Frequently Asked Questions about Community Foundations

What is a community foundation?

A community foundation is a tax-exempt public charity created by and for the people in a local area. It is a tool that helps individuals, families, community leaders, corporations, nonprofits, and government organizations make an impact by investing in effective programs and more inspired philanthropy.

How is a community foundation different from a private foundation?

Community foundations make philanthropy easy. They allow individuals and families to establish a customized charitable fund without being burdened by the regulatory requirements, tax liabilities and administrative and fiduciary hassles associated with setting up a private foundation. The regulations, taxes and administrative requirements required to establish and manage a private foundation do not apply to community foundations because they are public charities, and donors can remain anonymous. Individual and family foundations are increasingly moving their fund management to their community foundations to ensure longevity.

What are the benefits of contributing to a community foundation?

Our goal is to make the charitable giving process more simple and the work of investing more meaningful. Community foundations provide philanthropists a wide range of cost effective and tax-smart options to make a measurable difference.  Donors can self-direct their contributions to specific causes, invest in broader areas of interest, or provide unrestricted gifts to an endowment to address emerging needs. All of the foundation's assets are pooled for investment management purposes, minimizing cost and increasing return. This gives a small individual funder the same professional investment advice as a large foundation and creates an economy of scale that ensures more funds go to address issues and  needs.

What kinds of assets can be used to set up a fund at a community foundation?

One of the distinct advantages of working with a community foundation is flexibility. As a general rule, a community foundation can accept any type of asset as long it is marketable and not encumbered by an unusual liability.

What is a Donor Advised Fund?

A Donor Advised Fund (DAF) is a simple, flexible charitable giving tool that allows donors to support their favorite causes, while simplifying their giving and maximizing their charitable impact.  Donors make tax-deductible contributions to the Advised Fund and then recommend how they want the contributed funds distributed. DAFs give donors the security of skilled financial management and the flexibility of guiding their gifts. The Community Foundation of Utah does the time-consuming paperwork and recordkeeping. Donors' contributions are allowed all the tax benefits and privacy allowed to donors to public charities.