Chester County

     COMMUNITY FOUNDATION

More and more individuals, families and companies today are interested in giving money to charity rather than paying it in taxes.

Often, these donors want such gifts to stay within their communities for causes they care about, and they want their gifts to make a difference.

At one time there was only one way for donors to organize their philanthropy - the costly and burdensome private foundation.

Today, however, a much more cost-effective, flexible alternative exists -- the Community Foundation.  By using the Chester County Community Foundation, you will receive significant tax advantages while enjoying many of the benefits of a fully staffed private foundation at a fraction of the time and cost.

How to establish Your Foundation

Your tax-deductible fund or foundation can be created with the community foundation in one simple meeting.  you can start making grants at once, and you will receive regular reports on investment performance, grants paid and dollars available for grant distribution.

Grants from your fund can be made to charities or nonprofit agencies as defined by the IRS.  Your written instructions are all that are needed.  The money to be distributed can come from the annual earnings of your fund's endowment, or from a pass-through component of your fund, ort from both.

Tax Considerations

Your initial contribution and any others you may make in the future are deductible in the year you make the gift, even though you might take up to three years to decide how the money should be distributed.  You will not be taxed on the growth of assets in your fund.  Contributions of appreciated securities or real estate are calculated at their full current value for deductibility and are free of capital gains taxes.  Anyone may make a gift to your foundation, and will receive an acknowledgement for tax purposes from CCCF.

Questions & Answers

How long will my foundation or fund exist?  For how long may I appoint Trustees?

Your fund can last for perpetuity.  Trustees, or advisors, are typically appointed for one succeeding generation.

However, exceptions can be made depending on factors such as the size and purpose of the fund.

If at some point trustees are no longer involved, your foundation may become dedicated to one or more charities, or it can become a "field of interest fund," and the board of the Community Foundation will see that gifts continue to be made from it to charities that meet your original objectives.  A letter describing the fund's history and purpose can accompany each gift.

Will CCCF give to whomever I or my trustees designate?

Generally yes, so long as they are a nonprofit or charitable cause and meet any objectives you may have specified.  The Community Foundation board must retain final responsibility for all distributions in order to meet IRS requirements.

Can I give scholarships through my fund?

Yes, so long as recipients are selected from a large enough field of candidates by an independent selection committee. Checks are generally written to the college, or jointly to the college and the student.

What other services can you provide for me?

The Community Foundation can receive and screen funding inquiries on your behalf, and help put together proactive projects and collaborations to see that your objectives are met.  (This may require an additional fee to cover staff time.) You can also share in the benefits of our memberships with Delaware Valley Grantmakers and the Council on Foundations, both of which host seminars and publish materials.

How will my fund be invested?

An investment committee of the board oversees the placement of endowed funds with professional money managers.  The foundation closely monitors investment performance and reports back to fund trustees twice-yearly.  The primary investment manager at this time is SEI Corporation, of Oaks, PA.

What requirements will I face if I choose to create a private foundation?

You will require 4 - 6 months for IRS approval and incur significant start-up costs, followed by ongoing administrative requirements such as charitable registrations, annual reports, excise taxes, distribution requirements, and adhere to often difficult IRS reporting regulations and tests.

You will also need to decide how to manage foundation investments, evaluate and respond to large numbers of unrequested proposals, track and report on grant distributions to the IRS, conduct annual audits and create a mechanism for next-generation management.

Go to the Private vs. Community Foundation link for a table that illustrates the many advantages to creating your fund or foundation through CCCF rather than forming a private foundation.

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