I work with clients to create development plans to ensure interdependence from one or two sources of income like events or publicly funded grants.  The question “How do we label different types of donors?” always comes up.  Nonprofits and institutions of higher education seem to use dissimilar models when categorizing funding.  As an organization strives to spread revenue and set fundraising goals for each type of funder, it is important to define each and come to an understanding and agreement throughout the organization.  Some call a corporate gift a foundation gift.  Some call an individual gift a foundation gift.  It is sometimes confusing as names of funders vary.  A good example is The Carnegie Corporation of New York which is a foundation.  The Bank of America Charitable Foundation is a corporate foundation.  Fundraising isn’t rocket science but it does require thoughtful management of the details.

My rule of thumb is:

• If a gift is from a company that has a corporate foundation like North Carolina GlaxoSmithKline Foundation or Blue Cross and Blue Shield of North Carolina Foundation, it should be considered a corporate gift.
• If a gift is given from a private foundation that does not have a business tied to it like Z. Smith Reynolds Foundation or The Duke Endowment, it should be classified as a foundation.
• If a gift is from a family foundation, it can be counted as an individual gift or as a foundation gift depending on the size of the foundation and whether or not all the foundation’s trustees are family members.

The most important thing is to be consistent.  When setting annual campaign goals or capital campaign goals as part of your development plan, organizations can assess potential giving by constituent and make realistic yet stretch goals.  Do not fall into the trap of moving foundations gifts to corporate gifts for example just to make the goal for that type of funder.  Educate board members and fundraising volunteers on the difference between each constituent and how your organization categorizes each.  Wikipedia defines a charitable foundation and a private foundation as “A foundation is a legal categorization of nonprofit organizations that will typically either donate funds and support to other organizations, or provide the source of funding for its own charitable purposes.”

GRANT Source, a service of The Foundation Center, provides the following definitions for foundations (private and public), corporate foundations and corporate direct giving programs:

“Foundations

A private foundation is typically endowed by an individual or family and derives its money from a family, an individual, or a corporation. An example of a private foundation is the Ford Foundation.  In contrast, a public foundation derives its support from diverse sources, which may include foundations, individuals, and government agencies. An example of a grant making public charity is the Ms. Foundation for Women. Most community foundations are also grant making public charities.  “Foundation” is not a legal term, so if an organization has the word in its name, do not assume that it is a grant making organization. For example, the Foundation Center is not a grant maker.  All exempt organizations submit annual filings to the IRS. Private foundations file Form 990-PF, public foundations file Form 990, like other public charities. These filings are public documents and have valuable information about an organization’s finances, board members, and key employees.  In addition, private foundations must list all grants paid in that year. Some public foundations will list their grants voluntarily. You can access these filings here 990 Finder.”

“Corporate Foundations

• Are separate legal entities, maintain close ties with the parent company, and their giving usually reflects company interests.
• Can be private foundations or public charities.
• Generally maintain small endowments and rely on regular contributions from the parent company and/or subsidiaries to support their giving programs.
• Often grow their endowments in profitable years and tap them in leaner years.
• Must follow the appropriate laws governing private foundations or public charities, including public disclosure requirements.

Corporate Direct Giving Programs

• Are not separate legal entities, so they are not subject to laws governing exempt organizations, including public disclosure requirements?
• Do not have an endowment.
• Often include employee matching gifts and in-kind gifts as part of their grant making activities.
• Are often used to support programs that do not fall within the guidelines of the company-sponsored foundation.

Keep in mind that corporate giving, regardless of its form, is closely tied to the corporation's business interests. Thus, their programs often are designed to benefit employees, their families, or communities where the company conducts business.”  The entire GRANT Source article on corporate giving can be found here http://grantspace.org/tools/knowledge-base/Funding-Resources/Corporations/corporate-foundations-vs-giving-programs

The Bill & Melinda Gates Foundation even has a website page dedicated to tax status definitions http://www.gatesfoundation.org/How-We-Work/General-Information/Tax-Status-Definitions.

Hopefully I have not confused you even more but have shed some light on how to categorize revenue sources!  

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