A community foundation is a tax-exempt, independent, publicly supported, philanthropic organization established and operated as a permanent collection of endowed funds for the long-term benefit of a defined geographic area.
Typically, the community foundation has an independent governing body representing the broad interests of the community with members of the board serving limited terms. The board is responsible for asset development, management oversight, grantmaking, and seeing that a reasonable rate of return is achieved on all funds entrusted to the foundation.
A community foundation actively seeks new, typically large contributions of permanent endowment from a wide range of donors who are generally residents of the area and provides assistance to those donors in fulfilling their philanthropic interests. In the early years, a start-up community foundation may also conduct a modest annual campaign to support the cost of its initial operations.
The unrestricted funds or Community Funds of the foundation are awarded in a competitive process to non-profit agencies in the community. Typically, a community foundation will establish guidelines and processes for distribution and work with applicant agencies on appropriate projects. Community foundations accept some funds with restrictions placed by the donors that designate the agency or nature of the grants to be made. The Hamilton Community Foundation grants approximately $4 million annually to benefit the community.
A community foundation also provides leadership on community issues by serving as a facilitator, convener or mediator around significant community discussions. If it has the staff capacity, it may also provide technical advice to area nonprofits. The Hamilton Community Foundation, through its Endowment Partnership Program, assists non-profit partners by helping them develop and endowment program.
The foundation establishes the philosophy and policies for investments and authorizes an Investment Committee to direct the investing of the foundation’s assets accordingly. The foundation reviews the philosophy and policies annually. The Investment Committee meets regularly to review the investment portfolio.
A common governing instrument, called a fund agreement, covers all gifts and funds in the foundation. This agreement includes a “variance power to modify the use of restricted funds if such restrictions become unnecessary, incapable of fulfillment or inconsistent with the charitable needs of the community or area served. Those are the only conditions under which a foundation modifies the terms of a gift.
The community foundation is a public charity and as such, is under the supervision of the Attorney General of the State. If something happens to the community foundation, it would be the decision of the Attorney General regarding its future. The Hamilton Community Foundation has been in existence since 1951, and plans to continue to serve the needs of our community in perpetuity.
A community foundation files an annual return with the IRS, which is a publicly available document. In addition, most states require a state information return, which is also publicly available. The foundation is primarily accountable to the people of the area it serves and should publish an annual report that is available to all.
Foundation staff are available to talk with you to discuss your charitable interests. The fund agreements that establish donor-named funds in the foundation are made available to each donor during preliminary conversations with foundation staff. It is always recommended that the donors’ individual professional advisors review charitable gift plans.
It is estimated that there are more than 700 community foundations throughout the country. They serve small communities, counties, whole regions of the state, whole states and in some cases, multiple state areas. There are six community foundations in Butler County.
In 1914, Frederick Goff, a Cleveland, Ohio attorney and president of the Cleveland Trust Company, started the first community foundation as a component of his bank. He had two goals: to create a philanthropic vehicle to facilitate donor’s charitable intentions in perpetuity even if their original purpose became obsolete (variance power); and second, to establish a system whereby people of modest means could also engage in large scale philanthropy if they pooled their contributions.
A family may choose to establish a named fund that bears their family name and continues their community giving in perpetuity.
- A community group may decide to establish a fund in honor of, or memory of, a friend or community leader.
- A business may choose a community foundation to help with its grantmaking, thus saving time and personnel for the business, yet assuring support for their selected charitable interests.
- Some donors choose to make their community philanthropy anonymous and the foundation is a perfect partner to help them.
- Nonprofit agencies often establish their endowments within a community foundation to guarantee their endowment donors that the principal of the gift is never disturbed and the earnings will forever come to the agency.
It is a simple process involving a meeting with a representative of the foundation and the donor to review the fund agreement form and determine the donor’s desires and the most suitable way to accomplish them. Once the donor and other appropriate counselors of the donor approve the form, the initial contribution is made and the fund is established.
For the Hamilton Community Foundation, the minimum for a permanent fund is $5,000. Acorn funds allow donors to make smaller gifts in order to grow the fund to permanence over time.
There is no minimum contribution that may be made to the foundation. For funds that are less than the required amount to establish a named fund, any amount may be added to existing funds.
No. The Foundation is able to accept gifts of appreciated securities (which are particularly advantageous to the donor), real property, or in some cases, personal property. The community foundation offers the maximum charitable deduction available for estate and gift planning opportunities. The foundation is generally able to provide information on giving techniques and assist donors to evaluate the most effective ways to accomplish their charitable goals.