Frequently Asked Questions
What is a Community Foundation?
In simple terms, a community foundation is a platform for building community. As a 501(c)(3) tax-exempt public charity, community foundations help individuals, families, businesses and organizations establish charitable funds to support their community.
Why philanthropy?
People have a desire to help. People want to make a difference. And they want
to be a part of a process that will continue to make their community better
with each generation. People give for all kinds of reasons:
• to teach their family through their good example;
• to give someone the same opportunity in life that others
once gave them;
• to ensure a strong community for their loved ones;
• to be involved; and
• to share their good fortune.
Why do people become donors to the Mid-Shore Community Foundation?
Donors to the community foundation are people with a strong sense of community and personal commitment to making a contribution to the community in which they live. Some donors want to support worthwhile causes in their community, and the community foundation, which offers considerable expertise and familiarity with the community, can help them find the best way to commit their funds. Other donors appreciate the speed, flexibility, and ease of using the community foundation. Because the legal apparatus is already in place, existing forms are available so that a fund can be established quickly and easily.
Why establish a fund with the Community Foundation instead of giving directly to a favorite charity?
If a donor wants broader oversight and long-term benefits for a charity or a cause, he or she may set up an endowment at the Foundation managed to benefit one or more specific charities or charitable causes, forever.
I am frequently asked to support organizations and good causes in our community. It is hard for me to say no to people in some situations. Can the Foundation help me with this?
Yes, often times donors asked The Foundation to become the screening arm of their Fund. Donors simply direct all solicitations to the community foundation and our Director of Foundation Programs fields the requests and then will pass them on to donors. Once the donor makes a decision the foundation wll disperse the grant to the charity.
Are Community Foundations only for the wealthy?
No, the community foundation accepts contributions of all sizes. Your contributions can be combined with those of others who share your charitable interest to provide maximum impact to the community at minimum administrative costs.
Who governs the Community Foundation?
The Mid-Shore Community Foundation is governed by a board of directors that is representative of the five county community-Caroline, Dorchester, Kent, Queen Anne's and Talbot counties.
What are the financial benefits and tax advantages of gifting through the Community Foundation?
The community foundation's approach to planned giving offers a number of important financial benefits to donors. Because the foundation manages a large number of funds, administrative costs and service fees for any one fund are minimized-meaning less overhead cost to the donor's fund.
The Mid-Shore 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 them to recommend grants, or can choose to contribute to an existing fund that is flexible to respond to emerging needs in the community.
How can people give to the Community Foundation?
Individuals may choose to give now, enabling them to support local charities during their lifetime and in perpetuity. This can be done with gifts of cash, stocks, real estate, or other assets.
Those who choose a deferred gift can take advantage of key elements in estate planning. These planned gifts allow for tax advantages now for the commitment of a charitable gift later. Charitable Remainder Trusts, Charitable Lead Trusts, gifts of life insurance and retirement plan assets may all be used to establish a fund.
Donors may also include provisions in their wills for contributions to an established fund or to create a new fund at the community foundation. A contribution may save estate taxes as well as ensure the donor's charitable interests will be supported.
Can I/should I involve my attorney, CPA, estate planner, etc.?
The Foundation works with professional and financial advisors regularly to assist donors in the philanthropic process. We encourage you to include any of your advisors in exploring and deciding to establish a fund.
What is the best way to make a gift that will meet unforeseeable needs in our community?
A contribution to the Founders Fund of the Mid-Shore Community Foundation or one of the unresricted county funds is the best way to make a gift that will address the future needs of the community. Community leaders, now and in the future, know our potential and our problems. Increasing our unrestricted funds will increase the health of the community in the decades to come, as decisions are made on the most informed basis possible.
Is it hard to open a Donor Advised Fund?
No, the process is very simple and can be done in a matter of hours. It entails drawing up an agreement which the Foundation will provide (generic agreement) and then we ask you and your advisors to review and personalize the document. Once this is complete and signed the only other step is to either write a check, or transfer funds into the Foundation account.
Can I support to an organization that is not a 501(3)(c) through my Donor Advised Fund?
No, in order to maintain and preserve the tax deductibility of your contributions and those of our other Donors, we can only give to those organizations that the IRS deems nonprofit.
Can I pass my Donor Advised Fund on to my children?
Yes, not only can you pass the fund on to your children, we encourage families to include their children as fund advisors even when they are young so that they can begin to be mentored by you in the philanthropic process. Later as the children grow they will be familiar with the process and committed to serving the community. When you decide it is time to step back, your children can take over the Fund and hopefully begin the mentoring process for their children.
What is the difference between a private, family foundation and a fund with the Community Foundation?
Often, people establish a private, family foundation because they don't know that in many cases working through a community foundation offers an easier alternative. In addition to the tax benefits, setting up a fund through the community foundation has an extremely short turn around time. Additionally, the staff of the foundation takes 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 family foundations. That means donors may take the time necessary to be thoughtful in recommending charities to receive grants from their fund.
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.
Community Foundation vs. Private Foundation
What is the difference between the Community Foundation and the United Way/United Fund?
Both are important resources to the community and each complements the other. Some have described the differences by suggesting the United Way/United Fund 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. An additional difference is the community foundation's scope of funding is broader than the United Fund/United Way's focus on health and human services.
