Why should I give to or give through the Community Foundation?

The Community Foundation of Northeast Alabama (CFNEA) is a resource to help capture local wealth and assets for the long-term benefit of this region. Most small Southern communities have few permanent financial resources. In addition, many young people leave the area, which eventually results in local wealth being transferred to them, and in most cases, to regions that have far greater assets. Thus, more rural communities suffer from both limited assets and the migration of capital. A gift to CFNEA enables past and current residents to invest in and sustain their communities today and in the years ahead. 

What are the advantages of having a fund at CFNEA?

There are several reasons. With the Community Foundation you can establish a perpetual fund without establishing a private foundation or incorporating with the IRS. You receive the maximum charitable deduction since CFNEA is qualified public charity, benefit from professional administrative and investment services, have access to a knowledgeable local resources that review and monitor grant or scholarship recipients and give back to the institutions and organizations that served you in life.

What are the tax benefits of giving with CFNEA?

Because we are a community foundation, CFNEA is a fully tax-exempt nonprofit under Section 501(c)(3), a publicly supported organization under Section 170(b)(1)(A)(vi) and "not a private foundation" under Section 509 (a)(1) of the Internal Revenue Code. This creates the potential for the greatest possible charitable deductions. As a community foundation, funds managed by CFNEA are consolidated for reporting purposes, and therefore are not subject to excise taxes and other management and reporting requirements which apply to private foundations.

How do I know that CFNEA is financially accountable?

An independent audit of the Community Foundation is conducted annually and presented to the Board of Trustees for discussion and approval. CFNEA also files a tax return annually which is available for public inspection. Aggregate financial information is publicly disclosed; however, individual donor financial information remains confidential. Each fund representatives or advisor receives a financial report on a quarterly basis.

What kinds of funds can I create with CFNEA?

This depends on many factors, including whether or not you would like to have an ongoing involvement in the distribution of grants, and whether your charitable interests are broad or specific. It also depends on how long you wish your fund to exist. Please see Fund Types for descriptions of the various definitions of funds available at CFNEA.

What is the difference between a permanent fund and a pass-through fund?

In a permanent endowment fund, principal remains in the fund to generate earnings for distributions year after year. A pass-through or non-endowed fund permits principal as well as earnings to be distributed from time to time. You can always change a non-endowed fund's status to permanent. Many donors achieve this by naming a fund as the beneficiary in their will or estate plan.  

Who administers these assets?

All of the Community Foundation’s assets are under the sole authority of the Board of Trustees. Responsibility for investment policy and manager selection is monitored by the Finance & Investment Committee. Donors establishing a fund are making an irrevocable gift to CFNEA, which must have the unrestricted ownership of all gifts. Without this clear understanding, the gift cannot qualify for a charitable tax deduction. Moreover, it can cause the charity to lose its charitable status with the IRS and the Office of the Alabama Attorney General. This link will take you to financial information.

What fees are charged to the funds?

The Community Foundation charges two fees: i) investment and ii) administrative. The investment fee is the same for all assets regardless of asset size. As the Foundation grows these fees are reduced. Currently, they are 0.70 basis points or just under one percent (1%). The administrative fee depends on the type of fund; the services the fund requires and the duration of the fund. For example, a scholarship fund will include an application, a selection process, public award to the recipient, communication with the educational institution and monitoring the student’s compliance with the fund guidelines; whereas, a designated fund may make one distribution a year to a favorite charity. Please call or email us to request a current Fee Policy.

What information do donors receive?

The Foundation does not operate as a “charitable bank” where funds are deposited and then expended. We strive to inform donors about promising programs or projects in the region. Likewise, donors may inform the Foundation about a significant need or unmet service through the Community Investment Committee or public listening sessions. In addition, donors receive the Foundation's Annual Report and newsletters as well as quarterly financial statements showing income to and grant payments from the funds. 

In what ways are funds distributed from funds to the community?

The Foundation distributes funds through competitive grant applications two times each year. Donor-Advised funds can make grant recommendation throughout the year. Scholarship funds each have guidelines and an application. These are due on February 1 of each year. Ideally, scholarships are announced at the various high school award programs in April and May. In addition, the Foundation takes a leadership role in at least one major community initiative every two to three years.