In this article, you will learn what a philanthropic foundation is and how it works. Find out what the purpose of philanthropy is and how to practice it.
- What is a philanthropic foundation?
- How do foundations work?
- Do foundations pay taxes?
- How much money do you need to start a foundation?
- Example of philanthropic foundation
- Who is the most generous philanthropist?
- What is the purpose of philanthropy?
What is a philanthropic foundation?
A philanthropic foundation is a non-profit organization whose mission is to help others with limited resources.
These organizations have a social commitment and provide not-for-profit support.
Foundations raise funds through their own capital, donations and contributions from individuals.
Philanthropic activities are actions that bring a benefit to the community.
An example of philanthropic activity is a food drive or the organization of a charitable event.
A foundation is a non-profit organization created with the aim of helping others.
The Cambridge Dictionary defines the concept of philanthropy as follows:
“The activity of helping the poor, especially by giving them money.”
Therefore, the two terms are related to each other, when the purpose of the foundation is to help the poor.
Let’s see how philanthropic foundations work from a dynamic perspective.
The founders and families must look for a “modus operandi” that ensures continuity.
Both the material and spiritual legacy must remain over time.
Leadership can be tackled in two ways:
- The founder holds the responsibility for decision making. The next generations continue on the leader’s path.
- The alternative is democratic decision making, that is to say, the leader involves his family and other foundation members.
Article 19 of the Regulation for Application of the Law of Internal Regime of Taxation in Ecuador, establishes that:
“Legally constituted, private non-profit organizations of the following areas: religion, charity, the promotion and development of women, children and families, cultural activities, arts, education,research, health […] are exempt from income tax.”
In the United States, likewise, private foundations are exempt from federal income tax because they are charitable organizations.
In Ecuador, the initial cost of starting a philanthropic foundation includes the cost of meeting the following mandatory requirements:
- Request to approve the statute and grant legal personality to the social organization.
- Constitutive Act.
- Draft Statute.
- Provisional wage bill of the Directive.
The fund raising comes from different sources, depending on the circumstances. Here are some of them:
- Interest income.
- Capital appreciation.
- Founder’s donations.
- The founder’s family donations across generations.
- Corporate donations.
In this section, let us see an example of a philanthropic foundation, based on my experience.
The Nahím Isaías Foundation is a non-profit organization, inspired by the humanistic thought of its founder, Nahím Isaías Barquet.
“The objective is to promote the progress and development of human beings, in order to raise their standard of living and enable them to contribute to the improvement of society and help their families, by establishing health and education programs.”
The foundation serves low-income communities through Comprehensive Medical Centers, where health is conceived as a right and a duty of all.
The foundation currently has three centers. Two in the city of Guayaquil and one in Milagro.
It provides low-cost medical services in 38 specialties. Among them, pediatrics, gynecology, neurology, cardiology, etc.
Forbes provides an updated list of America’s great philanthropists who have given a part of their income to support social and humanitarian causes.
The magazine has classified them according to the donors giving over their lifetimes.
In January 2021, the following entrepreneurs stood out:
- Warren Buffett: he’s donated a total of $42.8 billion to focus on healthcare and poverty issues.
- Bill and Melinda Gates: contributions amount to $29.8 billion to support health and poverty alleviation.
- George Soros: lifetime donations reached $16.8 billion to foster education, antidiscrimination, healthcare, and democracy.
- Michael Bloomberg: he’s betting on climate change and health with a contribution of $11.1 billion.
- Charles ‘Chuck’ Feeney: donations totaled $8 billion that went to science, human rights, and youth.
- MacKenzie Scott: she has dedicated one year to philanthropy. Her contributions ($5.83 billion) help fight racial, gender, and economic inequality.
- Gordon and Betty Moore: their lifetime giving totaled $5.15 billion aimed at boosting science research, environment, and education.
- Eli and Edythe Broad have made contributions to education, arts, and science. Their lifetime donations reached $2.8 billion.
- Jim and Marilyn Simons: they have donated a lifetime giving of $2.7 billion to STEM research.
- Mark Zuckerberg and Priscilla Chan: they have made contributions of $2.7 billion to science, education, criminal justice, and election integrity.
The purpose of philanthropy is to help others and improve social wellbeing to create a better world.
Therefore, the purpose of philanthropy is to produce social benefits through donations and helpful activities that help build wealth.
The Isaías family considers philanthropy as a family principle based on respect for human dignity.
Anyone can practice philanthropy quickly and easily.
The first step is to identify a foundation whose purpose matches personal goals.
In fact, there are many causes to contribute to, such as science, education, health, environment, etc.
Likewise, you can choose a national foundation or opt for one abroad.
Philanthropy is undoubtedly beneficial. Philanthropic behavior helps create social wealth and makes one feel good about giving.
You can’t say that you have it all if you have not succeeded in helping others.
Hence, we at the Nahím Isaías Foundation help Ecuadorian people who live in the country’s economically less favored areas.
We develop health and education programs in our three centers located in Ecuador.
Through this article, we have learned what a philanthropic foundation is, how it works and what its purpose is.
Therefore, we can draw the following conclusions from this text:
- A philanthropic foundation is a non-profit organization whose mission is to help others with limited resources.
- Foundations raise funds through their own capital, donations and contributions from individuals.
- Philanthropic activities are actions that bring a benefit to society.
- According to Forbes, Warren Buffett is the biggest philanthropist today.
- The purpose of philanthropy is to help others and contribute to society to create a better world.
- There are many philanthropic causes to contribute to, such as science, education, health, environment, etc.