There are more than 650 of them in the United States-and there’s one in the state where you live. Together, they hold more than $35 billion in combined assets. Each year, they give more than $2.6 billion, collectively, in local grants. The most curious fact: You may have no idea they exist. They’re community foundations, tax-exempt charitable organizations that are vehicles for giving through donor-advised funds, organizational and individual endowments, services to the nonprofit community, and much more. And as the directors of community foundations are wont to say, their business is building community.
Why use a community foundation? If you’re an individual who is interested in making sure that your philanthropy is well-directed and defined, you may want to consider channeling your gifts through a foundation of this kind. Community foundations provide highly personalized services and will work with you to ensure that your monies are distributed in a fashion that maximizes your philanthropic intent-and is an ideal fit with your financial situation. They handle all of the administrative tasks that are associated with giving, such as issuing checks, writing letters, etc., and ensure that all aspects of your donation are handled in full accordance with the law. In addition, community foundations work closely with professional financial advisors to ensure that you reap the maximum tax benefits from your gift. In short, community foundations worry about all of the little details, so that you can focus on what’s most important: establishing your legacy.
When is a community foundation most relevant? Let’s say that you have recently moved to an area and know that you want to contribute to an organization serving young people and the arts, but aren’t sure which such organizations exist in your new hometown. The staff of community foundations is expert at matching your interests with existing organizations who will benefit from your contributions; this is called a field of interest fund.
You may also have identified certain organizations to which you would like to give; your local or regional community foundation can handle distributions of these monies as well, in the form of a designated fund.
Let’s say you’re interested in doing good, but aren’t very specific about how that happens-your priority is simply that funds are used in the ways that they are most needed at the time. In this case, you can elect to establish an unrestricted fund, where the foundation targets the community’s greatest needs and distributes monies according to the priorities they have identified.
If you would prefer to be very active in the distribution of funds, you can work hand-in-hand with the community foundation’s program staff to identify specific issues and areas that you would like your funds to target via your donor-advised fund. Your recommendations are typically submitted to the community foundation’s board for approval and then disbursed accordingly.
You can even choose to create scholarship funds with specific criteria (field of interest, ethnicity, geographic region) that the foundation will manage.
Community foundations are also experts at handling endowments, both on the behalf of individuals and for nonprofit organizations. In the case of an those who choose to establish endowment funds, they have the satisfaction of knowing that their gift will be distributed over time and will play a role in the long-term sustainability of both the community foundation itself and the organization(s) they have chosen to support. In the case of nonprofit organizations, community foundations can be instrumental in helping build and manage endowment funds.
You can even use a community foundation to establish your own mini-foundation, with board members, a specific set of funding priorities, and more. The community foundation will handle all of the nitty gritty details-fund distribution, administrative management, reporting, and more.
How can I give? Keep in mind that community foundations accept many types of gifts. You can choose to contribute real estate, stocks that have appreciated, cash, bonds and other assets to a community foundation in order to establish your credit as a donor. Your gifts can be made in the name of a fund you establish, or you can opt to give anonymously. Furthermore, if making an outright gift, such as those named above, is not a good fit, you can choose to name the community foundation in your will or as part of a bequest, charitable lead trust, or charitable remainder trust. You can even elect a charitable gift annuity, in which you make a gift of cash or property to your community foundation now, receive tax benefits, and then establish quarterly or annual income payouts for you or a designated loved one for as long as you live.
This sounds interesting. How can I learn more? Visit www.communityfoundations.net to learn more about these incredible resources for giving. This site also has a “community foundations locator,” so you can find the foundation nearest you.
The bottom line: When you give through a community foundation, you’re doing more than making a charitable contribution-you’re investing in your community. What legacy could be better than that?