Have another question? your questions about the Community Foundation of Southern Maryland. We'll answer them and add them to our FAQs.
Frequently Asked Questions
What is a Community Foundation?
- Community Foundations are charitable trusts that support local community causes. Our role is to manage donor funds and build endowments as well as make grants to charities and community groups, linking local donors with local needs.
- Created by and for the people of Charles County they help donors express their long-term interest in an area and its needs. The first Community Foundation was created in 1914 by a banker in Cleveland. Since then Community Foundations have been rapidly growing all over the world.
What makes Community Foundations different?
- Community Foundations identify local needs and mobilize local resources
- Community Foundations can meet all areas of community needs Ė arts and culture, education, environment, health, community development, youth and elderly.
- Community Foundations support cutting edge programs, can help create new organizations and meet new and emerging needs.
- Community Foundations help build healthy communities
- Develop permanent charitable funds
- Connect donors to programs they care about
- Provide community leadership
What is the difference between the Community Foundation and 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 check book, raising and distributing money annually, while a community foundation is more like a savings account, distributing interest from long-term funds in perpetuity.
Who decides how a community foundation's funds are distributed?
- The professional staff and the Grants Committee review all grant applications. The Grants Committee is a group of highly respected community leaders who are knowledgeable about the charitable needs of the community. Individuals who have Donor Advised Funds can participate in the grant making process by suggesting grants from their named fund.
Why should folks establish a fund with the foundation instead of giving directly to a favorite charity?
- Donors, who want to ensure that their gifts will do the most good in the community and support organizations over the long term, find that community foundations offer them the expertise, flexibility and financial resources to give more to the community while gaining the maximum tax advantages for each contribution. Some donors also prefer to be shielded from fundraisers by giving through the auspices of a community foundation.
Can folks give to organizations outside of the community where the community foundation is located?
- Yes. Community foundations can channel donor distributions anywhere in the country, and even in some cases outside the U.S., as long as recipients are nonprofit organizations qualified as 501(c)(3).
Who handles the investments of community foundations?
- The Community Foundation of Southern Maryland has employed a local investment firm to handle their investments. A volunteer Investment Committee made up of business leaders will monitor the investment returns carefully and work with the investment advisors to ensure the continued growth of each permanent fund in the community foundation. The community foundationís board of directors will provide final fiscal oversight.
Are there tax advantages of a community foundation over a private or family foundation?
- Community foundations are public charities under tax laws. This offers some advantages to donors over private foundations. For example, gifts of cash and ordinary property to a community foundation are deductible up to 50% of adjusted gross income (AGI). Gifts to private or family foundations are deductible only to 30% of AGI. Similarly, gifts of appreciated property to community foundations can be credited for 30% compared with 20% for a private foundation. There are no excise taxes on community foundations as there are on private foundations and community foundations do not have a requirement that a certain percentage must be distributed each year.
Is it ethical for advisors and attorneys to refer their clients to community foundations?
- Sometimes attorneys and advisors question whether it is ethical for them to refer clients to community foundations. By doing so, arenít you advocating a particular charitable cause? You are not, because of the fundamental difference between community foundations and other charities.
- The Community Foundation of Southern Maryland is organized to help people give effectively to improve the quality of life. They work with your clients to help them give to charities and meet their tax planning goals, and do not dictate the type of gifts their donors can make. By making a referral to a community foundation, youíre not advocating a particular cause.