The United States has the world's largest and most diverse philanthropy sector. With more than 100,000 private foundations, thousands of community foundations, and approximately $500 billion in annual charitable giving, American philanthropy is a major force in civil society, research, health, education, the arts, and social change. Understanding how US philanthropy works — its structures, regulations, and practices — matters for any organisation considering engaging with American funders.
Annual giving
Americans give approximately $500 billion annually to charity — from individual donations to foundation grants to corporate giving. This represents roughly 2% of GDP, one of the highest rates of charitable giving in the world. About two-thirds comes from individual donors; foundations account for roughly 20%; corporations give about 5%.
Private foundations
There are over 100,000 private foundations in the United States, ranging from billion-dollar institutional foundations (Bill & Melinda Gates Foundation, Ford Foundation, Wellcome Trust, etc.) to small family foundations. Private foundations:
- Are funded by a single source (individual, family, or corporation)
- Must distribute at least 5% of assets annually as qualifying distributions (primarily grants)
- Are regulated by the IRS as tax-exempt 501(c)(3) organisations
- Cannot engage in political activities or give to non-exempt organisations without proper procedures
Community foundations
There are nearly 1,000 community foundations across the United States — geographically defined public charities that accept donations from many donors, manage donor-advised funds, and make grants in their local communities. The Silicon Valley Community Foundation, New York Community Trust, and Chicago Community Trust are among the largest, managing billions in assets.
Donor-advised funds (DAFs)
Donor-advised funds — charitable accounts that donors contribute to, receive an immediate tax deduction for, and advise grants from — have grown explosively. National DAF sponsors (Fidelity Charitable, Schwab Charitable, Vanguard Charitable) each manage tens of billions in DAF assets. Donors recommend grants from their DAF accounts; the sponsor makes the actual grants.
Corporate philanthropy
American corporations give approximately $25-30 billion annually to charity — through corporate foundations, direct giving programs, employee matching programmes, and cause marketing. Corporate philanthropy is often tied to business objectives: community relations, employee engagement, brand values.
501(c)(3) status
Charitable organisations in the United States — including nonprofits, foundations, and churches — register as tax-exempt under Section 501(c)(3) of the Internal Revenue Code. 501(c)(3) organisations:
- Are exempt from federal income tax
- Can receive tax-deductible contributions from donors
- Cannot engage in partisan political activity (lobbying is limited, electoral activity is prohibited for public charities)
Private foundation regulations
Private foundations face specific regulations:
- Minimum distribution: must distribute 5% of assets annually
- Excess business holdings: limitations on holding more than 20% of a business
- Self-dealing: strict prohibitions on transactions between foundations and disqualified persons (founders, managers, major donors)
- Jeopardizing investments: cannot invest in ways that jeopardise the foundation's charitable purposes
- Taxable expenditures: restrictions on grants to non-public-charities, lobbying, and political activity
Public charities
Public charities (which include most nonprofits, community foundations, and schools) receive funding from many sources and face less regulation than private foundations. They can lobby (within limits) and have more flexibility in their operations.
Major institutional foundations
The largest US foundations wield enormous influence:
- Bill & Melinda Gates Foundation: global health, global development, US education (~$50B in assets)
- Ford Foundation: social justice, arts, human rights
- Bloomberg Philanthropies: education, environment, public health, arts
- Wellcome Trust: (UK-based but significant US operations) health research
- MacArthur Foundation: arts, education, climate, criminal justice
- Robert Wood Johnson Foundation: health and health care
- Rockefeller Foundation: global food, health, energy, economic development
- Kellogg Foundation: children and families, racial equity
Community foundation concentration
Community foundations are strongest in major metro areas (New York, Chicago, San Francisco Bay Area, Silicon Valley). They play a particularly important role in connecting local donors to local nonprofits and providing donor services (especially DAFs) to wealthy individuals.
Giving circles and collective philanthropy
Giving circles — groups of donors pooling resources to make larger grants together — are growing in the US, particularly among women and communities of colour. They represent an emerging democratisation of grantmaking.
Research before approaching
US foundations vary enormously in their grantmaking priorities, geographic focus, and organisational requirements. Research each foundation carefully — IRS Form 990s (public documents that show grants made) are invaluable for understanding a foundation's actual grantmaking practice.
Cold applications vs. relationships
Many US foundations do not accept unsolicited proposals. Building relationships — through programme officers, convenings, shared networks — often precedes successful applications. Understanding how to get a "warm introduction" is important.
International grantmaking
US foundations making grants to foreign organisations must conduct "equivalency determinations" (checking that the foreign organisation is equivalent to a US public charity) or use expenditure responsibility procedures. This creates compliance burden that some foundations avoid by only granting to US organisations. International applicants should understand this dynamic.
LOI processes
Many US foundations use a letter of inquiry (LOI) process before full proposals. The LOI — a 2-4 page summary of the proposed project — determines whether the foundation invites a full proposal. Strong LOIs are crucial gateway documents.
Trust-based philanthropy: a movement toward multiyear, unrestricted funding and reduced reporting burden, exemplified by foundations like MacKenzie Scott.
Participatory grantmaking: including community voices in funding decisions.
Social justice philanthropy: explicit attention to structural racism and systemic inequality in funding priorities.
Impact investing: programme-related investments and mission-related investments alongside grants.
DAF criticism and reform: growing policy debate about whether DAFs delay the distribution of charitable dollars.
Tahua's grants management platform supports organisations managing relationships with US foundations — with funder relationship tracking, LOI and proposal management, deadline management, and the portfolio tools that help nonprofits engage effectively with American grantmakers.