What is a community foundation?
A community foundation is a tax-exempt, nonprofit, autonomous, publicly supported, philanthropic institution composed primarily of permanent funds established by many separate donors for the long-term diverse, charitable benefit of the residents of a defined geographic area.
Community foundations exist for three primary reasons:
1) To provide giving vehicles and options for people, businesses and nonprofit organizations in a defined geographic area, usually no larger than a state;
2) To make grants;
3) To serve as community leaders, conveners and advocates about issues and needs.
Community foundations provide an array of services to donors who wish to establish endowed funds without incurring the administrative and legal costs of starting independent, private foundations.
What is the North Carolina Community Foundation?
The NCCF is the only community foundation serving the State of North Carolina. We are a collection of 1,200 permanent endowed charitable funds created by individuals, families, companies, organizations and governmental entities to benefit different charitable organizations and causes throughout North Carolina and beyond. We operate through a unique network of affiliate foundations serving counties across the state.
What is an affiliate? What is the relationship between the NCCF and my local affiliate?
The NCCF works statewide through a unique network of local affiliate community foundations serving North Carolina. Affiliates are generally unincorporated charitable entities that select their own advisory boards and conduct grantmaking and asset development specific to their communities.
Each affiliate works in partnership with the NCCF to access investment management, fund accounting, legal expertise, grant-making and other resources that support local charitable purposes. This approach has proven to be highly effective, allowing the NCCF to provide the expertise and services associated with a full-service community foundation, while at the same time leveraging the local leadership and expertise necessary to meet community needs and ensure that resources stay local.
How is the Foundation governed?
The Foundation is governed by a statewide board of directors made up of business and community leaders. Each affiliate partner also operates with a local board of directors.
What types of charitable funds do you administer?
There are seven basic fund types:
- Donor advised funds are those for which individuals (or their designees) reserve the right to recommend grants; federal tax law requires the Foundation to make the ultimate decision, but all efforts are made to follow donors’ wishes.
- Field-of-interest funds are created by the donor to support unspecified programs or organizations in a general field of interest, such as health care, children, the environment, etc.
- Designated funds are earmarked to benefit one or more nonprofit organizations or programs.
- Agency funds are established by a nonprofit agency for its benefit.
- Scholarship funds provide grants for educational purposes.
- Community (unrestricted) funds are used to meet community needs, as determined by the local affiliate boards and the Foundation’s statewide board. These funds allow the local affiliate board the ability to respond quickly to community needs.
- Gift funds are established by donors who intend to distribute the entire amount, either immediately or over time to a nonprofit organization, program or cause. Non-endowed gift funds are not set up for long-term growth.
There are also opportunities for donors to give directly to the NCCF’s Operating Endowment Fund to ensure overall support of the organization, affiliate network, core programs and philanthropic services to the state.
How much does it cost to start a fund at the Foundation and what ongoing fees are there?
There is no cost for starting a fund at the Foundation. Our annual fee structure depends on the type of fund. There is a $250 minimum annual charge and the fee then ranges from 1 to 2.0% of the fund’s average monthly balance.
Why do donors establish funds at the Foundation instead of giving directly to their favorite charities?
While many donors do make direct gifts to their favorite organizations, some wish to provide ongoing support in perpetuity. Many feel more comfortable making those gifts through the Foundation because of our permanence, professional investment management and oversight role to ensure their wishes are met by the recipient organizations.
What is the minimum amount I must give to establish a fund at the Foundation?
As of July 1, the minimum gift required to establish most types of funds is $25,000. A scholarship fund requires an opening gift of $40,000. The initial gift may be from one donor or from many.
What are some of the NCCF’s benefits and services?
- Track record
- Knowledge of the community
- Personal service/proximity
- Cost efficiency (low fees)
- Services (administrative, legal, investment, accounting, marketing, planned giving)
- Tax advantages
- Investment supervision by Finance Committee
How does the Foundation compare to the United Way?
The United Way raises money each year and distributes all that it collects to qualifying organizations (the charitable checkbook). The Foundation administers permanently endowed funds that, for the most part, distribute a portion of income in grants each year (the charitable savings account). Interestingly, several United Way organizations have chosen to establish endowment funds with NCCF to ensure that administrative costs are covered in perpetuity.
Can I get my money back if I change my mind?
Gifts to the Foundation are irrevocable. The decision to partner with the Foundation is a serious one, and we always encourage prospective clients to discuss their intent with their financial or legal advisors.
Can I make a gift to the Foundation and retain income for myself or for a family member?
Yes, we offer the opportunity to make "life income gifts" through the charitable remainder trust. We are happy to work with you and your financial advisors to determine if this type of gift is right for you.
Do I need to come to your office to discuss establishing a fund?
No. We can talk with you on the phone, communicate by email, or visit you in your home or office to discuss a possible gift or gift plan.
Can I recommend gifts to charities outside of North Carolina?
We allow grant distributions anywhere in the USA, as long as recipients are nonprofit organizations qualified as 501(c)(3)s.
How long does it take to get a fund established?
Once decisions are made about the type of fund you want and the asset you wish to donate, necessary paperwork can be prepared in a matter of minutes.
Why establish a fund through the North Carolina Community Foundation? Why not establish a charitable trust through another institution?
Advantages of working through NCCF:
The NCCF is a superior vehicle that allows donors to make charitable gifts with ease, simplicity, cost-effectiveness and maximum tax advantages. Our goal is to assist donors in realizing their charitable dreams while providing them with expert philanthropic services.
As a statewide and community-based organization, NCCF is positioned to go beyond routine financial services to deliver personal, localized, community knowledge and experience – an essential component of effective philanthropy unavailable through other vehicles.
Read more about the benefits of community foundations versus other giving options.