What is a community foundation and how does it work?
The Community Foundation of South Central Kentucky is a tax-exempt public charity. The foundation is a vehicle between philanthropists and organizations or causes in need. The foundation allows organizations to apply for grants that are funded through endowments made up of the donations from the community.
How do community foundations differ from private foundations and other nonprofit organizations?
Unlike private foundations, Community Foundation of South Central Kentucky is considered by the IRS to be a publicly supported charity. This means that Community Foundation of Southern Kentucky has tax advantages that private foundations do not—allowing us to do more with the gifts we receive.
Other non-profits have a very specific narrow goal. Community Foundation of South Central Kentucky’s only goal is to provide help to all organizations and causes in need. This broad goal allows those making donations to rest easy because the gift isn’t helping one group while neglecting another, it is going exactly where it is needed most.
What is an endowment?
An endowment creates charitable funds. By investing the principle of the endowment, the foundation makes money that is used for grants to organizations and causes in need. The principle is never touched. Ten-thousand dollars donated in 2000 is still in the fund today, continuing to help the community.
What Happens to a Contribution to the Community Foundation of South Central Kentucky?
Unless otherwise specified, donations go into the unrestricted fund. Grants from this fund are directed by the Community Foundation of South Central Kentucky board.
Specified donations are put directly into the funds indicated by the person giving the gift. Donors can also start their own fund. These funds become endowed after reaching the $10,000 threshold.
What are the advantages of donating to a community foundation?
Community Foundation of South Central Kentucky, with its publicly-supported charitable organization designation, gives the best tax advantages possible under the law. Current tax benefits are 20 percent higher than private foundations on cash gifts and 10 percent higher on appreciated property gifts. For publicly supported charitable organizations no excise tax exists.
How does the community foundation select grant recipients?
At the end of each grant cycle, the board meets to review grant applications that are then approved and awarded from the unrestricted funds and the specified funds.