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An individual usually founds these private foundations, often by bequest. They are occasionally termed "nonoperating" because
they do not run their own programs. Sometimes individuals or groups of people, such as family members, form a foundation while
the donors are still living. Many large independent foundations, such as the Ford Foundation, are no longer governed by
members of the original donor's family but are run by boards made up of community, business and academic leaders. Private
foundations make grants to other tax-exempt organizations to carry out their charitable purposes. Private foundations must
make charitable expenditures of approximately 5% of the market value of their assets each year. Although exempt from federal
income tax, private foundations must pay a yearly excise tax of 1%-2% of their net investment income. The Ford Foundation and
the John D. and Catherine T. MacArthur Foundation are two examples of well-known "independent" private foundations.
Independent foundations were most often originally organized as family foundations, but over a period of time family
involvement in the leadership has declined.
Independent Foundation Resources
Frequently Asked Questions
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Partial text reprinted with permission from the Forum of Regional Associations of Grantmakers.
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