Frequently Asked Questions
WHY DONATE TO YOUR FAVOURITE CAUSE THROUGH A COMMUNITY FOUNDATION?
Community Foundations, which are growing fast in the UK, provide an effective way
of giving to your favourite cause. But if you can give direct, why give through a
Community Foundation? This leaflet aims to answer some of the questions most frequently
asked about giving through a community foundation.
DON'T COMMUNITY FOUNDATIONS COMPETE WITH EXISTING CHARITABLE FUNDRAISING?
Community Foundations focus on long term fund development, aiming to build permanent
funds for the benefit of its local area. The income from the investment of these
funds provides for grants to support a wide range of community and charitable activities.
Community Foundations can hold funds in perpetuity - and that means that your giving
through a foundation can be for the long term. Community Foundations do not generally
get involved in traditional fundraising activities such as street collections, holding
charitable functions, or other similar activities. They complement, rather than compete,
with the day to day fundraising work of local charities and community based organisations.
Community Foundations are registered charities, and as such, can take advantage of
all the tax breaks which are available to charities. But Community Foundations don't
have to give grants only to registered charities. Provided that an organisation comes
within the broad charitable and social and community benefit remit of the Foundation,
it can receive a grant. The recent Charities Act changed the definition of charities,
but there are still many very small local organisations which will not be registered
as charities and cannot, for instance, take advantage of Gift Aid on your donation.
In addition, for many smaller charities, obtaining the Gift Aid refund is a time-consuming
business. The Community Foundation can obtain the Gift Aid refund on your donations
and add to the value of your gifts.
I ONLY WANT TO GIVE A VERY SMALL AMOUNT - IS GIVING THROUGH THE COMMUNITY FOUNDATION
THE BEST WAY FOR ME TO GIVE?
No - if you want to make only small donations to your favourite causes, the Community
Foundation is not the right way to give. Consider getting a CAF Charity Chequebook
account and give that way. Or you could consider making your donations into one of
our themed funds, which will then pool donations to give grants (see below for information
on our themed funds)
However - if you are business that wants to give more than £5000 a year to a range
of causes in the local area, the Community Foundation is a very cost effective way
to manage your giving. Our grant making expertise can help make the best use of your
money and we also monitor what the grantees are doing with your donations and will
report back to you on their progress. Ask for more details about our Flow Through
Grant Making and how we can help you. We can tailor make a programme to suit your
needs or you can contribute through our general fund, and we will make sure your
money goes to good causes in the County. We can also discuss smaller flow through
amounts with you.
Many businesses across the UK, both large and small, see giving through a community
foundation as a way of both demonstrating their corporate community responsibility
and also to celebrate particular milestones in the history of business, for instance
an anniversary since the foundation of the company, or a special event. We can also
help you achieve a profile for your giving, which is good for your business. Our
business is to support the development of philanthropy in our county, to enable local
businesses to concentrate on their core business functions.
I'VE BEEN THINKING ABOUT SETTING UP MY OWN FOUNDATION - WHY SHOULD I CONSIDER PUTTING
THIS MONEY INTO THE COMMUNITY FOUNDATION INSTEAD?
If you have more than £500,000 that you want to use to set up a Foundation or charitable
Trust Fund, then you could consider going it alone. The Charity Commission is trying
to reduce the red tape involved in setting up new charities, but there is still a
lot of regulation and paperwork that you will need to complete on an annual basis.
Most people in this position appoint a solicitor or take on a paid person to administer
the Trust for them and you will need to consider the costs of this. You will also
need to consider your investment vehicle and again, the Charity Commission lays down
strict guidelines in relation to charity trusteeship and investment.
The community foundation can offer you many advantages over setting up your own trust.
We can cut the costs of administration, because we can manage a number of trusts
at the same time. This means that the costs of grant-making are reduced as well,
as we already have an experienced grant-making team in place. We also pool our investments,
which can lead to higher returns as a more significant investment is being made.
Our Board is also experienced in operating as charity trustees and understands the
requirements of the Charity Commission - and we are already a registered charity,
so you do not have to set up a new charitable vehicle for your giving. We do charge
fees for our services, but compared to the costs of setting up your own foundation,
these are very competitive.
And obviously, you may want to keep control over where your grants go - and this
is not a problem. A donor advised fund in the foundation enables you to tell us where
you want to make grants : this may be within a theme, or may be to specific charities.
Again, you may feel a bit confused by the wide range of charities and community based
organisations out there and wonder which ones can make the most of your investment
in them. Again, this is where we can help. Through our close working relationship
with Herefordshire Voluntary Action and our knowledge of the community and voluntary
sectors in our county, we can help by making assessments of applicants and ensuring
that they will use your money well. We can also provide regular update reports to
you on the progress of the charities and community organisations that you support
- all part of our grant making service to ensure that you, the donor, get value for
your investment in local charities.
When you give through the Community Foundation, we can provide a tailor made service
which is adapted to your requirements as the donor - not to our requirements. Your
giving is through the Community Foundation, not to it.
I DON'T HAVE THAT KIND OF MONEY TO PUT INTO A FUND - CAN I STILL SET UP A FUND IN
THE COMMUNITY FOUNDATION?
One of the great benefits of community foundations is that they can help anyone set
up a named fund, which can be there in perpetuity, celebrating a person, a company
or a community. A named fund can be set up from as little as £15,000. Our pooled
investment scheme helps the money to grow, to enable small grants to be given. Obviously,
the larger your fund, the more grants it can give, but our service is the same high
quality, whatever the size of your fund.
I DON'T WANT TO SET UP A NAMED FUND, BUT WOULD LIKE TO CONTRIBUTE FOR THE FUTURE
- IS THERE ANOTHER WAY?
We are setting up themed funds, into which a donor can make a donation which is large
or small. We are currently considering three funds - for Sport in Herefordshire,
for the Arts in Herefordshire and for the Environment. These themed funds will pool
investments from donors and will give grants within the themes. Obviously, by investing
in this way with us for your charitable giving, you will not have the same influence
over the allocation of the grants, but you will know that we will make the best grant-making
decisions possible, drawing on a wide range of expertise to ensure that the grants
are given to very deserving organisations, who will be required to report back to
us on how they use the grants. And we'll provide you with progress reports on how
the grants are being used. We can also take one off donations through our themed
funds, as flow through grants.
Your satisfaction comes from knowing that the charitable investment that you have
made will continue into the future and will grow, to increase the benefits to the
county in your chosen field of interest. And we can research and reach organisations
which will provide maximum benefit - often organisations that you may not have been
aware of , but would be very pleased to support.
HOW DO COMMUNITY FOUNDATIONS COVER THEIR COSTS?
As a charity, we try and keep our costs as low as possible but we do run an office
and have paid staff, who ensure quality and good service to you as a donor. Our business
is philanthropy and building on the tradition of charitable giving within this county.
We make reasonable charges for our flow through services, which will often work out
cheaper for businesses than operating giving programmes to the community "in house".
For endowment giving, we charge a fixed rate fee, aiming to maximise the income from
the investments which goes in grants rather than administration. Again, these fees
will normally work out cheaper than setting up an independent trust. Our office will
provide further details on request.
WHAT ARE THE GUARANTEES OF STANDARDS AND QUALITY IN HEREFORDSHIRE COMMUNITY FOUNDATION?
As part of the national network of community foundations, Herefordshire Community
Foundation is required to meet certain standards. In addition, the network ensures
that good advice and information is available to Herefordshire to develop good practice
in both grant-making and in fund development. The Foundation was the grant maker
for a major Government programme - the Local Network Fund - and we were highly commended
for our grant-making operation and our knowledge of and responsiveness to community
needs in the county. As a further acknowledgement of our expertise, in 2008 we were
awarded the contract to act as the distributor for the government's Grassroots Grants
programme. This grants programme will run until March 2011.
Community Foundations are growing across the UK - there are now over 60 in operation.
Over £66 million was awarded in grants to local causes by community foundations collectively
just in the year 2007-8 alone. At the end of 2008, community foundations held over
£163 million in endowment - funds available for future generations.
Help us to grow the resources available to our charities and communities in Herefordshire
- for now and for future generations.
