Great giving options: We can help you choose the one that’s right for your client. The Community foundation offers a variety of options to help you help your clients achieve their unique charitable giving goals.
A donor-advised fund is one of the most commonly selected options at the community foundation because it is simple, easy to establish, and offers great flexibility. A donor sets up a donor-advised fund without naming any specific charity as beneficiary, and receives a full, upfront charitable deduction in the year the fund is established. For tax-reporting purposes, the donor only needs to document gifts to the fund.
As its name suggests, the donor advises the foundation about grants to be made to charitable organizations from the fund. The donor’s spouse or children may also advise on grants from the fund. Legally, our board of directors makes the final decision.
As part of its donor services, the community foundation can help donors sort through the hundreds of charitable organizations serving the area and identify worthwhile projects to support that meet the donor’s interests. As an added safeguard, the foundation oversees grants from donor-advised funds to ensure that all recommended recipients are legitimate charities. The community foundation requires that the majority of grants benefit its geographic area; however, the donor can recommend grants to nearly any tax-exempt charity in any geographic location.
Unrestricted endowments are designed to fund the most pressing needs of the community. Those needs often change over time and may fall into several categories, including youth and community development, education, arts and culture, and health and human services. The board exercises its discretion in granting the proceeds from unrestricted funds to deserving nonprofit organizations serving the foundation’s entire geographic area.
Donors can make gifts in any amount to existing unrestricted endowments. Individuals, families, corporations or foundations can also create named unrestricted funds. Making a gift or bequest to an unrestricted endowment is one way to create a living legacy — one that is able to grow and be responsive to the changing needs of the community.
A field-of-interest fund, as the name implies, allows the donor to address a cause or special interest without being locked into naming a specific charity. The donor names the purpose of the fund — such as meeting the needs of children or fighting substance abuse — and the community foundation identifies the projects that can most effectively accomplish that goal at any given time.
A designated fund names a particular charity or charities of the donor’s choice to receive the fund’s annual proceeds. The specified charity benefits from the community foundation’s investment management capabilities and organization. Donors have the assurance of knowing that the principal will be preserved and that the charity they’ve selected will continue to receive funding. If for any reason the named organization should cease to exist, the community foundation’s board will redirect the fund to a charity that most closely meets the donor’s original intent.
A related type of fund, an agency endowment fund, is a permanent endowment established by a nonprofit organization itself to provide perpetual support for its own mission. Any 501(c)(3) charity can establish such a fund at the foundation. A charity might do so in order to protect hard-won endowment dollars from being borrowed by future management, or to benefit from investment economies of scale. And the variance power ensures that the funds will always serve an important, related purpose, should the agency cease to exist.
The community foundation can administer a wide variety of scholarship funds, which may be established by individual donors, families, organizations or corporations. Scholarship funds are very flexible and can be targeted to students from a particular geographic area or school, to students pursuing a specific field of study, or for a designated career focus.
Scholarship recipients are selected on a competitive basis, and criteria may include academic and non-academic factors as well as demonstrated need. Selection of scholarship recipients can be done either by the scholarship committee of the community foundation or by a selection committee of the donor’s choosing (subject to public policy). The foundation staff works with individual donors to set up scholarship funds to meet their charitable objectives.
An administrative fund gives donors the opportunity to provide support for the ongoing operations of the community foundation. These funds enable the foundation to charge reduced management fees to other funds, thus preserving more dollars for grantmaking. Donors may add to the existing administrative fund established by the foundation’s board of trustees or may establish a fund in their name or their family’s name for the same purpose.
Supporting organizations offer the donor an attractive alternative to forming a private foundation, avoiding the administrative burdens associated with it. The supporting organization has its own board of directors and grantmaking policies, while using the foundation for administrative activities if desired. Contributions to a supporting organization earn maximum tax deductibility, there is no minimum payout for grants, and no excise taxes are assessed due to its public charity status acquired through affiliation with the foundation.