Indiana Community Foundations
What is a Community Foundation?
A community foundation is a vehicle for people of all means to make a
lasting difference in their community. The central purpose of a community
foundation is to serve the needs and philanthropic aims of donors who wish
to better their community, now and in the future. Community foundations
do this by providing donors with flexible, efficient, and tax-effective ways
to ensure their charitable giving achieves the greatest possible impact.
The concept of a community foundation is as ingenious as it is simple - it is a
means to build, over time, substantial endowment funds for a community
through contributions large and small.
Because these contributions are endowed, they are never spent. Instead,
they are permanently invested to produce income. The income earned is
then used to help meet the community's charitable needs - from social
work to art and culture. So gifts to a community foundation continue to
benefit your community forever. This is a philanthropy in its broadest sense.
A community foundation does not usually conduct programs of its own.
Rather, it supports new or existing programs of other non-profit
organizations and agencies. It can also serve as a neutral convener, bringing
diverse opinions and players together for the good of the whole community.
But a community foundation's principal function remains that of serving
donors and their community by building permanent endowed funds for
philanthropic purposes.
Donors like you may set up individual funds, in your own name or the name of
a loved one, and have essentially as little or as much as control as you wish
in determining which charities benefit from your fund.
Or, you may choose to contribute to a variety of existing funds, set up to
serve particular purposes. Each community foundation also has a general
endowment fund, the income from which is distributed by the community
foundation's board of directors to address needs and opportunities in your
community as they change over time.
A community foundation is governed by a local board of directors chosen for
their knowledge of the community and designed to be representative of a
broad cross-section of the community. The directors further possess
expertise in the many areas of management necessary to carry out the
stewardship functions of the foundation.
A community foundation is a tax-exempt organization under Section 501 (c)
(3) of the Internal Revenue Code. All contributions are tax deductible to
the maximum amount allowable for gifts to a public charity. Indeed,
because community foundations are classified as public charities under the
tax code, some donors are able to claim larger tax deductions on gifts to
community foundations than they are on gifts to their own private
foundations.
A community foundation represents a wide variety of ideas and interests
of individual donors who have united in a common purpose - the bettering of
their community both now and in the future.
Whatever your charitable intentions, there are ways to achieve them
through your gifts to your community foundation.
The Uniqueness of Community Foundations
Growth of Community Foundation Activity
Community Foundations are the fastest growing area in philanthropy today.
To Illustrate:
More than 600 community foundations exist nationwide
Indiana leads the nation, with nearly every county of the state served by a
community foundation.
Thousands of individuals have realized the unique opportunity community
foundations offer to fulfill their philanthropic wishes. Thus, in the past
decades assets nationwide have tripled to more than $10 billion.
Indiana community foundation assets are growing at more than twice the
national rate - over $100 million having been added to the state's
community foundations in the last three years alone.
Individuals are not the only ones who have realized the value of community
foundations. Many private foundations and corporations have become strong
advocates and have introduced significant initiatives to support the growth
of the community foundation movement in America.
Such private foundations and corporations have devised programs to
stimulate the development of local community foundations and to encourage
individuals and families to create endowments for all kinds of charitable
purpose through the community foundation instrument.
The largest of these programs by a private foundation is the GIFT
Initiative - "Giving Indiana Funds for Tomorrow" - funded by a $60 million
grant from Indiana's Lilly Endowment Inc.
Through the GIFT Initiative, donors who contribute to their community
foundation's permanent endowment for any charitable purpose of their
choice may enable that foundation to qualify for matching funds from Lilly
Endowment. Such donors are thus helping their community foundation more
rapidly build a permanent source of charitable dollars to meet the changing
needs of the community.
Community Foundation Characteristics
A community foundation typically is an organization that holds, invests, and
administers a collection of separate funds - usually endowments -
established by donors to meet the philanthropic goals of the donors and the
needs of the community being served.
Donors contribute money, stock, or other assets, usually to the community
foundation's permanent endowment. In doing so, the donors can identify a
wide variety of charitable causes and community needs.
Funds are pooled and investments are overseen by a governing board.
The governing board and its distributions or grants committee consist of a
representative group of community leaders.
Community foundations usually do not engage in fund-raising campaigns
directed towards attracting large numbers of small contributions.
Operating needs are typically satisfied through corporate and business
support, board member support, and fund management fees.
Planned gifts and bequests form the primary tool for endowment
development. Often attorneys, financial planners and bankers utilize the
community foundation vehicle to fulfill their client's wishes.
What the Community Foundation Can Do for You
The foundation provides permanence. You are assured that your gifts will
benefit the agencies and residents of your community in perpetuity. Your
gift will be safe. As a permanent endowment, the principal will never be
spent - but the earnings will be there to permanently support your
community.
The community foundation provides flexibility. You may select from the
types of funds described in this booklet. You may make your gifts with
cash: shares of stock, including those which have appreciated in value;
closely-held stock; life insurance; or even real estate.
Gifts to the community foundation can reduce your tax burden. Income
taxes are reduced through the deductions allowed by the IRS for
contributions to a public charity, which is how a community foundation is
classified. If appreciated assets are donated, in most instances you
eliminate the capital gains tax you would incur if you sold the assets. An in
the instance of contributing funds through your estate, estate taxes are
avoided.
Your community foundation provides professional administration. For
unrestricted and field-of-interest funds, the community foundation
continually assesses the changing needs of your community and awards
grants to agencies best addressing those needs, sparing you, the donor, of
having to make such judgements. In the case of designated funds, the
community foundation easily handles the issuance of annual grants to the
organizations you specify when you establish the fund.
Your community foundation provides a perfect alternative to a private
foundation. Donors who want the individual involvement of a private
foundation without the accompanying administrative complexities,
restrictions, and expenses can accomplish the same result by establishing a
donor-advised fund within the community foundation. Using a donor-advised
fund within a community foundation also offers a donor more generous tax
deductions than those offered to donors to a private foundation.
Establishment of a fund is easy, convenient, and inexpensive.
Types of Endowed Funds to Which You Can Contribute
Undesignated or Unrestricted Fund
You want your charitable gift to accomplish the most to improve the quality
of life in your community. You believe that as conditions change, a group of
citizens from your community will be best able to assess the current
charitable needs and to be creative and flexible in their grant-making.
Field-of-Interest Fund
You are interested in a particular field (e.g., education, youth, environment)
but you do not want to restrict the grants to be made over the years to
any specific organization serving that field.
Designated Fund
You have supported a favorite charity or two and would like to continue
that support in perpetuity. You thus designate the specific charity that is
to receive grants.
Donor-Advised Fund
You like the advantage of a charitable fund for which you make suggestions
on which charities should be supported each year, but you want to avoid the
federal restrictions placed on private foundations.
Many community foundations further expand on these types of funds with
such variations as:
Scholarship Fund
You have your gift used to set up scholarships in your name so that
deserving your people can get the education they might not otherwise
receive.
Operating Endowment
You are interested in supporting the community foundation so it will be
available for all citizens. Your gift provides the foundation with annual
operating funds.
Agency Endowment
A charitable organization takes advantage of the community foundation
characteristics of permanence, of pooling funds for better investment
return, and of reduced administrative costs. The organization thus places
its endowment within the community foundation and each year receives
income from the fund.
U.S. Tax Code Encourages Charitable Giving
When you give outright gifts of cash or other assets, you receive an
immediate tax deduction, a component of the tax structure with which
almost everyone is familiar. There are two simple, yet creative, ways to
donate and still retain the income of your assets: Charitable Remainder
Trusts and Charitable Gift Annuities.
You also get tax deductions with these two methods of giving. Simply, they
allow you to contribute cash or property, and they pay you an income for life.
A further advantage of Charitable Remainder Trusts or Gift Annuities is
that you could use the income to purchase life insurance, which can become
an inheritance for you heirs.
*Based on an 8.0% federal midterm interest rate and quarterly payments.
A community foundation is a vehicle for people of all means to make a
lasting difference in their community. The central purpose of a community
foundation is to serve the needs and philanthropic aims of donors who wish
to better their community, now and in the future. Community foundations
do this by providing donors with flexible, efficient, and tax-effective ways
to ensure their charitable giving achieves the greatest possible impact.
The concept of a community foundation is as ingenious as it is simple - it is a
means to build, over time, substantial endowment funds for a community
through contributions large and small.
Because these contributions are endowed, they are never spent. Instead,
they are permanently invested to produce income. The income earned is
then used to help meet the community's charitable needs - from social
work to art and culture. So gifts to a community foundation continue to
benefit your community forever. This is a philanthropy in its broadest sense.
A community foundation does not usually conduct programs of its own.
Rather, it supports new or existing programs of other non-profit
organizations and agencies. It can also serve as a neutral convener, bringing
diverse opinions and players together for the good of the whole community.
But a community foundation's principal function remains that of serving
donors and their community by building permanent endowed funds for
philanthropic purposes.
Donors like you may set up individual funds, in your own name or the name of
a loved one, and have essentially as little or as much as control as you wish
in determining which charities benefit from your fund.
Or, you may choose to contribute to a variety of existing funds, set up to
serve particular purposes. Each community foundation also has a general
endowment fund, the income from which is distributed by the community
foundation's board of directors to address needs and opportunities in your
community as they change over time.
A community foundation is governed by a local board of directors chosen for
their knowledge of the community and designed to be representative of a
broad cross-section of the community. The directors further possess
expertise in the many areas of management necessary to carry out the
stewardship functions of the foundation.
A community foundation is a tax-exempt organization under Section 501 (c)
(3) of the Internal Revenue Code. All contributions are tax deductible to
the maximum amount allowable for gifts to a public charity. Indeed,
because community foundations are classified as public charities under the
tax code, some donors are able to claim larger tax deductions on gifts to
community foundations than they are on gifts to their own private
foundations.
A community foundation represents a wide variety of ideas and interests
of individual donors who have united in a common purpose - the bettering of
their community both now and in the future.
Whatever your charitable intentions, there are ways to achieve them
through your gifts to your community foundation.
The Uniqueness of Community Foundations
Growth of Community Foundation Activity
Community Foundations are the fastest growing area in philanthropy today.
To Illustrate:
More than 600 community foundations exist nationwide
Indiana leads the nation, with nearly every county of the state served by a
community foundation.
Thousands of individuals have realized the unique opportunity community
foundations offer to fulfill their philanthropic wishes. Thus, in the past
decades assets nationwide have tripled to more than $10 billion.
Indiana community foundation assets are growing at more than twice the
national rate - over $100 million having been added to the state's
community foundations in the last three years alone.
Individuals are not the only ones who have realized the value of community
foundations. Many private foundations and corporations have become strong
advocates and have introduced significant initiatives to support the growth
of the community foundation movement in America.
Such private foundations and corporations have devised programs to
stimulate the development of local community foundations and to encourage
individuals and families to create endowments for all kinds of charitable
purpose through the community foundation instrument.
The largest of these programs by a private foundation is the GIFT
Initiative - "Giving Indiana Funds for Tomorrow" - funded by a $60 million
grant from Indiana's Lilly Endowment Inc.
Through the GIFT Initiative, donors who contribute to their community
foundation's permanent endowment for any charitable purpose of their
choice may enable that foundation to qualify for matching funds from Lilly
Endowment. Such donors are thus helping their community foundation more
rapidly build a permanent source of charitable dollars to meet the changing
needs of the community.
Community Foundation Characteristics
A community foundation typically is an organization that holds, invests, and
administers a collection of separate funds - usually endowments -
established by donors to meet the philanthropic goals of the donors and the
needs of the community being served.
Donors contribute money, stock, or other assets, usually to the community
foundation's permanent endowment. In doing so, the donors can identify a
wide variety of charitable causes and community needs.
Funds are pooled and investments are overseen by a governing board.
The governing board and its distributions or grants committee consist of a
representative group of community leaders.
Community foundations usually do not engage in fund-raising campaigns
directed towards attracting large numbers of small contributions.
Operating needs are typically satisfied through corporate and business
support, board member support, and fund management fees.
Planned gifts and bequests form the primary tool for endowment
development. Often attorneys, financial planners and bankers utilize the
community foundation vehicle to fulfill their client's wishes.
What the Community Foundation Can Do for You
The foundation provides permanence. You are assured that your gifts will
benefit the agencies and residents of your community in perpetuity. Your
gift will be safe. As a permanent endowment, the principal will never be
spent - but the earnings will be there to permanently support your
community.
The community foundation provides flexibility. You may select from the
types of funds described in this booklet. You may make your gifts with
cash: shares of stock, including those which have appreciated in value;
closely-held stock; life insurance; or even real estate.
Gifts to the community foundation can reduce your tax burden. Income
taxes are reduced through the deductions allowed by the IRS for
contributions to a public charity, which is how a community foundation is
classified. If appreciated assets are donated, in most instances you
eliminate the capital gains tax you would incur if you sold the assets. An in
the instance of contributing funds through your estate, estate taxes are
avoided.
Your community foundation provides professional administration. For
unrestricted and field-of-interest funds, the community foundation
continually assesses the changing needs of your community and awards
grants to agencies best addressing those needs, sparing you, the donor, of
having to make such judgements. In the case of designated funds, the
community foundation easily handles the issuance of annual grants to the
organizations you specify when you establish the fund.
Your community foundation provides a perfect alternative to a private
foundation. Donors who want the individual involvement of a private
foundation without the accompanying administrative complexities,
restrictions, and expenses can accomplish the same result by establishing a
donor-advised fund within the community foundation. Using a donor-advised
fund within a community foundation also offers a donor more generous tax
deductions than those offered to donors to a private foundation.
Establishment of a fund is easy, convenient, and inexpensive.
Types of Endowed Funds to Which You Can Contribute
Undesignated or Unrestricted Fund
You want your charitable gift to accomplish the most to improve the quality
of life in your community. You believe that as conditions change, a group of
citizens from your community will be best able to assess the current
charitable needs and to be creative and flexible in their grant-making.
Field-of-Interest Fund
You are interested in a particular field (e.g., education, youth, environment)
but you do not want to restrict the grants to be made over the years to
any specific organization serving that field.
Designated Fund
You have supported a favorite charity or two and would like to continue
that support in perpetuity. You thus designate the specific charity that is
to receive grants.
Donor-Advised Fund
You like the advantage of a charitable fund for which you make suggestions
on which charities should be supported each year, but you want to avoid the
federal restrictions placed on private foundations.
Many community foundations further expand on these types of funds with
such variations as:
Scholarship Fund
You have your gift used to set up scholarships in your name so that
deserving your people can get the education they might not otherwise
receive.
Operating Endowment
You are interested in supporting the community foundation so it will be
available for all citizens. Your gift provides the foundation with annual
operating funds.
Agency Endowment
A charitable organization takes advantage of the community foundation
characteristics of permanence, of pooling funds for better investment
return, and of reduced administrative costs. The organization thus places
its endowment within the community foundation and each year receives
income from the fund.
U.S. Tax Code Encourages Charitable Giving
When you give outright gifts of cash or other assets, you receive an
immediate tax deduction, a component of the tax structure with which
almost everyone is familiar. There are two simple, yet creative, ways to
donate and still retain the income of your assets: Charitable Remainder
Trusts and Charitable Gift Annuities.
You also get tax deductions with these two methods of giving. Simply, they
allow you to contribute cash or property, and they pay you an income for life.
A further advantage of Charitable Remainder Trusts or Gift Annuities is
that you could use the income to purchase life insurance, which can become
an inheritance for you heirs.
*Based on an 8.0% federal midterm interest rate and quarterly payments.
|
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |