Frequently Asked Questions
A community foundation is a collection of individual funds and resources given by local citizens to enhance and support the quality of life in their community. It is a tax-exempt public charity that allows many individuals, through gifts and bequests, to establish permanent endowment funds under the umbrella of one large foundation. Money generated by these funds is distributed to the local community in the form of grants to other nonprofit organizations and agencies to address needs and opportunities. The Foundation was founded in 2004 to provide simple, flexible, and effective ways for permanent endowment funds to be established and managed. The foundation works with donors to help achieve their personal, financial, and philanthropic goals and to establish endowments for a variety of purposes. The Foundation is one of the over 600 community foundations nationwide. It is a member of the Council on Foundations and the Association of Fundraising Professionals. Community Foundations are the fastest growing vehicle for giving in the United States.
Why give through the Greater Round Rock Community Foundation?
If you want to support your local community, it can be difficult to know how to choose which organization to support. Needs of communities can change and what is important now in a community might not be in 20 years’ time. Many communities are looking at ways in which they can regenerate and preserve the future of their community. The Foundation can establish a permanent, independent and flexible source of local funds, which can respond to changing community issues – now and in the future.
There are a number of ways the Foundation can assist in this. A community could allocate funds for the future, or a donor might like to leave a gift for his or her community in the form of a bequest. By contributing to the Foundation’s Community Fund, you will be contributing a gift that keeps giving and supports the on-going economic and social well-being of Round Rock.
Another advantage of giving through the Greater Round Rock Community Foundation includes the prudent management and pooling of funds. This means investment returns can be maximized. Responsible administration and personalized funds can offer donors the benefits of their own fund without the burden and expense of management.
Why should I make my contributions to the Foundation 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 into your Fund, rather than having to make smaller, multiple individual transactions with each of your favorite charities. In addition, your gift is invested to grow tax-free which can result in more dollars to be given away.
It’s simple: You centralize your charitable donations by setting up a Fund. This eliminates the need to track multiple receipts for your donations and simplifies your tax filing. You can enjoy the flexibility of recommending grants to your favorite charities now, next year or whenever you are ready. No more rush to write a bunch of checks at year-end for tax purposes.
It’s satisfying: You can leave a legacy by naming your own fund or remain anonymous. You are also able to involve family members in your charitable giving decision-making. And you may choose successor advisors to continue your tradition of giving.
What is an endowment?
An endowment is a fund whose contributions are not expendable; only the earnings on those contributions are available for distribution to support tax-exempt organizations or other charitable purposes.
Where does the Foundation get its funds?
The Foundation’s funds come from administration fees on named funds and from generous supporters of our operations.
If I am not a “Rockefeller,” is the community foundation for me?
Community foundations offer a variety of options for making donations. By combining your resources with those others who share your interests, you can maximize the impact of modest contributions with minimal costs. The Foundation also welcomes honorariums and memorial gifts.
Are gifts to the community foundation tax-deductible?
Yes. The Foundation is recognized as a 501(c)3 organization by the Internal Revenue Service. The financials are reviewed monthly by an independent accountant.
How are the funds invested and administered?
A diversified investment portfolio is managed by a professional investment manager. Investment guidelines emphasize the protection of the corpus with the generation of income. The investment committee seeks total return with minimum risk over the long term. The Board of Governors review investment performance quarterly.
How is the Foundation different from the United Way?
Both are important resources to the community. Both are necessary and compatible. Some have described the differences by suggesting the United Way is more like a community checkbook, raising and distributing money annually – while a community foundation is more like a savings account, distributing interest from long-term funds in perpetuity. An additional difference is the Foundation’s broad scope of funding, including arts, religion, and scholarships, not just health and human services.
Who manages the Foundation?
The Foundation has a Board of Governors who has responsibility for the governance of the Foundation. The Foundation also has a staff member who is able to assist you or answer questions at any time and who manages the day to day operations.
How does the Foundation work with the community?
The Foundation will work with the community to help them build a capital base, establish partnerships, build community capacity and identify possible sources of funding. We help and facilitate rather than do.
Who can donate and what donations can be accepted?
The Foundation can work with any donor and accept a wide variety of donations of cash, property, shares and stock – of significant or modest means. The permanence of the Foundation makes it ideally suited to receive bequests as well.
So how does our gift keep giving?
Giving through the Greater Round Rock Community Foundation means that you can give back to your community through permanent income-earning endowment funds. The permanence of endowment means that your gift can last for generations because all charitable gifts go towards building a corpus of funds – a body of money kept in perpetuity. The funds are pooled and invested, with the return on investment used to make grants to support a wide range of local initiatives. This way, the original donation becomes a constantly growing source of funding.
What proportion of donations is used to fund administration expenses?
The Foundation will charge a management fee of 1% (one cent per dollar) or a minimum of $500/year. This fee will be used to cover the administration and program costs associated with managing the fund.
May I designate where my charitable monies will go?
Through a “donor advised fund” you retain the privilege of making recommendations for your specific charitable interests through a written agreement suggesting the “who, when, how much and how often”. The Foundation is here to advise you in any way possible so that you have the satisfaction of knowing that you and your dollars are giving back to the community as you envision.
How much does it take to establish a donor advised fund or other named fund?
The minimum to create a named fund is $10,000.
Does it require a contribution of $10,000 to be a donor to the Foundation?
There is no minimum contribution that may be made to the foundation. Any amount may be added to existing funds.
When setting up an endowment, can the capital be used?
The philosophy behind a community foundation is to build a capital base so that, in time, the return on investment is able to be used to meet emerging needs within a community. It is acknowledged that it can take some time to build an adequate base from which there is enough return to fund projects. In some cases, portions of the capital may be used to fund vital projects or to enable further and significant generation of funds.
How would I use my local community foundation?
- A family may choose to establish a named fund that bears their family name and continues their community giving in perpetuity.
- A community group may decide to establish a fund in honor of, or memory of, a friend or community leader.
- A business may choose a community foundation to help with its grantmaking, thus saving time and personnel for the business, yet assuring support for their selected charitable interests. Some donors choose to make their community philanthropy anonymous and the foundation is a perfect partner to help them. Nonprofit agencies often establish their endowments within a community foundation to guarantee their endowment donors that the principal of the gift is never disturbed and the earnings will forever come to the agency.
What about corporate giving?
Working with The Foundation, businesses are provided with a centralized administration for their corporate giving as well as lower costs and increased efficiencies in their charitable dollar distributions. A business may also want to set up a Scholarship Fund in their company’s name. Your donated dollars will continue to grow and the Foundation will administer the scholarship’s distribution.
Does the Community Foundation compete with other charitable organizations?
The Foundation is not like other charitable organizations in Round Rock. The Foundation seeks substantial gifts from a limited number of individuals and businesses. It is not a charity with an annual fund drive. The Foundation applies its funds to a wide range of community needs unlike most charitable organizations that exist to support the needs of a single cause. Most important, the Foundation exists to enhance the ability of other nonprofit organizations to serve the changing needs of our community.