What is a Community Foundation?
A community foundation is a nonprofit organization that provides a vehicle for charitably-minded donors (individuals or organizations) to create funds which are permanently invested to support the donors’ charitable interests. Earnings from those funds are then put back into the community in the form of grants.
There are over 800 community foundations in the United States and 1800 around the world. Indiana boasts 94 community foundations. Most are based in individual counties, providing every Indiana citizen the opportunity to participate in and witness the power of philanthropy at a very local level.
What does a community foundation do?
Community foundations accept gifts (including various types of assets) from individuals, nonprofits, corporations and other organizations for the purpose of permanent investment for community good. Community foundations are unique in that they serve three audiences: donors, nonprofit organizations, and the community at large.
Community foundations serve three major purposes:
The majority of funds maintained at a community foundation are endowed, i.e. the principal amount is permanently invested and only the earnings are available for disbursement to charitable causes. Donors may: establish permanent (endowed) funds to support charitable interests of their choice; donate to an existing fund that supports their interests; or choose to establish or support an unrestricted fund which can be used to address various charitable needs of the community. Because they are permanent, funds invested today will be generating benefits for the community 10, 25, and 50 years from now!
Funds at the community foundation are permanently endowed, and the earnings from those funds are disbursed as grants into the community. These grants might come in the form of an annual donation to the founding contributor’s charity of choice, a scholarship, or community grants issued by the Foundation in response to community needs. The purpose of a community foundation is to provide a vehicle for donors to fulfill their charitable intentions and to maintain and invest funds in such a way as to maximize the granting potential for impact in the community.
The community foundation also administers selected non-permanent (pass-thru) funds. These funds are not permanently endowed and typically function for short-term charitable community projects.
Community foundations serve as community partners -- assessing and addressing charitable needs in the community and working with other agencies and entities to create a greater sense of community in their counties. Sometimes this centers around a certain project or issue; most of the time it is simply maintained by strong working relationships with other community leaders and charitable organizations.
Community foundations have been compared to 3-legged stools: each leg is essential to the stool’s successful function. Likewise, each role of a community foundation is critical to its overall success: each role is dependent upon its interrelationship with the other, and none can be successful without the other.
How is a community foundation different from United Way?
Both organizations are important resources for White County. An easy way to describe the difference is to think of United Way as a checking account and the Foundation as a permanent savings account.
United Way raises funds and annually distributes all of that money to the agencies it serves. Community foundations build permanent endowments, the earnings from which are used for grants to address the charitable wishes of the donor.
United Way typically focuses on health and human services, while the Foundation’s scope of funding can be much broader and may address such areas as arts and culture, economic and community development, health and recreation, and education, as well as human services.
What “community” do you serve?
Typically, gifts are used to create or support funds that address community needs and opportunities in White County; however, a donor may designate the beneficiary of his or her gift to a charitable organization anywhere in the world. CFWC is based locally but can serve globally!
Foundations are for rich people, right? I’m not rich, so what does CFWC have to do with me?
Indeed, most of us are not (italicize) rich. Community foundations offer the opportunity for individuals to make small gifts that are added to a greater whole, which, when added together, can make a very big difference in a community. By combining your resources with others who share your interests, you can maximize the impact of a modest contribution. You don’t have to initiate a fund to make a difference; you can simply contribute to an existing fund, which increases the amount available for grantmaking from that fund next year. Easy!
Can I make a gift in honor or memory of someone?
Memorials and honorarium gifts are very effective ways to pay tribute to
someone’s contributions to the community -- or to celebrate a birthday or anniversary! You select the CFWC fund that honors your special someone’s interests (or make a general donation to the Foundation), and CFWC will notify that person of your thoughtful gift (without a $ amount). Memorials and honorary gifts are listed in our Annual Report.
CFWC is honored to work with families who have lost a loved one and would like to honor that person with a legacy gift or gifts. If it’s at the time of death, a simple directive of “memorial gift to CFWC” will suffice for funeral notices, and details can be worked out at a less stressful time.
How do I give to the Community Foundation?
As a nonprofit entity fully endorsed by the Internal Revenue Service, the Foundation is able to accept gifts in a variety of forms ~ cash, appreciated stocks and securities, insurance, real estate, bequest designations, etc. The “For Donors” section describes these various gift types in greater detail.
May I give anonymously?
Absolutely. CFWC respects your privacy and will only share your name or the story of your gift with your permission. Confidentiality and respect are hallmarks of community foundations.
Is there a cost to set up a fund?
There is no cost to establish a fund (aside from the donation you make to create the fund itself). There is no minimum to establish a fund, but we ask that you commit to a fund balance of at least $5000 within five years; no grants are disbursed from the fund until its 3-year trailing average is $5000 ($25,000 for scholarships and field-of-interest funds).
Each fund within the Foundation makes an annual administrative contribution to CFWC, which helps sustain our operations. For most funds, this contribution is 1-1/2% of the 3-year trailing average; for scholarships and pass-thru funds, the contribution is 2%.
Are there administrative and tax benefits to working through the Foundation?
One of the advantages of working through a community foundation for your charitable giving plans is that your administrative responsibilities are reduced to basically nothing! CFWC acknowledges all receipts, handles grant disbursements from your fund, and, through its affiliate agreement with The Community Foundation of Greater Lafayette, professionally invests your funds for maximum growth potential, and handles all audit and tax form responsibilities.
Gifts to CFWC are eligible for maximum tax benefits under the IRS code, and we have access to software that can provide sample scenarios for gift planning purposes.
Who can receive grants from CFWC?
Most typically, CFWC grants are distributed to 501c3 nonprofit organizations serving White County residents. A donor may, however, designate that grants from his/her fund benefit a church, school, or other nonprofit organization outside White County, which is perfectly fine.
Remember, CFWC is based locally but can serve globally!
Why should I become a donor?
To support your community and the things you care about! The Foundation offers considerable expertise regarding the needs and opportunities within White County. This expertise helps people who care about the community find the best way to direct their charitable interests.
Our donors appreciate the speed, flexibility and ease of using the Foundation. Because the legal tools are already in place and existing legal forms are available, a fund can be established ~ and all tax advantages obtained ~ in a very short time.