What is a Community Foundation?

A Community Foundation is a nonprofit community corporation with the unique capability to serve as a vehicle for philanthropy and a powerful force for improving the quality of life in the local area. In the United States, Community Foundations serve tens of thousands of donors, administer more than $31 billion in charitable funds, and address the core concerns of nearly 750 communities and regions.

What is the Community Foundation of Washington County MD, Inc.?

The Community Foundation of Washington County MD, Inc., was created by and for the people of Washington County, Maryland. The Foundation is a nonprofit organization that manages funds contributed by members of the community, and makes annual grants to local charities and nonprofit organizations.

The Foundation exists to promote local philanthropy. Since the first grant in 1998, we have awarded $20 million in grants and scholarships to the community. With over $38 million in assets and more than 300 funds, donors may contribute to a range of charitable funds or set up their own endowed fund to ensure support for generations to come. The Community Foundation meets the national standards of the National Council on Foundations. To learn more about the Foundation or to set up a fund, you may contact our office at (301) 745-5210.

What are the advantages of using the Foundation’s services?

The Foundation provides flexibility for donors to meet their charitable interests and needs, including:

  • Expert investment management and safeguards
  • Numerous ways to honor others and/or create family legacies
  • Significant tax deductibility, in most instances
  • Many charitable vehicles and gift assets from which to choose

By using the services of the Foundation, not only can you give a gift that keeps on giving, but also enhance the quality of life in the greater Washington County area now and in the future.

What is a fund?

The Foundation consists of a collection of separate funds, each with its own donors and charitable purposes. In a sense, the funds act as individual foundations, except that administration, investment management, program support and trustee oversight are shared by all donors at the Foundation; thus, significantly reducing costs.

What is the difference between an endowed and non-endowed fund?

Endowed is a fund whereby the initial gift and subsequent gifts are never spent, and instead, the income and earnings of the fund support the charitable purpose defined by the fund’s founding donor.

Non-Endowed is a fund where all contributions, as well as income and earnings, may be used for charitable purposes.

What types of funds does the Foundation offer?

The Foundation offers the following types of funds:

Designated Endowment: Allows a donor to designate which specific charity or charities to support.

Community Endowment: Unrestricted funds where the Community Foundation’s Board of Trustees determines the most appropriate uses for the proceeds, responding to the community’s most pressing needs.

Scholarship: Endowed funds established by donors to benefit local students based upon guidelines defined by the donor. The IRS regulates these funds.

Donor-Advised: Permits a donor to maintain an advisory role in the disbursement of the proceeds. Donor-Advised Funds can be endowed or non-endowed.

Field of Interest:  Allows a donor to specify general areas in which to direct the fund’s earnings. You can create a field of interest fund as endowed or non-endowed.

Agency Fund: Created by nonprofit organizations as either endowed or non-endowed.

Legacy Fund: Legacy Funds, deferred gifts to the Community Foundation, will be established by a gift of the estate of the founder.

What assets can I use to contribute to a fund?

Giving is easy and can be accomplished with a variety of tax-deductible gifts, including:

  • Cash
  • Securities
  • Bequests
  • Trusts
  • Real Estate
  • Life Insurance

Why not give directly to my favorite charity or nonprofit organization?

Most charities have experience serving the public, but not investment management and oversight. The Community Foundation can provide experience and competent management in the following areas:

Development Expertise: While some larger charities have a development staff, many smaller ones do not. The Community Foundation can offer assistance with sophisticated gift plans, such as charitable remainder trusts.

Support to Numerous Charities: Many donors wish to support several charities. The Community Foundation can set up a single endowment fund that supports several charities. Our flexibility ensures the fulfillment of your charitable wishes.

Lasting Impact: Most of us believe our favorite charities will continue to serve our community forever. Sadly, history has shown us that this is not always the case. The Community Foundation has the built-in flexibility to redirect funds to a similar purpose if the named beneficiary ceases to exist. This flexibility assures your legacy endures forever, and cannot be used to pay off the debts of an agency in financial trouble.

How do I establish a new fund?

You can establish an endowment fund with a minimum of $5,000, which can come from individuals, families, corporations, financial institutions, probate courts, bequests, private foundations and charitable organizations. Donors may choose the distribution of the funds. Each fund becomes a permanent part of the Foundation.

  1. Define your charitable and financial objectives. Consider how you want your gift used, whether or not you want future family members involved, whether or not you want income from a trust during your lifetime and how much involvement you want in making grant choices.
  2. Select the type of fund that matches your charitable interests: Community Fund, Field of Interest Fund, Donor-Advised Fund, Designated Fund, Scholarship Fund, Non-endowed Donor-Advised Fund, Memorial Fund, etc.
  3. Decide how much you want to contribute to the charity for this year or over the next several years. Or, determine how much you might set aside as a permanent fund to generate annual income for charitable giving. Of course, you and your descendants can add to the fund at any time.
  4. Choose a name for your fund. Many donors choose a family name, but you can use any name meaningful to you.
  5. Determine which asset you will use in creating your fund: cash, securities (publicly traded or closely held), real estate, or tangible personal property such as art, antiques or jewelry. Assets with a low cost basis are often wise choices since they offer maximum tax advantages–you pay no capital gains tax and receive a favorable income-tax deduction. You may also want to review assets inside your qualified retirement plan for possible charitable use.
  6. Decide if a charitable trust would benefit you. Options include: (1) You can provide income for a determined number of years to you or someone you choose and (2) You can provide your favorite charities with gifts in perpetuity after the death of the last beneficiary.
  7. Consider including a directive in your will that allots a percentage of your estate to a specific existing fund, or a fund that you establish to meet your charitable interests in perpetuity.

With the help of the Community Foundation, you can join others who have perpetuated their giving. We will gladly work with you and your lawyer, accountant, life insurance agent or financial planner to explore these and other options to find the type of gift and approach that works best for you.

May I set up an anonymous fund?

Yes, all gifts and grants can remain anonymous.

What organizations may I recommend for grants?

You may recommend qualified nonprofit public charities, schools and government programs at the local or national level.

Can I recommend a grant to an individual?

No. According to IRS regulations, the Community Foundation may make grants only to qualifying nonprofit public charities. The Community Foundation staff checks all organizations for documentation of nonprofit status.

I want to direct the fund to a specific type of organization, but I am not familiar with all of them in Washington County. Can the Community Foundation help me identify these?

Yes. Our staff can work with you to identify nonprofit organizations that meet your charitable goals. We can also research organizations you would like to know more about before recommending them as grant recipients.

How are the funds invested and who are the investment managers?

The Foundation’s Investment Committee, comprised of Foundation Trustees with investment expertise, sets the overall investment policy, selects the managers and monitors their performance. Our main investment manager is Mason Investment Advisory Services. Donors establishing a fund of $100,000 or more may recommend an investment manager and strategy, subject to the approval of the Foundation’s Board of Trustees. Donor-designated managers include The Hershey-Fitzsimmons Group of RBC Wealth Management, The Family Heritage Trust Company and Marshfield Associates.

May I choose my own investment manager?

Donors establishing a fund of $100,000 or above may recommend an investment manager and strategy, subject to the approval of the Foundation’s Board of Trustees.

What fees does the Community Foundation charge?

The Foundation partially meets its operational expenses through an annual management fee of 1% for each fund under our direction. However, we charge 1.5% for field of interest and scholarship funds due to the greater administrative effort required.

How can I find out more about the Community Foundation?

We welcome you to give us a call at (301) 745-5210 or complete our online contact form.