The Rise of Foundations (Part 2 in a Series

Today public charities represent just one percent of all foundations. But they are responsible for almost one-tenth of all foundation giving.

Fifty percent of the value of a gift to a public charity can be used to reduce taxes. For private foundations, that percentage is smaller -- thirty percent -- but still a lot.

As we told you last week, the United States has about seventy thousand foundations for charitable giving. They are required to give away at least five percent of their total holdings each year.

Many of the rules that govern foundations come from the Tax Reform Act of nineteen sixty-nine. Congress established a number of differences between public charities and private foundations. The new law defined all individual, corporate and operating foundations as private. That meant greater restrictions and different financial reporting rules than for community foundations.

Not surprisingly, strong foundation growth takes place during strong economic growth. For example, foundations grew quickly during the nineteen forties and fifties. A growing economy and changes in tax laws also led to sharp growth during the eighties.

The economic expansion of the middle and late nineties resulted in record foundation growth. In two thousand, as the stock market reached its highest level, so did the number of new foundations. More than six thousand that year alone.

This is the VOA Special English Economics Report.