FAQ For Donors...

General

What is a community foundation?

A Community Foundation is a nonprofit organization that works with donors in a specific geographic area to help them accomplish their philanthropic goals. It is the most flexible and tax-advantaged way to give to the community.

What do you mean by "the most tax-advantaged way to give?

Since the Community Foundation is a public charity, an individual can deduct cash contributions of up to 50% of his/her adjusted gross income (AGI) and can deduct the value of marketable securities contributions of up to 30% of AGI in any one year. This compares favorably to private foundations through which an individual can deduct only 30% of AGI for cash and 20% of AGI for marketable securities contributions. A wide range of appreciated assets qualify for full-value deduction with NWACF (see chart comparing private foundations and donor advised funds).

Giving

Who has the right to make grants from a donor-advised fund?

Only those individuals who establish the fund (the "donors") and personal representatives named by the donors have the right to recommend grants from a fund.

May I give to my church or synagogue?

Yes, a donor may recommend a grant from his/her fund to these institutions and to any other nonprofit.

Can I give to charities outside of northwest Arkansas?

Yes, a donor may recommend a grant to any nonprofit 501(c)(3) charity located anywhere in the U.S. and some foreign charities.

May I buy a table at a charity gala?

No. Because a portion of the ticket is not tax deductible, the foundation does not accept recommendations for grants to purchase tickets to charitable events.

How much do I have to give away every year?

The Community Foundation does not have a "minimum payout requirement." This is a key advantage over private foundations that have a 5% minimum payout annually, as mandated by law.

Can I give to an individual who has suffered a personal tragedy?

Grants are generally made to charitable organizations. The only grants available to individuals are scholarships, which must be selected through a competitive process.

Fund

What does it cost to set up a fund?

There is no "set-up" charge to establish a fund with NWACF; all you have to do is complete a Donor Advised Fund Agreement. There is a maximum 1% annual administrative fee assessed against the fund's balance to cover the cost of donor services and grant administration. The administrative fees are reduced for funds larger than $500,000. Investment management charges (presently ½ of 1%) are netted from investment income.

What is your minimum account size?

Individual donors can start a Horizon Society Fund for as little as $600 a year and build towards a permanent endowment. Nonprofit agencies can do the same. Individuals wishing to support a variety of causes will need $25,000 to establish an Advised Fund or Field of Interest fund. Scholarship funds also require $25,000. A Designated Fund for a single agency requires $15,000. All funds must maintain a minimum balance before disbursements can be made.

What can I name my fund?

A donor may name a fund anything they choose. For instance, they may use the family name, as in the Stanley and Annabel Applegate Scholarship Fund, or the name may reflect an interest, as in the Northwest Arkansas Community Development Fund.

Can I change or add personal representatives?

During the lifetimes of the donors and named personal representatives, they have the right to add to or subtract from the list of named representatives.

Can I make grants from the corpus of my contribution?

Yes, grants may be made from investment income, appreciation, or the corpus of the fund.

Who is managing my money and how is it managed?

The Community Foundation has a diversified portfolio. Donors may select the diversified portfolio or you may choose to participate in a money market fund The Foundation is presently paying approximately ½ of 1% investment management fees (55 basis points) annually, which is netted out of the investment income.

How long can a fund stay in operation?

A fund may continue in perpetuity.

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