In 1947 newspaperman Charles Edward Marsh founded the Public Welfare Foundation to assist the needy without "red tape." His purpose, to offer the greatest good to the greatest number, symbolized the efforts of the foundation he created. Before the creation of the foundation, Marsh's giving was very personal and individually focused. Although the creation of a foundation formalized his giving, he wanted to retain the personal focus that emphasized the needs of individuals. Often giving in small sums, Marsh gave money to purchase medication, food, and other necessities. The greatest good, he felt, could be achieved by giving in such a way that allowed people to sustain and improve their situation. During his travels Marsh developed a system of agents who acted on his behalf for needy individuals within their community. At its peak, the money given through the agent system comprised almost half of the foundation's total grants. Each agent was given a monthly cash allowance to distribute wherever they saw a need. In return, they sent periodic reports back to the foundation describing the needs and assistance provided. Periodically, agents would write with special requests for extra building funds, medical procedures, and educational funding. By the end of the 1950s the foundation funded projects worldwide.

The 1960s was a volatile decade for the foundation. Charles Marsh died in 1964 and difficulties with IRS laws posed a threat to the foundation's stability. Marsh donated his three newspaper companies to the foundation to ensure a permanent, steady income that would maintain the foundation's grant making abilities. The arrangement caused the IRS to question whether the foundation was a charitable organization or a business because of the income generated by the newspapers. Eventually, it ruled that ownership of Marsh's newspaper holdings constituted a violation of tax law and revoked the tax-exempt status of the foundation in 1966. In response, the foundation agreed to transfer ownership of the Spartanburg Herald and Tribune, Tuscaloosa News, and Gadsden Times to subsidiary corporations (which were eventually sold in 1985) and to phase out the agent system that the IRS deemed questionable because no mechanism for accountability was evident. While the foundation settled with the IRS and regained its tax-exempt status, its way of distributing money was forever changed. By 1969 the agent system was gone and the foundation hired its first official staff member, Glenn Ihrig, signaling a great change from individual agents distributing funds to a professionalized foundation staff responsible to the board for the grant making activities of the foundation.

In the mid-1970s long-time foundation leaders Claudia Haines Marsh and Veronica Keating resigned from their positions. Claudia Haines Marsh was the third wife of Charles Marsh and served as the president of the Public Welfare Foundation from 1952-1974. Veronica Keating was secretary-treasurer from 1952-1975. Both women were key influences in the development and professionalization of the foundation seeing it through the IRS crisis and helping it successfully evolve in the midst of change. While they remained active on the foundation's board, leadership passed to Davis Haines as president and Glenn Ihrig as secretary-treasurer. By the close of the 1970s, the foundation hired its first program officer in the area of children's preventive health care.

The foundation continued to focus its grant making policy and giving strategies during 1980s. A second program area in elderly assistance was added and the foundation began a youth unemployment "initiative." Larry Kressley was hired to seek out grass roots programs in the area of youth unemployment and work with them to develop funding proposals. Completely different from the traditional practice of letting organizations approach the foundation, the initiative approach proved successful. As the foundation defined its grant making policy, it named five specific funding areas as its primary focus: disadvantaged youth, the environment, disadvantaged elderly, population and reproductive health, and criminal justice. According to Peggy Dillon, author of Seeking the Greatest Good, by the end of the 1980s the foundation was steering "away from a largely service-based, grant-giving organization into one operating consciously as a catalyst for social good."

Larry Kressley became the executive director of the foundation in the early 1990s. Under his leadership the foundation continued to develop an approach to giving that emphasized community outreach and partnerships in developing grant making opportunities. Based on that approach, a three-tiered model of giving that included service, advocacy, and empowerment emerged. Foundation officers became more directly involved with helping organizations shape programs that reflected the foundation's fundamental belief that direct service to individuals was the key to lasting change. The foundation's areas of support increased to eight and included: disadvantaged youth, the environment, disadvantaged elderly, population and reproductive health, criminal justice, health, community economic development and participation, and human rights and global security. In 1999 the foundation purchased the True Reformer Building in Washington, DC to serve as its permanent headquarters.

By 2007 the Public Welfare Foundation distributed more the $400 million to 4200 organizations. The foundation continues its interest in bettering the lives of individuals by serving as a catalyst for change. In order to maintain a strong and sustainable, effort in grant making, the foundation now focuses on three specific program areas: criminal and juvenile justice, health reform, and workers' rights.