5 Reasons to Fulfill Your Philanthropic Vision with a Community Foundation
by A. Scott White, CFP®, ChFC, CLU
If you want to support your local community with charitable donations, you may want to consider partnering with your local community foundation. Organized as a nonprofit philanthropic entity for the broad-based public benefit of the residents within a given area, each community foundation is governed by a local board of directors.
The primary purpose of a community foundation is to serve the philanthropic goals of donors who wish to make a difference in their community today—and in the future. Assets are held in separate funds established by donors. While traditionally community foundations have built permanent endowment funds, today more of them also offer opportunities to make immediate impact giving.
When you donate to a local community foundation, you’re strengthening the community where you live and work, providing support to people right in your own neighborhood, supporting causes you care about the most. Here are 5 reasons why you may want to consider partnering with your local community foundation.
- They can help you fulfill your vision.
Community foundations can receive gifts of cash, securities, cash or other property. They also facilitate planned gifts and estates, matching the interests and financial circumstances of donors while offering tax benefits within state and federal laws.
- They handle administrative burdens.
Community foundations invest, keep records, and handle reporting to carry out their charitable activities. Donors don’t need to manage paperwork or distribute funds—that’s part of the community foundation’s role. The foundation will make donations based on donor recommendations while the donor’s fund earns interest.
- They support your community in perpetuity—with your input.
Community foundations provide perpetual fund maintenance and oversight, ensuring that fund income will be managed and distributed in accordance with the intentions of the donors.
- They offer maximum tax deductibility and tax-free growth.
Community foundations are classified as public charities under Section 501(c)(3) and Section 170(b)(1)(A)(vi) of the Internal Revenue Code, giving donors tax deductions for income and estate tax purposes to the maximum extent permissible under current tax law. They pay no income tax, so the growth in donors’ funds is completely tax-free.
- They multiply your donation.
When you give to a community foundation, your gift can be pooled with other gifts and grant money so it can have a bigger impact.
If you wish to explore how to leave a legacy in your community, you may want to talk with your local community foundation.