Private foundations are not-for-profit organizations and are usually non-government organizations too. These organizations have a principal which is managed by a group of trustees or a board of directors. Private foundations maintain a range of activities including educational, charitable and even religious causes via grants meted out to other non-profit organizations.
The Internal Revenue Service Code defines a private foundation as a US or foreign charity that is exempt from all taxes. In other words, public charities are organizations that are not private foundations as stipulated in Section 509(a) of the Internal Revenue Service Code.
The difference between public charities and private foundations is that charity organizations usually gain funding and other support mainly from the general public, and also receives grants from the government, individuals and private foundations. It is only a handful of charities that partake in grant-making activities, while a majority of them carry out direct services and tax-exempt initiatives. Private foundations are different. Their funding comes from one source, like for example, a family or an individual or even a corporation. They are more commonly not grant makers nor do they get funds from the general public.
Keep in mind that just because an organization has the word ‘funding’ in its name, that does not necessarily mean it is a private foundation. The word has no real legal meaning. It would be helpful to take a look at the manner in which the IRS defines an organization and their criteria for filing either Form 990-PF which needs to be filled out annually by private foundations or Form 990 which should be submitted by public charities and non-profit organizations on an annual basis.