FREQUENTLY ASKED QUESTIONS
What is a Community Foundation?
A community foundation is a tax-exempt, public charity that allows individuals, companies and organizations to establish funds within one large Foundation, offering an inexpensive, value-added way to be a philanthropist. By law, Community Foundations are allowed to “pool” all investments for greater opportunities. Each separate fund’s distributions are available to respond to emerging problems and specific opportunities in the community.
The Community Foundation of the Northern Shenandoah Valley is one of approximately 800 community foundations across the country working to improve the quality of life in a specific region.
What does a Community Foundation do?
Community foundations are grantmaking public charities that are dedicated to improving the lives of people in a defined local geographic area. They bring together the financial resources of individuals, families, and businesses to support effective nonprofits in their communities.
The Community Foundation of the Northern Shenandoah Valley was established in 2001 to encourage philanthropy and create opportunities to improve the quality of life for present and future generations in the Northern Shenandoah Valley. Our work is to build resources that will support our community needs, from the arts to civic engagement, to education, to conservation and preservation, to health and human services.
What “community” does CFNSV serve?
The Community Foundation of the Northern Shenandoah Valley serves the City of Winchester and the counties of Frederick, Clarke, and Warren counties. In addition to funding local nonprofit organizations, donors may also support regional, national, and international charities through CFNSV.
Where do you get the money you distribute?
Our donors establish funds at the Community Foundation of the Northern Shenandoah Valley which generate the grant funding that is distributed back to the community. Depending on the type of fund (endowed or non-endowed) these funds may permanently generate earnings or the full balance of the fund may be available for distribution.
Donors to community foundations range from people of relatively modest means to those with large financial resources. By establishing a fund or donating to an existing fund within a community foundation, donors can contribute to their charitable interests.
Why be a donor?
The Community Foundation of the Northern Shenandoah Valley donors are people and organizations with a strong sense of community and personal commitment to the communities in which they live. Some donors want to support worthwhile causes in their communities, and the Community Foundation can help them to find the best way to donate their funds. Other donors appreciate the flexibility and ease of using the Community Foundation. Because the legal apparatus is already in place, funds can be established in a very short time while obtaining the greatest possible tax advantages.
What do you fund?
The Community Foundation of the Northern Shenandoah Valley provides grants for the charitable work of nonprofit organizations and for scholarships supporting traditional and non-traditional education. Our unrestricted, competitive grants support nonprofits working in our community. Grants from other funds support the charitable interests of our donors, most of which are community-based, but which may extend beyond the Northern Shenandoah Valley.
The scope of our funding is shaped by our donors and the purpose of each fund established at CFNSV. Our donors’ vision is our grantmaking stewardship for generations.
How is this different from the United Way?
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 checkbook, raising and distributing money annually, while a community foundation is more like a savings account, distributing interest from long-term funds in perpetuity. Additionally, the United Way focuses primarily on health and human services while the Community Foundation can support any number of nonprofit organizations and charitable causes including theatre, the arts, youth sports programs, education, conservation, and historic preservation.
What are the financial benefits and tax advantages of giving through the Community Foundation?
Because community foundations manage a large number of unrestricted and discretionary funds, administrative costs and service fees for anyone fund are minimized—meaning 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.
The Community Foundation also 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 to respond to emerging needs in the community.
I thought foundations were for rich people. I am not rich. Why should I think about giving a gift through the Community Foundation?
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. Donors who want to make a difference without establishing their own fund, can contribute to an existing fund that supports their charitable interests. You can use the fund search tool on our website or contact us to explore your options.
We also offer an option for donors to contribute over time to build a fund. You can begin setting up an endowment fund within the Community Foundation of the Northern Shenandoah Valley with as little as $1,000, with up to five years to build to a permanent endowed status of $5,000.
How do I set up a fund?
The most important step to setting up a fund is to clearly outline your charitable goals. Whether you are trying to plan your estate, support your annual charitable giving, fund a particular charitable cause, ensure the long-term success of a specific organization or establish a scholarship, CFNSV staff can walk you through the simple process of setting up a fund to meet your goals. Either give us a call or set up an appointment to meet with us to discuss whether a CFNSV fund can help support your charitable goals.
How can I give to the Community Foundation?
Some people prefer the simplicity of cash. There are, however, many other ways to give, including securities and real estate. Gifts to the Community Foundation may be made at a surprisingly low cost by giving real estate or securities that have appreciated in value. Were the donor to sell the property, a substantial tax would be levied on appreciation, whereas a gift to the Community Foundation not only incurs no tax but entitles the donor to a tax deduction for the full value.
Explain the difference between a family foundation, private foundation, and Community Foundation. Does this have importance for my taxes?
Often, people establish a family foundation or a private foundation because they don’t know that in many cases, working through the Community Foundation offers an 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. Additionally, the staff of the foundation becomes available to help with grants, screen grant requests, 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 and ordinary income property 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.
How are the Community Foundation funds invested and managed?
An Investment Committee serves the Community Foundation. The Mason Companies manage the assets of the CFNSV and endowment funds are invested in a diversified portfolio of equity and fixed-income securities. The Mason Companies specialize in providing investment services to Community Foundations and have consistently out-performed market averages.
What services do I receive as a donor and is there a fee for this?
The Community Foundation provides all IRS reporting, accounting, and accountability. The Community Foundation ensures that all grant and scholarship recipients meet the tests to ensure tax-deductible status. 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 Community Foundation is a not-for-profit organization and does need to charge an administrative fee, reviewed annually by its Directors. Please see our fee page for information about our current fees.
How will funds be invested? Can a donor influence or tell you how and with whom to invest his/her funds?
Investment strategies are determined by the Investment Committee. Donors may take advantage of the option to recommend a manager, but the final decision, however, rests with the Community Foundation Board of Directors.
What’s the first step?
Please contact us to explain your interest and ask your questions.
Why entrust your assets to us?
An endowment fund in your name, family name or that of a loved one is a lasting way to support your favorite charitable causes throughout your life and leave a legacy long after you are gone. It is a powerful way to pass on the lessons of philanthropy to your children… and theirs.
We work hard to make giving easy and meaningful for donors and the causes they care about by:
- Accepting a wide variety of gift types (cash, stock, life insurance);
- Offering many fund types. You can name a fund, advise a fund, or designate an area of interest or specific charity to benefit;
- Handling fund administration – you get the joy of giving while we do the research, paperwork, grant follow-up and reporting;
- Sharing our community needs expertise; and
- Endowing funds so that your charitable wishes create a permanent legacy.
CFNSV provides local expertise and personal service.
The Foundation has deep roots in the counties we cover, is governed by a strong board consisting of local leaders and employs quality staff who provide highly personalized service to ensure that your giving is meaningful, efficient and effective.
Why not give directly to the charity I care about?
We highly encourage you to continue supporting the charities you care about. Giving through the Community Foundation can benefit the causes you care about because of our commitment to the endowment (meaning your gift makes a permanent impact); our ability to accept complex gifts; and our professional expertise in managing and investing your gift. In some instances, a charity may be doing outstanding work in their mission area, but does not have the financial expertise to manage and invest your gift for the best impact.