Frequently
Asked Questions
for Professional Advisors
- What is a Community Foundation?
- What does a Community Foundation do?
- What "community" does it cover? Who do you serve?
- Where do you get the money you donate?
- How can you help my clients?
- When is The Community Foundation the right choice for my clients?
- What do you fund?
- What are the financial benefits and tax advantages of making gifts through The Community Foundation?
- What about my clients who are thinking about giving smaller amounts – why should they give through The Community Foundation?
- How long does it take to set up a fund?
- What about non-cash gifts?
- Explain how you are different from a private family foundation.
- What services do donors receive and is there a fee for this?
- What if my clients don’t like the idea of giving through an endowment?
- Can people give anonymously?
- How are the Foundation funds invested and managed?
- Is there some oversight to the investment of funds?
- Who governs The Community Foundation?
- How is The Community Foundation different from the United Way?
- As a Donor-Advised Fundholder, how do I check my account online, recommend grants, and learn about special events just for Fundholders?
- How do I contact you?
- What
is a Community Foundation?
( top of page )The Community Foundation Serving Boulder County is one of approximately 650 community foundations across the country and around the world. Community foundations are set up by people, corporations and families who want to give back to a specific community and use a high-service and flexible organization to help them maximize their philanthropic impact.
It is a tax-exempt public charity that allows people to establish both permanent endowment funds or more active gift funds within the confines of one large foundation, and offers an inexpensive, value-added way to establish a named fund. The income from these separate funds - and the principal if the donor desires - is available to respond to emerging problems and opportunities in the community.
The Community Foundation Serving Boulder County also offers donors a way to invest in the current and future needs in Boulder County through the Community Trust, the Foundation's most responsive fund. - What
does a Community Foundation do?
( top of page )The Community Foundation Serving Boulder County was established in 1991 to improve the quality of life in Boulder County, now and forever, and to build a culture of giving. Our primary work is to make grants to community groups working in the arts, civic engagement, education, the environment, and health and human services. We've granted over $40 million to qualified nonprofit organizations since we made our first grants in 1992. The foundation also provides non-financial support to community groups, by offering technical assistance. In addition, we serve our donors, helping to work with them and their families to ensure that their charitable dollars have maximum impact. Finally, The Community Foundation provides philanthropic leadership in the community.
- What
"community" does it cover? Who do you serve?
( top of page )The Community Foundation generally serves Boulder County. Some donors, however, have interests elsewhere which they fund through The Community Foundation.
- Where
do you get the money you donate?
( top of page )Donors to community foundations range from people of relatively modest means to those with substantial financial resources. By establishing a fund or donating to an existing fund within a community foundation, donors can contribute their gifts of cash, securities and real estate toward a permanently named endowment or an advised gift fund, in which the principal of the fund is available for grants. Many donors are interested in planned giving and have The Community Foundation in their charitable remainder trusts, charitable lead trusts or estate plans.
- How
can you help my clients? ( top
of page )
If you have clients who would like to go about their philanthropy with the same kind of strategy and impact they apply to their business worlds, The Community Foundation can help. We provide a high level of service and expertise on community needs and how to make meaningful and high impact grants.
We can also help clients going through a variety of life events with tax consequences, including the need for a year-end tax deduction, a business or residential sale, or the transfer of other assets. We can help clients who are worried about the impact of wealth on their kids. We can help clients who have no interest in the administrative hassle of setting up and running their own foundations, but would like to be making an impact with their charitable dollars. - When
is The Community Foundation the right choice for my
clients? ( top of page )
The Community Foundation donors are people with a strong sense of community and personal commitment to making meaningful contributions to the communities in which they live. The Community Foundation, which offers considerable expertise and familiarity with the community, can help them find the best way to commit their funds. Some donors enlist our help to involve their families in philanthropy. Other donors appreciate the speed, flexibility, and ease of using The Community Foundation. Because the legal apparatus is already in place, existing forms are available so that a fund can be established, including obtaining all applicable tax advantages, in a very short time.
Although we work with people of different means, the people for whom we provide the most value are:•Medium to high-net worth •Able to establish a fund of $250,000 and above •Love and have affinity for Boulder County •Interested in active and informed grant making •Looking for service, expertise and a value-added philanthropic partner
- What
do you fund? ( top of page
)
Since our inception in 1991, The Community Foundation has granted over $40 million to nonprofit organizations working in the arts, civic engagement, education, the environment, and health and human services. Grant recipients from our Community Trust Fund have included Clinica Campesina, Boulder County Safehouse, The Family Learning Center, Emergency Family Assistance Association (EFAA), the Dairy Center for the Arts, Project Self Sufficiency, Boulder Shelter for the Homeless, Parenting Place, Volunteer Connection, the Humane Society, Rocky Mountain Peace and Justice Center, Adopt A School Program, and Thorne Ecological Institute. A complete grants list is available.
When a donor establishes a Donor-Advised fund, he or she may recommend where grants from those funds are directed. Grants can be directed to organizations in Boulder County or elsewhere in the U.S. Some donors also fund internationally. -
What are the financial benefits and tax advantages
of making gifts through The Community Foundation?
( top of page )
The Community Foundation's approach to planned giving offers a number of important financial benefits to donors. Because community foundations manage a large number of unrestricted and discretionary funds, administrative costs and service fees for any one fund are minimized - meaning less overhead cost to the donor's fund. Another important advantage is that the federal tax code provides significant incentives for contributions to a community foundation as a public charity.
The Community Foundation has a number of different types of funds to accommodate donors who prefer the long-term strategy of endowments, as well as those who want to give more actively each year. Donors can choose to establish one of these funds, which allow donors to recommend grants, or can choose to contribute to an existing fund that is flexible in response to emerging needs in the community. -
What about my clients who are thinking about giving
smaller amounts – why should they give through
The Community Foundation?
( top of page )Community foundations offer a variety of options for making donations. By combining your resources with those of others who share your interests, you can maximize the impact of modest contributions with minimal administrative costs. A gift to the Community Trust, the foundation’s most responsive fund, is an investment into a permanent resource that will address emerging needs and opportunities here, now and in the future.
- How
long does it take to set up a fund?
( top of page )The first step is to decide among a Donor-Advised Endowed Fund, a Donor-Advised Gift Fund, and a Donor-Advised Impact Fund. The endowment fund is invested using a long-term strategy. Working with foundation staff if they choose to, donors make recommendations for grant distributions, which are generally 5 percent per year of the fund’s assets (although a donor can establish a different payout rate). It is the right option for those who are striving for a permanent legacy and a permanent way to contribute to the community. A gift fund comes with all the same staff and administrative services as an endowment fund, but is set up so that grants may be recommended from principal and then rebuilt. This option appeals to donors who would like to make more active grants on an annual basis. The Donor-Advised Impact Fund offers a unique alternative to the first two funds. Like an Endowed Fund the Impact Fund is invested in The Community Foundation‚s investment pool allowing the principal to grow over time. Donors may request that up to 20% of the fund be granted each year–increasing grant amounts to organizations the donors wish to immediately help.
In any case, most funds can be set up in 24 hours.
The Foundation has sample forms, available on this site or by contacting the Foundation. We encourage prospective donors to review them with their own professional advisors. When a fund is established, the donor must specify the amount that will be endowed and the amount to be kept available for short-term distributions, such as from a gift fund. The donor may wish to establish the fund to help meet a variety of needs within the community or may specify a purpose or area of concern for which income from the fund is best used. Donors can also name the fund that they endow for themselves, spouses, a family member, a company, or a valued friend. Funds may also be anonymous.
Gifts also may be contributed to an existing event, or a general or specific purpose fund.
- What
about non-cash gifts?
( top of page )Some people prefer the simplicity of cash. There are, however, many other ways to give, including securities (including closely held and restricted stock, as well as publicly traded securities) and real estate. Gifts of long-term capital gain property can provide capital gains tax relief to your client.
Gifts to The Community Foundation may be made in the form of life income agreements such as a charitable remainder trust. A charitable lead trust can provide gift transfer tax advantages to your client while making possible a stream of gifts to the foundation over time.
- Explain
how you are different from a private family foundation.
( top of page )
Often, people establish a private family foundation because they don't know that in many cases, working through a community foundation offers a faster and easier alternative. In addition to the tax benefits listed below, setting up a fund through The Community Foundation has an extremely short turn-around time, as little as one day. Additionally, the staff of the foundation becomes available to help with grants (including facilitating work with families), screen applications and take care of auditing and financial reporting requirements. Many community foundation donors are also pleased by the fact that community foundations have none of the annual payout requirements of a family foundation, so donors may leave their funds dormant when they lack the time to focus on it in any given year.
Community foundations combine the tax advantages of a public charity with the lasting quality of a private foundation. Gifts of cash to a community foundation are deductible up to 50% of adjusted gross income versus 30% for a private foundation. Gifts of appreciated property can be credited for 30% versus 20% for a private foundation. There is no excise tax on community foundations as there is on private foundations, and community foundations do not have the payout requirements of private foundations.
- What
services do donors receive and is there a fee for
this? ( top of page )
The Community Foundation provides all IRS reporting, accounting and accountability. The Grant Committee and staff of The Community Foundation does extensive grant review and site visit work, and their recommendations and evaluations are always available to donors. The Foundation assures that all grant recipients meet the tests to assure tax-deductible status. The foundation follows up with grantees, providing donors with a progress report a year after a grant was made. When appropriate, The Community Foundation can help donors solicit proposals to fund certain categories of interest to the donor. Donors are kept apprised of special community needs on a regular basis. We can also help donors publicize their funds or, conversely, act as a community liaison to provide anonymity for donors.
The donor is charged an annual fee of 1.25 percent, plus Investment Advisor Charges of less than 40 basis points
(< 0.4%). A complete list of fees is available.
- What
if my clients don’t like the idea of giving
through an endowment? ( top
of page )
Many donors prefer the more active model of a Donor-Advised Gift Fund. In this model, donors transfer assets into the fund, and may then distribute the balance of the fund down to zero. New contributions of any size may be made to a fund at any time. This fund model is often appealing to donors who have an incentive to make a tax-deductible contribution at a specific time, but would like some additional time to decide how to distribute grants, or would like to tap into the foundation’s expertise or recommendations.
For a gift fund, the donor is charged a one-time fee of 2.00 percent on each contribution to the fund.
The Donor-Advised Impact Fund offers a unique alternative. Like an Endowed Fund the Impact Fund is invested in The Community Foundation‚s investment pool allowing the principal to grow over time. Donors may request that up to 20% of the fund be granted each year–increasing grant amounts to organizations the donors wish to immediately help. -
Can people give anonymously? ( top of page )
Yes.
- How
are the Foundation funds invested and managed? (
top of page )
After an extensive and competitive proposal process, the foundation chose to employ the services of a local firm, Sargent Bickham Lagudis, for investment advisor services. Short-term funds are invested locally for maximum returns and minimum fluctuation potential. Longer term funds are invested to emphasize growth and outpace inflation. A full copy of the foundation’s Investment Policy Statement is available. The Investment Committee recognizes the importance of investing in a socially conscious manner and can establish an account with mutual funds that meet socially responsible criteria.
Donors making a significant gift of $250,000 can recommend a money manager of their choosing. That manager will need to use The Community Foundation’s investment guidelines in managing the fund. -
Is there some oversight to the investment of funds?
( top of page )
An investment committee of respected individuals from the country's leading financial institutions, brokerage houses and investment firms serve pro bono to wisely guide the board of trustees in maximizing short- and long-term investments of the funds. The Community Foundation uses a diversified investment portfolio.
-
Who governs The Community Foundation?
( top of page )A governing board of trustees comprised of individuals who are representative of Boulder County.
-
How is The Community Foundation different from the
United Way? ( top of page
)
Both are important resources to the community and each complements the other. Some have described the differences by suggesting the United Way is more like the community's check book, raising and distributing money annually, while a community foundation is more like a savings account, making grants from long-term funds in perpetuity. An additional difference is The Community Foundation's scope of funding is broader than the United Way's focus on health and human services.
- As a Donor-Advised Fundholder, how do I check my account online, recommend grants, and learn about special events just for Fundholders?
( top of page )
Donor-Advised Fundholders of The Community Foundation may recommend grants and view your fund balances, gifts to your funds, grants made, and grants pending — all online here beginning in June 2008. If you're a Donor-Advised Fundholder and you don't know your username and password, please contact The Community Foundation Development Team at 303-442-0436.
- How
do I contact you? ( top of page
)
Please send us e-mail at or call The Community Foundation office at 303-442-0436
(toll free: 1-877-744-7239) if you have questions.
