What Is a Community Foundation?
A community foundation is a tax exempt, non-profit, publicly supported, philanthropic institution with the long term goal of building permanent, named funds for the broad-based charitable benefit of the residents in a given area.
The common mission of every community foundation is to enhance the quality of life in the local area. Community foundations carry out this very broad mission by building a permanent endowment fund and using the annual income to support a variety of local nonprofit organizations through grants and special projects.
Most community foundation assets are held in separate funds established by local individuals, families, businesses, or charitable institutions. Each fund may have a special purpose, but the foundation board of directors, representing the community, oversees them all. The IRS recognizes community foundations as public charities in part because they receive support from the general public and their boards broadly represent the areas served.
How does a community foundation work?
A community foundation is governed by a board of directors of community leaders and is administered by professional staff. Operating expenses are paid from management fees, through grants and partnerships with local foundations, and from gifts designated by donors to cover foundation operating costs.
How is a community foundation different from a private foundation?
Community foundations make philanthropy easy. They allow individuals and families to establish a customized charitable fund without being burdened by the regulatory requirements, tax liabilities and administrative and fiduciary hassles associated with setting up a private foundation. The regulations, taxes and administrative requirements required to establish and manage a private foundation do not apply to community foundations because they are public charities, and donors can remain anonymous. Individual and family foundations are increasingly moving their fund management to their community foundations to ensure longevity.
What are the benefits of contributing to a community foundation?
Our goal is to make the charitable giving process more simple and the work of investing more meaningful. Community foundations provide a wide range of cost effective and tax-smart options to make a measurable difference. Donors can self-direct their contributions to specific causes, invest in broader areas of interest, or provide unrestricted gifts to an endowment to address emerging needs. All of the foundation's assets are pooled for investment management purposes, minimizing cost and increasing return. This gives a small individual funder the same professional investment advice as a large foundation and creates an economy of scale that ensures more funds go to address issues and needs.
What kinds of assets can be used to set up a fund at a community foundation?
One of the distinct advantages of working with a community foundation is flexibility. As a general rule, a community foundation can accept any type of asset as long it is marketable and not encumbered by an unusual liability.
Are there other community foundations in Utah?
Yes, we partner closely with the Park City Foundation.