The Community Foundation of Northeast Alabama (CFNEA) recognizes the importance of professional legal and financial counsel. For this reason, the Foundation welcomes donors to include their professional advisors when establishing a fund or making a planned gift to CFNEA. Though the Foundation offers all services necessary to maintain a fund, it does not intend to replace a trusted professional advisor. Instead, the Foundation partners with advisors, aiming to strengthen the bond by offering their clients effective approaches to charitable giving. These approaches include:

Personalization
 
The Community Foundation understands that no two donors are alike. Donors come with diverse philanthropic goals, ranging from a scholarship fund benefiting a local high school to passing on charitable values to the next generation through an Advised Fund. Equally diverse are the types of assets used to begin funds. No matter how routine or complex the situation, CFNEA partners with professional advisors to create an individualized plan for giving. When requested, the Foundation also works to integrate established estates or private foundations into a permanently endowed fund at CFNEA.

Accommodation

Further underscoring a commitment to personalization, the Foundation accommodates donors in their desire for involvement. Donors may choose to remain anonymous or they can be recognized for their generosity and public leadership which often inspires others. Donors also define their level of involvement; they may closely participate in the grant making process or allow the Foundation to manage the fund based on their objectives.

Simplicity

 The Community Foundation functions as a flexible and reliable resource in providing effective solutions for donors and advisors. Our services include professional preparation of documents, financial reporting, distribution and receipting of grants and scholarships, and all other administrative tasks required of a fund. Through the Foundation, donors and advisors may set up a fund and receive immediate tax benefits in a single day.

Advantages

As a public charity, CFNEA offers the highest level of tax benefits for charitable giving. Thus, any asset irrevocably given to the Community Foundation immediately receives maximum tax benefits. The impact of an investment is further multiplied by pooling of all investment funds. This enables all donors to benefit from professional investment management at reduced costs. In addition, community foundations are the only entity in the IRS Code that has a variance authority over charitable funds. This legal privilege ensures that in future years, funds at CFNEA are not subject to probate court and legal fees to debate the use or continuation of the fund’s charitable purpose. For donors seeking to leave a last legacy, this is a significant benefit. 

Why shouldn't my client give directly to the organization(s) they wish to support?

The Community Foundation is ideal for clients who have situations that would result in a large charitable contribution, such as the sale of a business, a required IRA distribution or the transfer of assets out of their estate for tax purposes. Placing these gifts at CFNEA allows your client to receive an immediate tax deduction and make grant distributions at a later time.

Clients may also want to ensure that a regular gift to a favorite charity continues beyond their lifetime. The Community Foundation can ensure that these intentions are followed. A similar scenario is the client who is uncertain of a charity’s longevity, so a fund at CFNEA can have a contingent beneficiary or ensure that the fund serves the purpose intended by the donor.

Larger gifts to charitable organizations have proven to harm organizations, cause them to be reclassified as a private foundation or caused other donors to stop giving. Thus, a fund at the Community Foundation can be a substantial resource to avoid unintentional outcomes.   

What types of assets can a client give to the Community Foundation?

CFNEA is capable of accepting a wide variety of assets, from cash and securities to real property and contracts such as IRAs, life insurance policies, certificates of deposit. We also have the ability to offer charitable gift annuities, provide charitable life estates and manage other trusts and split-interest gifts (remainder and lead trusts). Clients can keep their assets during life and then gift them in a will or estate plan to establish a perpetual fund that is prearranged with the Community Foundation.

What are the tax benefits for my clients if they give to the Community Foundation?

As a qualified 501(c)3 charitable organization, the Community Foundation offers the maximum charitable tax advantaged available by law. Because the CFNEA is a community foundation, it is not subject to the taxes and regulations affecting private foundations.

How much control and freedom would my client have in making grants?

Your client can recommend grant distributions to any charitable organization within the United States that fall within the broad philanthropic mission of the Foundation and is qualified as a public charity under Section 501(c)(3) of the Internal Revenue Code. The Community Foundation will ensure that organizations recommended for a grant meet this requirement.

In complying with federal tax laws, and for the protection of your client, the Community Foundation cannot support distributions to that would benefit an individual, fulfill a personal obligation such as a pledge, fund a political campaign, or support a private foundation.

How does a Donor-Advised fund work?

Your client can establish a Donor-Advised fund with a signed fund agreement and a minimum opening gift of $1,000. Your client will receive an immediate tax deduction. Gifts minimums of $10,000 are required for a fund to be invested. Your client then recommends grants of no less than $250.00 using a Donor-Advised Recommendation Form. This can be done at anytime throughout the year. A Donor-Advised fund can be converted to a perpetual fund with a minimum gift of $100,000.

Can my client name a successor to the fund?

Yes, your client can name a successor or successors to the fund. If they do not name a successor, or after the successor's death, the Foundation's Board of Trustees will continue to award grants from the funds in accordance with your client's directives as defined in the fund agreement.

How do CFNEA's costs compare with those of commercial gift funds and private foundations?

The Community Foundation's fees are highly competitive with commercial gift funds; however, CFNEA offers far more than investment services. Your clients will receive information on promising local projects that lack funding; they can combine their funding with like-minded donors and make truly significant impact grants; and they will benefit from a staff that understands the community and has expertise in the philanthropic field.

There is no fee for starting a fund at CFNEA, which is significantly less expensive than incorporating a private foundation. Since we handle all administrative details, including filing annual tax returns, conducting an annual audit, performing due diligence on grants, and all details associated with processing and tracking grants or scholarships.