Frequently Asked Questions
Won’t a community foundation in Dufferin cannibalize other fundraising activities of local groups?
What would be the relationship between a Community Foundation and other local organizations, like the hospital foundation, or Big Brothers Big Sisters, or Family Transition Place?
As a service club that is a registered charity, if we support the start-up of a community foundation by donating stat-up funds, could the foundation in the future provide funds to the service club?
You say you will not compete for fundraising in the community, and yet you are actively seeking donations right now. Please explain.
What is the difference between United Way and a community foundation?
If I have $50,000 and want to support an organization like Hospice for example, why don’t I just give it directly to Hospice instead of going through a community foundation?
It depends on your personal objectives in giving the money to the charity of your choice. If you give to them directly, it could all be used to fund their operating costs and be used up in perhaps a couple of years. But if you want to create a fund that could support your charity of choice for many years by flowing smaller grants annually from the investment income of your money, then giving it to a community foundation to manage, with the restriction that all income goes to Hospice annually, is a great alternative.
It sounds like each local charity should set up their own foundation to receive and administer these kinds of endowment funds. Tell me why they should not?
I want to leave part of my estate to a charitable foundation in my name. Why don’t I just set up my own named foundation?
See answer to question 8 above – this applies to private foundations as well. Unless you have upwards of a million dollars to put into your own foundation, admin costs can eat up a lot of it. Using a community foundation, you can create your own named fund and your family members may even be advisors to making of grants annually from it.
How much does it cost to administer a community foundation? Won’t administration costs eat up a lot of the donations?
The board and committee members at a community foundation are all volunteers from the local community who serve without compensation, so overhead costs can be kept low. It is true that there are ongoing costs for annual audits, reporting to CRA, insurance and eventually, as the funds grow in number and size, for a staff member to keep manage it. Typically, community foundations levy a fee of between 1 and 2% of the invested money, to fund operation costs. You know that professional money managers – in mutual funds, for example, levy a fee of approximately 2% to manage the money, and the larger the pool they manage, the lower the fee they levy. Community foundations, by pooling money to be invested in larger pools, can achieve those lower management fees, which mainly offsets any fees levied by the community foundation.
Will the board of the community foundation directly manage the investment of the funds?
The board will oversee the investments and will provide direction on such things as the kind of investments that are acceptable, or the degree of risk that would be tolerated. However, professional money managers would handle the day to day management of the funds – just like most of you do with your RRSP investments. As a new community foundation, we could partner with another foundation for management of the funds to increase the size of the pool of invested money – and so achieve savings on management fees – and to use their expertise in fund reporting.
Do we need another charity in Dufferin?
Unlike almost every other charity, which exists to provide needed service to the community, the only service a community foundation provides is an additional source of funding. A community foundation does not itself actively deliver local services, it helps others deliver those services by providing funding.
Why form a community foundation now, and why in Dufferin?
Almost 200 communities across Canada have community foundations – some are close to a century old -that help improve the lives of people in their communities. Around Dufferin, there are foundations in Centre Wellington, Guelph, Caledon/Brampton, Barrie, Bradford, Grey-Bruce and so on. With the aging baby boomer generation, and with many people having been fortunate enough to collect substantial assets over their working life, more and more people are considering what to do with their wealth after family needs have been considered. Many people are wondering how to minimize tax on their estate at the time of death and considering ways they can leave an impact year after year from their original gift.