COMMUNITY FOUNDATION 101

As defined by the Council on Foundations, a community foundation is a tax-exempt, nonprofit, autonomous, nonsectarian philanthropic institution supported by the public with the long-term goals of:

  • Building permanent, component funds established by many separate donors to carry out their charitable interests;
  • Supporting the broad-based charitable interests and benefitting the residents of a defined geographic area, typically no larger than a state; and
  • Serving in leadership roles on important community issues.

Most community foundation assets are held in individual funds established by local individuals, families, businesses or organizations. Each fund may have a specific purpose designated by the donor.

There are over 750 community foundations in the United States and over 1,800 community foundations throughout the world. The first community foundation was established in 1914 in Cleveland, Ohio.

An endowment is a type of fund that is established to produce income for charitable purposes. A typical endowment fund will distribute only the income generated from investments; its principal will never be distributed. This is to ensure that endowment funds remain permanent as long as the principal is never invaded and as long as the distribution rate reflects the long-term growth patterns of investment.

No. Some donors prefer to see a greater percentage of their gift distributed annually.

Community foundations use the power of endowed funds to meet both the current needs of the local community as well as the future needs. By giving to a community foundation, you guarantee that the causes you care about will be provided for today, tomorrow and generations to come. The expertise of a community foundation’s staff and Board of Directors ensures that each donation has the desired impact the donor intended.

Of course you can certainly give directly to the nonprofit or cause of your choice and community foundations can help with that as well.

Grants are made from the funds that donors have established and community foundations strictly follow the intent of the donor to ensure that their funds are supporting the causes they care about. At Main Street Community Foundation, grants are awarded to local nonprofits that work in the areas of arts and culture; community development and outreach; education; health; human services; environment; and animal welfare. There are several annual grant cycles that have been designed to meet all kinds of needs.

For a list of recent grant awards by Main Street Community Foundation, visit our Grants Awarded page.

Yes. All community foundations are independently organized and operated. There are 17 community foundations in Connecticut, each serving a defined geographic area.

Simply, community foundations are a funder of local nonprofits. Community foundations do not provide services, but they help the organizations that do, to be able to do it better. Community foundations identify needs in the local community and provide financial and other support to nonprofits to fill those needs.

Most nonprofit organizations have a very specific mission, whereas the mission of community foundations is very broad: to connect people with causes they care about to better their community. The breadth of the mission allows community foundations to serve a wide group of people and organizations, and reflects the ability to make grants in any field of interest with a charitable benefit to the local communities.

A community foundation is supported by the public – individuals, families, businesses and organizations. Private foundations, by contrast, are generally supported by a single individual, family or business. Because of a community foundation’s broad base of support, community foundations are classified by the IRS as publicly-supported charities, thus giving them tax advantages not enjoyed by private foundations.

Individuals, families, businesses and organizations make up a community foundation’s donor base and are its source of support. Donors contribute cash, stocks and securities, and real property. Such contributions are often made as simple gifts, but many choose to give through their will or other form of planned giving.

A community foundation’s operating expenses are covered by charging a small fee to each fund. In addition, some gifts received by community foundations are specifically designated for operating costs.

Community foundations are committed to maintaining a focus on the perpetuity of its funds and are responsible for providing a stable source of funding for organizations in the local communities. Most community foundations seek the services of outside investment professionals, selected and monitored by the community foundation’s Investment Committee, who manage the endowment in compliance with the Foundation’s Investment Policy Statement.

Community foundations offer the best tax advantages for charitable donations available under law. Community foundations are a publicly-supported nonprofit organization, qualified under section 501(c)(3) of the internal revenue code.

By giving through a community foundation, you are supporting local philanthropy and the causes you care about in a long-term manner.

  • Experience. The staff of community foundations consist of dedicated, experienced professionals whose mission is to assist you and keep your intent always at the front of their mind. The staff understands the changing needs of your community and has a thorough understanding of the nonprofit organizations serving those needs.
  • Personalized Service and Customization. Community foundations will meet with you individually or with your financial advisor to discuss your charitable giving interests and needs, and how we can best fulfill them while making the most of your philanthropic dollars. You choose what to give, when to give, and what cause(s) or organization(s) you wish to support. You can be as involved in your charitable giving as you choose.
  • Local Commitment. A Board of Directors, made up of knowledgeable community leaders and volunteers like you, serve as the policy makers and ambassadors for the community foundations.
  • Immediate and Long-Term Impact. Community foundations are committed to the stewardship of assets ensures that the charitable goals of donors are met now and for generations to come.
  • Privacy. You decide when or whether you want to be recognized for your gift or remain anonymous. You can feel secure in knowing that your personal information will never be disclosed.
  • Tax Advantages. Community foundations are public charities and donations qualify for the maximum available deduction for charitable contributions in the year when the gift is made.

Contact Susan Sadecki, President & CEO of Main Street Community Foundation, at 860.583.6363 who would be happy to answer any questions.