Advisors: Your frequently asked questions answered

Clients can set up a fund at the Community Foundation for whatever purpose they want and know that their wishes are going to be carried out. I don't worry about referring clients to the Community Foundation; I know it's in good hands.”

– Nancy Little, retired shareholder, Buhl, Little, Lynwood & Harris

We have the local knowledge and expertise to best serve your clients' philanthropic interests. You have the skills and knowledge to best serve your clients' financial and legal interests.

It's a perfect partnership.

We're here to support the work you do to put your clients' philanthropic plan into action. Take a look at some of the questions we regularly hear from your peers:

While the donor-advised funds (DAFs) available through some of the major commercial institutions offer the same tax deductibility as a fund at the Community Foundation, donor-advised funds housed at the Foundation are relationship- and service-based. With our expertise, we make donors aware of local needs and local opportunities, enabling us to create giving strategies that reflect the donors’ interests. Donors become part of a “community of donors” focused on strengthening our region.

In contrast, commercial donor-advised funds are transaction-based. The commercial institution cannot provide guidance or insight into the community, its needs, or nonprofit leaders. Nor do the fees charged against these commercial funds support philanthropy in the region. Our fees are recycled back into the community in the cultivation of philanthropy.

Additionally, the Community Foundation can accept the full range of gift opportunities, while gifts to create funds at commercial institutions tend to be limited to cash and publicly-traded securities.

To see all the differences easily, look at our full DAF comparison chart.

A fund at the Community Foundation is less costly to establish than a private foundation in terms of both time and money. Our staff can help your clients establish a fund in a matter of days, and then we handle all the administrative details and reporting. Establishing a private foundation can take months or longer, and the private foundation then becomes responsible for substantial legal, accounting, and operational matters.

A private foundation is usually endowed by a single family or corporation and controlled by that family or corporation. In contrast, a community foundation derives its support from a broad spectrum of the general public and is controlled by a board of community leaders. Because it is publicly supported and controlled, the community foundation is accorded certain advantages over private foundations by the IRS, including the following:

  • Higher deduction limits for donors.

  • No excise tax imposed.

  • No minimum payout requirement.

  • No separate tax reporting on individual funds.

See our full list of advantages over at Private Foundation or Community Foundation?

Here are seven questions to consider:

  1. Do I have clients who care deeply about their local community?

  2. Do my clients give to more than one charitable cause?

  3. Are my clients interested in creating a personal or family legacy in their community?

  4. Are they considering the creation of a private foundation, but are concerned about the cost and administrative complexity?

  5. Would they like to stay personally involved in the use of their gift dollars?

  6. Do they want to receive maximum tax benefit for their charitable contributions under federal law?

  7. Do they place a priority on sound financial management of their contributions?

If you answered yes to any of these questions, your clients may benefit from knowing more about us. We’d be happy to help you make an introduction.

We work closely with professional advisors in mid-Michigan to offer services including assistance with research, document samples, customized calculations, personalized presentations, and attendance at client meetings.

We're trained to assist individuals and families in thinking through their charitable goals and to provide you with current information on charitable giving options to help you better serve your clients. We encourage a continuous interface for our donors with their legal, accounting and financial counsel. We become part of your team, helping your clients with current and future philanthropic endeavors.

We can accept the full range of assets including cash, publicly-traded or closely-held securities, limited liability companies and limited partnership interests, as well as real estate. A fund at the Community Foundation can also be the beneficiary of bequests, charitable remainder and charitable lead trusts, retirement accounts, and insurance policies.

Your client’s tax situation should be viewed on an individual basis to determine the deductibility allowed for them. A fund at the Community Foundation is often a better alternative than a private foundation. Some of the tax advantages of working with the Community Foundation include:

  1. Federal tax deductions: The Community Foundation is a 501(c)(3) public charity. As such, gifts to the Community Foundation qualify for the best income, gift, estate, and generation-skipping transfer tax treatment allowed for charitable transfers.
  2. You avoid capital gains taxes on gifts of long-term appreciated assets such as stock (both public and privately owned companies) and real estate. Your deduction will be valued at full fair market value, but you won't have to recognize the built-in gains as income.
  3. Funds established at the Community Foundation are not subject to private foundation income taxes, excise taxes, or 5% mandatory distribution rules.
  4. Gifts to funds at the Community Foundation receive more favorable tax treatment than gifts to private foundations.

That’s where the real enjoyment and excitement begins for your client. A member of the Community Foundation’s staff will work with your client to fine-tune their charitable goals and make their philanthropy as meaningful as possible. We can do research, set up site visits, and introduce your clients to other like-minded fundholders.

Your clients establish their fund by completing a fund agreement and providing an initial irrevocable contribution of $10,000 or more. Your client may make additional gifts to their fund in any amount and at any time.

The Community Foundation’s current minimum grant distribution is $500. Your clients may request grant distributions from their fund in any amount over $500 at any time. Grant requests can be made by email, by phone, or online.

We create and send quarterly statements reflecting activity in all funds.

Yes, we offer personalized resources to suit your particular client’s questions. Check out our Advisor Toolkit and let us assist you.