Questions & Answers
FIND ANSWERS TO OUR MOST COMMON QUESTIONS
A community foundation is a tax exempt, non-profit, publicly supported philanthropic organization with the long-term goal of building permanent, named funds, for the broad-based public benefit of the residents in each area.
Most community foundation assets are held in separate funds established by local individuals, families, businesses, or charitable institutions. Each fund may have a special purpose, but the foundation board of directors, representing the community, oversees them all.
The IRS recognizes community foundations as public charities in part because they receive support from the general public and their boards broadly represent the areas served.
A community foundation is governed by a board of directors with interest in the community. Operating expenses are paid from an annual fund fee and from gifts designated by donors to cover foundation operating and program costs.
Most nonprofit organizations have a specific mission. By contrast, a community foundation’s mission is very broad: to improve the quality of life in a given area. This breadth of mission reflects the ability to make grants in any field of interest with a charitable benefit to local communities.
This flexibility allows us to serve a wider group of potential donors on the one hand and, on the other, a wider group of nonprofit organizations whom we consider our partners in improving local communities.
Area nonprofits benefit from having a local community foundation because the community foundation helps money stay in a community. Community foundations benefit local nonprofits in other ways, too: besides having local grant money available, some nonprofits ask the community foundation to manage an endowment on their own behalf. We call such funds “agency endowment funds.”
As it grows, a community foundation gradually becomes a center for charitable giving in a community. We help make connections between the people who want to give and the people who need their support.
A community foundation is supported by a broad and ever-widening group of unrelated individuals, families, corporations, and institutions. The only thing that connects all donors is a desire to improve local communities.
Community foundations are also allowed to treat all funds within their control (known as “component funds”) as part of a single corporation. This gives them administrative and investment advantages over private foundations as well.
Private foundations, by contrast, are generally supported by a single individual, family, or business. Rarely does it make sense to establish a private foundation if the principal endowment is not large.
Our community foundation offers two primary benefits to the Rhinelander area. We help raise the level of local giving, and we help keep charitable dollars in the local community. It is our intent to build a local source of charitable capital that will become a steady, long-term resource for our community.
We help to ensure charitable gifts given to help our community will remain effective and relevant over long periods of time. Even as local needs and giving opportunities change, a community foundation is able to adapt charitable funds to find relevance in a changing community.
An endowment is a type of fund that is set up to produce income for charitable purposes. While some endowment funds allow distribution flexibility, many endowment funds will distribute only the income generated from investments, meaning its principal will never be distributed. A typical distribution rate from a foundation endowment fund is 4% or 5% per year.
The community foundation adheres to an investment policy established and approved by the Board of Directors. Please contact the Community Foundation for Investment Policy guidelines and more information.
We offer the best tax advantages for charitable donations available under law. We are a publicly-supported non-profit organization, qualified under section 501(c)(3) of the internal revenue code. We encourage you to consult your tax professional.