By Nicolette Silva, JD
Director of Donor Relations
A community foundation grows charitable giving to make its area—its neighborhoods, its cities, its region—a more vibrant, more prosperous, and more resilient place for all. Community foundations accomplish this by helping donors give in a way that is easy, meaningful, and often permanent. They connect the donors’ resources with community needs, making grants to nonprofits that are doing the work to serve the community.
Since the creation of the first community foundation in 1914 in Cleveland, Ohio, community foundations have evolved into dynamic, multi-faceted grantmaking organizations. Currently, there are more than 700 community foundations existing in the United States, and each one serves a defined geographic area. Community foundations are accredited by a national standards board and governed by philanthropic-minded volunteers whose sole interests are adhering to donors’ intentions and serving the community.
Enjoy Customized Philanthropy
Community foundations are made up of component “funds” which, although separately governed pursuant to a donor’s wishes, are pooled together and invested in order to create a maximum return. Each fund is administered according to its “type.” Although it varies and this is only a small snapshot of types of funds available, most community foundations offer some version of the following fund types:
- Donor Advised and Family Foundation Funds. Donors can create a donor advised fund and recommend the community foundation make distributions to nonprofits in such amount and at such times that a donor sees fit—sort of like a charitable “checking account.” Family Foundation funds are larger donor advised funds that allow donors to promote their foundation in the same way as a private foundation, but enjoy the maximum tax benefits of a fund at a community foundation.
- Endowment Funds. Endowment funds are permanent funds insofar that the goal is to avoid invading principal, thus creating a reliable stream of income for charity. These funds can be designated for a specific nonprofit or for a specified field of interest or geographical area, such as “to support animals in Hillsborough County.”
- Scholarships. Donors can create scholarship funds that support specific schools or establish scholarship criteria for students to participate in a competitive scholarship process. Some donors create scholarships in memory of their loved ones and encourage family and friends to donate to the fund.
The breadth of fund types offers donors the flexibility to practice their philanthropy in a way that is customized and convenient. Moreover, community foundation staff are accessible and endeavor to make charitable giving a joyful experience.
Obtain Maximum Tax Benefits
Community foundations are nonprofits, classified as “public charities.” The “public charity” status is what separates community foundations from private foundations: donors obtain maximum tax benefits for donations to funds administered by community foundations. Additionally, community foundations can accept donations of complex assets, such as closely-held business interests, land, and even crops. Thus, donors can make complex gifts to component funds at a community foundation while supporting their favorite nonprofits.
Leave a Lasting Legacy
The core principle of community foundations is stewardship: the careful and responsible management of donors’ funds and donors’ charitable intent. Community foundations ensure perpetuity of funds through “variance power,” which enables community foundations to alter the purpose of a fund in the event a charitable purpose becomes obsolete or impossible to achieve. Variance power is exercised carefully and sparingly, and only in such a way that aligns with a donors’ original intent.
For example, let’s imagine a donor created an endowment for a named nonprofit that provides free veterinary services for animals. Years later, after the donor is no longer living, that nonprofit closes its doors. The community foundation would then change the designation of that endowment to benefit another nonprofit offering similar services.
Consult with Community Experts
Because community foundations are receiving grant applications for competitive grantmaking from their unrestricted funds, they are uniquely positioned to educate donors on the pressing needs in the community. Additionally, community foundation staff stay connected with the local non-profits and have a good sense of where grants will have the best impact.
A community foundation’s flexibility, careful stewardship of donors’ legacies, and community knowledge are all a part of what makes them an appealing philanthropic vehicle for donors. To learn how we can help you or your clients, please feel free to contact me at any time. I can be reached by email and phone at firstname.lastname@example.org or 813-609-4855.
About the Community Foundation of Tampa Bay
Founded in 1990, the Community Foundation of Tampa Bay connects donors, nonprofits, community and business leaders, professional advisors, volunteers, and residents to make the maximum positive impact in the Tampa Bay region. For 30 years, the Community Foundation of Tampa Bay has been dedicated to making giving easy and meaningful for donors as a way to strengthen nonprofit organizations and build a better, more vibrant community.