|Funding Charitable Projects Locally
Americans give billions of dollars to charity. Though the big international donations often grab the headlines, most funds went toward humble projects.
March 19, 2009
If you have clients who are excited to spearhead a community project, direct them to a community foundation (CF) says Janice Black, president of the Foundation for Enhancing Communities in Harrisburg, Penn. "Community foundations provide donors with tax-efficient ways to fund their philanthropic goals, relieve them of much of the legal and administrative duties and let them participate in the process from beginning to end," she adds.
The invitation for personal involvement is attractive to wealthy donors who respond to its entrepreneurial spirit. "Community foundations are a great fit for donors who want a hands-on means of helping others," says Black. She adds that bringing together individuals for the express purpose of benefiting their common community can be an empowering process, one that can create a domino effect.
For example, when a Harrisburg, Pa.-based Rotary Club needed $200,000 to build Colonial Park, a handicapped-accessible playground, its leaders came to Black's group. The benefits of partnering with the CF included the ability to raise and distribute funds tax-free. In addition, Black's group managed all the legal, fiduciary and administrative requirements, including the detailed tasks of accounting and filing taxes. In turn, the Rotary Club and community residents were able to concentrate their efforts on lining up volunteers, fundraising and perhaps most important, enjoying the process of creating the park as a group of like-minded individuals.
"The money just came flying in," says Black, reflecting on donors' contributions. And since the Rotary members knew that the park would need ongoing maintenance, the Harrisburg foundation managed that funding effort and now holds an endowment that pays for the upkeep. Perhaps Colonial Park's best legacy is that it has served as a model for similar efforts established throughout the area.
Benefiting Communities and Donors
Community foundations specialize in addressing local needs, an area that is often underserved by other charitable organizations. Unlike organizations that address very specific areas such as cancer research, CFs are set up to fit almost any philanthropic goal. In addition to this, CFs provide donors with a variety of tax-efficient ways to begin breaking ground on their projects.
"Community foundations can accept gifts of stock, real estate, IRAs, insurance policies — pretty much anything," says Black. Usually a foundation will turn these gifts into cash as quickly as possible and disperse it to where it is most needed. Contributions are tax deductible for the donor and capital-gains-free for the foundation. Additionally, when the CF is the sponsor, contributions to fund-raising events are tax deductible as well to the extent they exceed the value of the benefits provided to the donors. "We've thrown balls, golf tournaments and dinners to raise money for projects," says Black.
Emily J. Rushing of the Community Foundations of Greater Birmingham, Ala., says that good planning is critical to a project's success. Sponsors need to address four areas before working with a community foundation: goals, time frame, budget and consideration of maintenance costs after the project is completed. These provide the complete framework for any charitable undertaking, something that can get overlooked in the rush to good intentions. The more thought given to them up-front, the better the outcome, she says.
It is important to include CFs earlier in the planning process rather than later, since they can bring their varied experiences to bear on a particular project. Foundation professionals can offer excellent advice on everything from grant applications and tax questions to fundraising and can accommodate single donors, groups of givers and even government bodies. Black's group was able to negotiate and successfully set up a scholarship program that involved individual donors working with the state of Pennsylvania to create a public and/or private education fund. During this complex process, Black's group provided another invaluable service: the ability to negotiate tricky situations. Voters initially greeted the scholarship with skepticism due to concerns about funding and fairness. Those doubts disappeared thanks to the community foundation's involvement.
For donors looking to do good locally, consulting a community foundation can provide them with the resources and expertise needed to make their vision a reality.
To locate the community foundation in your area, go to www.communityfoundations.net.
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