a branch of the Canadian government which regulates all foundations. Under Canadian law, since 1967, a private foundation is controlled by a single donor or family through a board that is made up of a majority (more than 50%) of directors at non-arm's length. It is a legally registered charity with the Canada Revenue Agency. A public foundation is governed by a board that is made up of a majority of directors at arm's length. A private foundation is not allowed to engage in any business activity, but it can operate its own charitable program.

The Canada Revenue Agency designates the application as a "charitable organization", a "public foundation", or a "private foundation", depending on its structure, its source of funding and its operation. The Income Tax Act requirements are different, depending on the type of charity (Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, para. 149.1(4)(a)).

Foundations were first introduced in The Bahamas in December 2004 following the Foundations Act.