What is a family foundation?

A family foundation is characterized as an independent entity that is typically governed by family members. This structure allows a family to manage their philanthropic efforts and charitable giving while maintaining control over the foundation's activities and objectives. Family foundations are established to provide grants to support various causes, often reflecting the family's values and interests. They operate under their own set of rules and guidelines, enabling them to tailor their charitable activities according to the family's vision.

In contrast to other options, a government-backed financial institution refers to organizations that are funded and supported by governmental resources, which does not align with the independent nature of family foundations. A public charity is distinct as it involves soliciting donations from the public and usually has federal tax obligations, significantly differing from the private initiative seen in family foundations. Lastly, classifying a family foundation as a personal investment strategy overlooks its primary purpose of philanthropy and charitable activities, rather than investment goals.