to professional advisors Sa m ple presentation ( Please note: This presentation is long. Please tailor it to meet your needs. If it is more appro- priate for your organization, substitute “community fund or community endowment” for “community foundation.” ) Why we’re here n To help you help your clients with their planning and charitable interests n To introduce to you the flexibility and benefits of a community foundation n To tell you a few stories about how others have found the community foundation concept useful Do you know some of these people? Mary Pettigrew — widow of James Pettigrew, she has been in the community only since they retired here about 10 years ago. She has become deeply involved with the local church and the local arts scene. She worries about her only daughter who is a successful single- mom career woman living far away, and doesn’t know what she should do about the estate plans that leave everything to the daughter and granddaughter, both of whom argue that they don’t need it and tell her that she should do whatever she wants with it. What sug- gestions can you make to help her? Mabel and Joseph Cargill — Joe has built a substantial business in the community. He is considered a leader and theirs is a high-profile family. Their kids are grown and gone and none is involved in the business. With his wife, Joe chairs all the big events in town and donates time and money generously to several organizations. He likes to be identified with new groups and activities, is strong-willed and opinionated, and has finally decided to sell the business that will undoubtedly bring somewhere in the low eight figures. He needs to review his estate and financial plans in preparation for this substantial financial event. How are you discussing charitable giving with them and what could the commu- nity foundation do to help them? Mr. and Mrs. Wingate — They have lived here all their lives and are very involved in com- munity activities. They have lived comfortably but wouldn’t be known for their charitable giv- ing. They raised two children and are eagerly expecting their third grandchild, have attend- ed a local church all their lives, and are facing the realization that they need to review the wills they made 30 years ago. Many of you have guided them through the years — in their L E A D I N G T A C T I C S F O R R U R A L F U N D D E V E L O P M E N T : H O W - T O S A N D T E M P L A T E S V E R S I O N 3 - 0 6
2 retirement account, their insurance policies, their plans for the kids’ education, and their modest investment portfolio. They love their children and grandkids but recognize that the kids are well-paid executives, so maybe they should be rethinking their wills that left every- thing to them. What do you say to them and how do you discuss their chari- table interests? Let’s take a look at the history of the community foundation movement. Maybe that will help put some of these questions into perspective. The first Community Foundation was started in 1914 by Frederick Goff, president of a Cleveland Bank. Why? n He was holding charitable funds he couldn’t distribute because the donors had died and Sample presentation to professional advisors their wills specified they must be used for specific community needs that no longer existed. n Because he believed that everyone should have the opportunity that Carnegie, Rockefeller, Ford and Mellon had—to make a big difference with their charitable giving. n Because he knew the cost effectiveness of pooled funds. n Because he believed that wise people currently serving on the board of the bank could help with this need to distribute the funds most appropriately to current charitable causes. The community foundation concept became popular and soon the foundations began to proliferate, especially in all the major cities of the nation. They were still not well known as entities, however, until the late 1960’s when: In 1969 Congress identified abuse in the field of philanthropy and determined to eliminate it. n Congress determined that using your own tax-exempt foundation for personal gain was inappropriate. n Congress also found that public charities, in general, were not abusing their tax-free sta- tus, so community foundations were no longer required to pay excise tax, they no longer had to have a minimum 5% payout and distribute it within a one-year period, and they could offer greater tax deductions and flexibility to accept certain types of gifts. n This 1969 Tax Reform Act began the rush to form free-standing corporate community foundations no longer attached to a bank. The early 1970’s saw the formation of many community foundations throughout the country, but primarily still in the larger cities. L E A D I N G T A C T I C S F O R R U R A L F U N D D E V E L O P M E N T : H O W - T O S A N D T E M P L A T E S V E R S I O N 3 - 0 6
3 Suddenly, it seemed that everyone was eyeing the benefits of the community foundation business model. Just what made it so special? The four principles identified by Frederick Goff in 1914 are the same today and form the basis of the community foundation concept — essentially unchanged over all these years. These are: n Community foundations have “cy pres,” (pronounced “sigh-pray”) or the variance power — the ability to change the directions of the original donor if the cause is no longer necessary (if, say the donor’s funds were to go to combat a specific disease, and the disease has been eradicated); or if the foundation is incapable of following the directives of the donor (if, say, funds were to go to pay for schooling for young people interested in making buggy whips). Cy pres is not used often: in the case of polio, funds originally dedicated Sample presentation to professional advisors for that purpose would be diverted to the next closest cause, such as another muscular disease; funds for scholarships to learn to make buggy whips might be diverted to schol- arships for automobile mechanics. Nevertheless, cy pres avoids the cost and time of hav- ing to return to the court for permission to change the donor’s terms. n Community foundations typically have modest to small minimum size requirements to start donor-named funds, say $5,000–$10,000 on average (or sometimes less or none at all in rural places), so many individuals and families can have a fund in their name that lives forever — annually distributing funds to their favorite causes. n Community foundations use the concept of pooling these small funds for efficient and effective investment performance — you couldn’t have a private foundation for $5,000 or even $50,000 but you can have a named fund in a community foundation and work with your foundation to carry out your and your family’s dreams and charitable activities. n Community foundations are governed by volunteers serving on the board and on numer- ous committees. Board members typically are limited to a certain maximum number of years of continuous service on the board, so there is a regular addition of new leadership and no control by a single family or individual. Volunteers also form the grant committee to help distribute the funds, the investment committee to determine the investment poli- cies and procedures and to hire and fire the professional money managers, and other committees to build the assets of the foundation. The scene today is quite different in several ways: n There are now well over 650 community foundations throughout the United States — both in large cities and in countless rural communities. n There are community foundations starting around the world — in North America, Europe, Africa, Asia, Australia and South America. L E A D I N G T A C T I C S F O R R U R A L F U N D D E V E L O P M E N T : H O W - T O S A N D T E M P L A T E S V E R S I O N 3 - 0 6
Recommend
More recommend
