FAQs
What is a community foundation?
A community foundation is a nonprofit community corporation with unique capabilities as a vehicle for philanthropy, and a powerful force for positive change in the communities in which they thrive. There are over 700 community foundations throughout the United States, utilitzing more than $4.5 billion each year, with the individual foundations focusing on local needs and services.
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, MD. 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 and since 1997, over $7 million has been distributed to the community. With over $20 million in assets and 166 funds, donors may contribute to a range of charitable endeavors 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 the offices at (301) 745-5210 or visit the web at www.cfwcmd.org
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.
Using the services of the Foundation is a way to give a gift that keeps on giving. Your gift will enhance the quality of life in the greater Washington County area now and in the future.
What is a fund?
Funds are the building blocks of the Foundation. The Foundation is a collection of separate funds, each with its own donors and charitable purposes. In a sense, funds are like individual foundations, except administration, investment management, program support and trustee oversight are all shared through the Foundation which significantly reduces costs.
What types of funds does the Foundation offer?
The Foundation offers four types of funds which may be endowed or non-endowed:
Restricted: Restricted funds allow a donor to designate which specific charities, scholarships, or charitable endeavors are to be supported.
Unrestricted: Unrestricted funds have no restrictions: the Community Foundation’s Board of Trustees determines the most appropriate uses for the proceeds, responding to the community’s most pressing needs.
Donor-Advised: Donor-advised funds permit a donor to maintain an advisory role in how proceeds are disbursed.
Field of Interest: Field of interest funds allow a donor to specify general areas to which proceeds should be directed.
What is the difference between an endowed and non-endowed fund?
Endowed: An endowed fund is a fund where the initial gift and subsequent gifts are never spent and the income and earnings of the fund support chairtable purpose as defined by the fund’s founding donor.
Non-Endowed: An non-endowed fund is a fund where all contributions as well as income and earnings may be used for the charitable purpose.
What assets can be used to contribute to a fund?
Giving is easy and can be accomplished with a variety of tax-deductible gifts including the following:
- Cash
- Securities
- Bequests
- Trusts
- Real Estate
- Life Insurance
Gifts to all existing funds are always accepted, or with a minimum gift of $5,000, a new fund can be established and named according to your preference.
Why not give directly to my favorite charity or nonprofit organization?
Most charities are experienced in serving the public, but are not experienced in investment management and oversight.
Here are a few questions to ask of your favorite charity:
- Does the organization have investment policies that are designed to provide an income, while providing for growth and avoiding the erosion of buying power due to inflation?
- Are there absolute safeguards in place that protect the principal from being invaded for emergencies or by a future spendthrift board of directors?
The Community Foundation can provide experience, competent management in the following areas:
Development Expertise: While some larger charities have a development staff, many smaller ones don't. 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 setup a single endowment fund that supports several charities. Our flexibility ensures that all of your charitable wishes will be met.
Lasting Impact: Most of us believe that 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 that your legacy endures forever, and could never be used to pay off the debts of an agency in financial trouble.
How do I establish a new fund?
Endowment funds may be established with a minimum of $5,000 which can be contributed by individuals, families, corporations, financial institutions, probate courts, bequests, private foundations, and charitable organizations. Donors may choose how they wish the funds to be distributed. Each fund becomes a permanent part of the Foundation.
Here are a few steps needed to establish a fund:
- Define your charitable and financial objectives. Consider how you want your gift to be used, whether or not you want future family members involved, whether or not you want income from a trust during your lifetime, how much involvement you want in making grant choices.
- Select the type of fund that matches your charitable interests: Community Fund, Field of Interest Fun, Donor-Advised Fund, Designated Fund, Scholarship Fund, Non-endowed Donor Advised Fund, Memorial Fund, etc.
- 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.
- Choose a name for your fund. Many donors choose a family name, but you can use any name that is meaningful to you.
- 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.
- 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 chose; and (2) you can provide your favorite charities with gifts in perpetuity after the death of the last beneficiary.
- 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 be happy to 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 whether they be local or national organizations.
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 make grants to a specific type of organization but I am not familiar with any. 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, composed of Foundation Trustees with investment expertise, set the overall investment policy, selects the managers and monitors the performance of the managers. The Foundation’s current investment managers include: Mason Investment Advisory Services, Fulton Financial Advisors, RBC, and Marshfield Associates. The Community Foundation’s assets are audited annually by an independent auditor and are available for public review.
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 management with the exception of scholarship funds which a 1.5% fee is charged.
How can I find out more about the Community Foundation?
We welcome you to give us a call at 301.745.5210 or fill out the “contact us” form on this website.
