Frequently Asked Questions

When we speak to community members and business leaders in our community, there are common questions that people have about community foundations.  We love questions, because it means you are thinking with your heart and truly considering your options to participate.  Here are a few of the questions that seem to pop up regularly.  If you have a question that is not addressed below, please contact us.  We would love to hear your feedback and any other questions you may have.
Won’t a community foundation in Dufferin cannibalize other fundraising activities of local groups?
Most local fundraising activities are asking for relatively small amounts of money on an annual basis to support annual operating costs of their organization. Community Foundations, however, exist primarily on receiving large blocks of one-time cash – either from individuals or companies who want to minimize tax on while providing a long-term benefit to the community, or from individuals who leave substantial funds from an estate to the foundation.  Therefore, the main source of funds for a community foundation is very different from the annual giving for fundraising drives of charities and non-profits.  Our objective is to create a new pool of giving locally that can then provide a new source of funding to local charities and non-profit agencies, today and for future generations.
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?
All of these types of organizations could be recipients of grants from the community foundation. Just as importantly, a major objective of a community foundation is to raise the awareness and knowledge of philanthropy in the community – the benefits of giving, both to the community and to the individual. A community foundation would want to work with other local charities to achieve this goal, to everyone’s benefit.
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?
Service clubs that are a registered charity and who match our granting criteria can apply for grants.
You say you will not compete for fundraising in the community, and yet you are actively seeking donations right now. Please explain.
A community foundation has significant costs to get set up and going.  Legal costs of incorporation and obtaining charitable status, insurance, developing annual reports to CRA and to the community, promoting our message to the community – even with lots of volunteer time, still costs money.  Until we are self-sustaining from our own internal sources, we need to seek donations to support our start-up costs. It is our hope that after 3-5 years we will be self-sustaining.

 

What is the difference between United Way and a community foundation?
The United Way primarily gets donations from employees voluntarily signing up through their employer to make small deductions from their payroll.  The United Way then pools all the donations, and through a grant process, gives to charities in the community.  That works best in communities with a lot of larger employers – not so well where most employment is in small businesses or sole proprietorships. Dufferin is one of those communities that has a very low participation rate in United Way programs.  Another key difference is that United Way tends to be a “one-time-gift-and-it’s-spent” approach.  Community foundations focus on endowed giving, where a one-time gift keeps giving year after year, forever.
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?
It is expensive to set up and to administer charitable endowment funds. The smaller the fund managed, the greater the percentage of the investment will go to pay annual operating costs. Community foundations offer an alternative to setting up a lot of smaller foundations and is much cheaper to operate due to consolidating funds, enlarging the pool of money managed. Reporting on the income of each fund is still provided, but there are no legal fees, insurance, or annual audit fees to pay – only one organization pays fees for all funds under administration, representing a substantial saving to the community.
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.