Frequently asked questions
What is a “community foundation”?
A community foundation is a public charity established to serve specific charitable interests or charitable interests in a designated geographical region. The community foundation invites donors to build endowment funds in support of its mission and/or hold funds for specific charitable organizations that serve community needs. Donors are able to designate which organizations will benefit from their gift or they may make an unrestricted gift in support of the overall mission of the Foundation. Since all funds are invested, the endowment funds continue to grow so that over time more and more charitable causes will be able to benefit from the donors’ gifts.
How does a community foundation differ from a private/family foundation?
There are a number of major differences between a community foundation and a private or family foundation. Generally, a private or family foundation only makes sense for people who are willing and able to take on the high administrative costs and management responsibilities associated with this option. The benefits of working with a community foundation are numerous. They include:
How many community foundations are there and what are their assets?
There are more than 700 community foundations in the United States ranging in size from a few million dollars to more than $2.2 billion in assets.
Why should I choose to work with LCF?
With so many ways for donors to give today, we are frequently asked: Why choose to work with the Lake Community Foundation (LCF)? There are many general reasons donors choose to work with a community foundation, such as to take advantage of the tax benefits of planned giving, or to simplify their giving, or to leave a legacy for generations to come. An important specific reason is that the LCF board of directors consists of community leaders who know the needs of the community.
Is my gift to the Lake Community Foundation tax deductible?
Yes. LCF is recognized by the U.S. government as a 501(c) (3) non-profit organization. As such, all gifts to LCF are tax deductible to the fullest extent of the law. You will receive a written receipt to document your gift for tax purposes.
Are there other benefits of establishing a fund with LCF?
Yes. Here are several more reasons and benefits of working with the Lake Community Foundation:
Can I honor my family name through a gift to LCF?
Yes. Endowments, donor advised funds and special scholarship funds are frequently named after individuals or families. Your LCF Planned Giving Officer can advise you regarding the options that are most suitable for you.
What are the various fund types or donor relationships possible when working with LCF?
Donors to the Lake Community Foundation are able to choose among a number of fund options to benefit their favorite charities. They include: Donor Advised Funds, Unrestricted Gifts, Designated Beneficiary Funds and Field of Interest Funds. In addition, the Foundation offers life income arrangements via Charitable Gift Annuities, Deferred Charitable Gift Annuities and Charitable Remainder Trusts.
Can corporations establish a fund relationship with a community foundation like LCF?
How do I set up a fund with the Lake Community Foundation?
Getting started is as easy as making a phone call. We will work with you. We will take the time to listen to your goals and answer your questions. We will explore the best options for you based on your age, financial situation and charitable objectives. New donor advised funds can be set up with a contribution as little as $5,000 ($25,000 minimum for new donor advised endowed funds or $50,000 for other named designated endowment funds). And there are never any out of pocket costs/fees for establishing a new fund. You may make a contribution of any size to an existing fund.
I’d like to give but I still need income. Can LCF help?
Yes. Life income gift arrangements, such as charitable gift annuities and deferred gift annuities may be an excellent choice for you. These options allow you to make an irrevocable gift (cash, appreciated securities, real estate, etc.) that pays you a guaranteed income for life at a generous fixed rate of return. There are also immediate and future tax benefits associated with these gifts.
What does it cost to set up a Donor Advised Fund?
There are no out-of-pocket expenses. The Foundation is responsible for investing the assets you contribute. An annual administration fee of 1% is charged against the earnings of the funds with less than $1 million in assets (Funds greater than $1 million have a lower, tiered fee structure). The fund’s annual investment fees average .45% - .50%. These expenses impact the daily net asset value of the investment pools. They are not charged separately to accounts.
What is the definition of an endowed fund? Is that the same as a trust?
Protecting the original principal by making distributions only from a portion of the earnings and protecting the principal from erosion caused by inflation. By doing so, an endowment is a gift that lasts forever. Individuals who establish endowments are making an irrevocable gift and may designate the beneficiaries (e.g. their church, school, charitable cause, etc.). By doing so, they can be assured that their original intent will be fulfilled for future generations. A trust is created as a legally distinct entity whereby another institution or person serves as a representative (trustee) acting on behalf of an individual. There is a transfer of ownership which provides the legal distinctiveness. Trusts may be revocable or irrevocable. An endowment may become part of a trust.
When I make a gift to LCF, can I direct how the funds are to be invested?
Yes, at the time the fund is established you may choose among several options. Funds may be invested in three investment pools: long-term growth, balanced growth and conservative growth. Depending on the size of your fund and your charitable intent, we will explain your options and guide you to the best alternative.
Why should I make my contributions to LCF with a Donor Advised Fund rather than make donations directly to the individual charities?
• It’s smart: There are wonderful tax advantages. By making contributions to your own Fund, you receive an immediate charitable tax deduction. And, you can reduce your tax liability even more by donating appreciated securities or property. For these gifts you take a full fair market value tax deduction and pay no capital gains tax for the gift. Many charities have no way to handle these types of gifts but with your own Fund, it’s easy: You make a single securities transaction with LCF into your Fund, rather than having to make smaller, multiple individual transactions with each of your favorite charities