A charity organization or more known as “charity foundation” is a company, or an unincorporated association, or trusts created for a single purpose, that is for charitable causes. Charity foundations are non profit organizations that most of the time takes over some services that the government used to provide. These services includes (but not limited to) health services, assistance or services for the elderly and unemployment.
Charity organizations are philanthropic organizations coordinated by individuals or institutions with the aim of allocating donations to support causes in relation with the goals of the charity foundation.
More often than not, these charity foundations are supervised by the government. Mostly (if not all), government all over the world require charity foundations to register and are obliged to submit financial and activity reports on an annual basis. Charity foundations in the United States are required to register through the Attorney General of the State they are operating. The charity sector is a fast growing sector all over the world. As a matter of fact, there are over more than a million charity foundations in the United States alone.
The exact figure as reported by the “Giving USA Foundation” care of the “Center on Philanthropy” at the Indiana University – Perdue University Indianapolis, is 1,010,395.
Charity foundations enjoy tax exemptions. The tax exemptions for these charitable organizations vary, depending on the country. But more often than not, in general law jurisdictions, charitable organizations enjoy tax exemptions for their proceeds, while its contributors are bound to enjoy tax reliefs or deductions for their contributions. Particulars of these exemptions and deductions or reliefs vary from government to government.
In the United States, the contributions to these charitable organizations are deductible for income tax purposes. That is, if charitable organization is recognized the United States Internal Revenue Service as a non profit organization based on section 501 (c) (3) United States tax code. The United States Tax Law also allows trusts that do not meet the criteria in order to qualify as exempt under section 501 (c) (3) to acquire significant tax advantages if they are associated with specific provisions. Trusts that belong to this category are called Charitable Remainder Trusts and Charitable Lead Trusts. Charitable Remainder Trusts are identified by the remainder of their assets, if their assets pass to a designated charity at the death of the grantor any of the grantor’s beneficiaries or beneficiary. General rules are applied to charitable and non charitable trusts. Although there are some rules that are only applicable to charitable trusts. The particulars of these rules differ between jurisdictions.
There are numerous types of charity foundations, private charitable organizations and community foundations are the most common types of charity foundations. These foundations are managed by a board of directors and these foundations make grants from a permanently endowed investment.