What is a foundation? A foundation is a non-governmental, nonprofit organization established under the Internal Revenue Code to "aid social, educational, charitable, religious or other activities serving the common welfare," primarily through the making of grants to nonprofit charities. What is a nonprofit charity? Nonprofit charities are dedicated to a specific mission, rather than making money for owners or investors. No part of their income privately inures to the benefit of anyone. Many nonprofit charities are incorporated under Internal Revenue Code Section 501(c)( 3). What is the nonprofit sector? Foundations and the nonprofit charities they support are referred to collectively as the "nonprofit sector" or the "independent sector." In 1999, Pennsylvania's $1.284 billion in charitable grant dollars came from four types of private foundations: Independent foundations are usually endowed by one source, such as a family, an individual's bequest, or the conversion of a nonprofit to a for- profit organization. Policies and grantmaking decisions are made by the donor, an independent board of directors, or a trust officer. Corporate foundations are separate legal entities established by for- profit corporations for the purpose of making grants to charities. Community foundations build their endowments through contributions from many donors in a region. Policies and grantmaking decisions are made by a community- based board of directors. Operating foundations use most of their income to support their own charitable programs and services. Some maintain limited grantmaking programs. (Note: Figures in this report include only grantmaking operating foundations, rather than all operating foundations. This report does not cover operating foundations in great detail.)