Options for Existing Non-Profit Organizations

A designated fund at the Community Foundation can be a permanent fund (endowment) or a non-permanent fund (pass-through), or both, for an existing nonprofit organization. Gifts to funds held by the Community Foundation are fully deductible at the current fair market value, including publicly traded or closely held stock.

Designated Funds

An existing non-profit organization may want a second charitable entity to hold its endowment or be its “foundation.” The goal may be to have a separate 501(c)(3) entity to receive grants from corporations and foundations. A designated fund at the Community Foundation is a simple way to accomplish these goals and is easy to establish. The existing non-profit organization creates an endowment or pass-through fund in its name at the Community Foundation to which many individuals, corporations and foundations can contribute. The fund agreement can name other organizations to benefit from the fund if the named organization goes out of business.

The Role of the Non-Profit Organization

• Establish a designated fund with a contribution of cash, securities, or other property valued at $5,000 or more for endowments and $500 or more for a pass-through fund.
• Name the fund, which can include “Foundation.”
• Work with the Community Foundation staff to publicize the fund.
• Add to the fund at any time.
• Taxpayers take a tax deduction at the time a gift is made.

The Role of the Community Foundation

• Process contributions to the fund and issue gift acknowledgement letters.
• Manage and maintain fund records.
• Administer and invest the assets of the fund if desired.
• Allocate earnings to the fund annually, including earnings which are available for distribution to the charitable organization in accordance with the spending policy of the Community Foundation, and capital appreciation or depreciation.
• Establish the value of any securities donated to the fund based on the fair market value on the date they are received.
• Include the fund in the Community Foundation’s federal and state tax returns and independent audit.
• Issue regular financial reports on the fund’s status.
• Report the fund in its annual report.
• Assure that the endowment fund exists in perpetuity to support the charitable organization.

If you are looking for information on how to obtain a grant from the Community Foundation, see the Grants portion of our web site.

For more information on the Community Foundation of Southern Indiana and how it can help you accomplish your charitable objectives through a designated fund, please call or e-mail Jim Wathen at (812) 948-4662, or jwathen@cfsouthernindiana.com.