The activities of philanthropic foundations are unique because they are not designed to make a profit and the funds involved are not subject to taxes.

Philanthropic organizations are set up in order to help improve the lives of others rather than to make money. One modern example is the Bill and Melinda Gates Foundation that was set up to gather and disperse funds to improve healthcare, education, and financial opportunities for people all over the world.

Unlike other businesses, philanthropic foundations do not aim to make money beyond that required to run the organization. Those who donate to such foundations do not have to pay taxes on the donated amount of money, and the foundations themselves are exempt from business taxes.