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A foundation for our community

Giving back to your community can offer very attractive options

December 9, 2012
Messenger News

Many people are familiar with foundations that serve colleges and universities, private schools, hospitals, museums and other institutions of this kind. The purpose of these foundations is to raise charitable funds to support the mission of their organizations.

What many people may not realize is that community foundations work the same way, except their charitable support is for their communities. The purpose of a community foundation is to help people with philanthropic interests support community nonprofit organizations and causes that they care about, easily and effectively. Community foundations promote philanthropic giving for the distinct purpose of bettering their communities and improving the quality of life of the people who live there.

Community foundations develop lasting legacies through funds that are designed to support the philanthropic goals of donors. From these funds, grants are made to a wide range of charitable causes and nonprofit organizations that address a wide range of current and long-term community needs. Put in simpler terms, a community foundation serves as a permanent "savings account" to benefit the community today and tomorrow.

The Fort Dodge Community Foundation and United Way is recognized for meeting the rigorous standards established by the national Council on Foundations. As a community foundation, the Fort Dodge Community Foundation and United Way is a public charity that offers community-minded citizens tax advantaged ways to create long-term charitable assets to better their community, advance the common good, and improve quality of life now and for future generations.

The mission of the Fort Dodge Community Foundation and United Way is to serve as a catalyst for charitable giving that will support important community programs, services and projects that benefit the public good and improve the quality of life of all citizens, families and youths in Fort Dodge and Webster County. Our objective is to drive positive change and community development through grant-making, convening and leading, and by leveraging donor giving to meet community needs today and forever.

The Fort Dodge Community Foundation and United Way can support a wide range of important community projects, issues and causes in such fields of interest as: education; health care; human services, recreation; parks and trails; the arts; historical preservation and cultural heritage; public safety; environment and beautification; economic development, the Fort Dodge Public Library; the Blanden Memorial Art Museum; other nonprofit organizations; churches and other religious organizations; and other community causes and needs. The beauty of a community foundation is that it offers donors the flexibility of supporting almost any community cause, project or nonprofit organization.

Fact Box

Endow Iowa tax credits

The 25 percent Endow Iowa Tax Credits: The Endow Iowa Tax Credit program was created to encourage donors to enhance the quality of life in their communities. Donors who establish an endowed fund with a qualified community foundation, (the Fort Dodge Community Foundation and United Way is a qualified community foundation) are eligible to receive a 25 percent state of Iowa tax credit for the amount of their gift and also take full advantage of federal income tax deductions that are afforded to charitable gifts. The example listed here is based on an endowed gift of $10,000 with the donor being in a 28 percent tax bracket.

$10,000 Donation

$ 2,800 May be saved on federal taxes

$ 2,500 (25 percent) state tax credit

$ 5,300 = Net tax savings

How an endowment works

An endowed fund with the Fort Dodge Community Foundation and United Way is carefully invested for prudent return and growth so the fund will exist in perpetuity. The growth of the endowment fund and the income earned help provide grant dollars necessary to carry out the charitable objectives of the donor. Endowed funds typically have a granting policy in the range of 4-5 percent annually. This means that over time, more grant dollars are available to the community and the endowment fund itself continues to grow. The example listed here is based on an endowed gift of $20,000 with an average annual growth of 6.5 percent.

YEAR 1: Establish an endowment fund - $20,000 gift.

YEAR 15: $19,000 in cumulative grants have been made - $32,000 fund balance

YEAR 25: $38,000 in cumulative grants - $46,000 fund balance.

YEAR 50: $132,000 in cumulative grants - $114,000 fund balance.

As a community foundation, the Fort Dodge Community Foundation and United Way enjoys a flexibility that allows us to work closely with donors and respond to their charitable interests and goals. The most popular giving vehicles are donor advised funds, endowment funds and planned gifts.

Donor-advised funds: The most popular philanthropic vehicle used across the nation by community foundations is a donor-advised fund. Simply stated, a donor-advised fund is a charitable vehicle in which a donor contributes cash or assets to create a fund with a community foundation. Contributions to a donor-advised fund offer donors attractive tax saving advantages. Donor-advised funds allow donors to support a variety of charitable causes through their fund any time they choose. Donors appreciate the flexibility of picking and choosing how they want their charitable gifts distributed and can change their charitable preferences at anytime. Donors truly enjoy this flexibility. Some donor-advised funds will be fully expended during the donor's lifetime; others will be a permanent legacy, benefiting the community into the future. Donors can also receive special state tax credits when giving through Iowa community foundations if their donor-advised fund is endowed. Setting up a donor-advised fund is a simple process and there are no legal or accounting fees required. The staff at the community foundation takes care of all the administrative details - tax, legal, and accounting matters.

Endowment funds: To benefit your community for the long-term, endowment funds can serve as a permanent "investment account" for the community and county. Endowed funds are prudently invested to grow over time. A portion of the earnings from the funds' balance (usually 4 to 5 percent) can be granted out on an annual basis to support community needs and charitable causes specified by the donor. The remainder of the investment yield is returned to the principal so the funds will continue to grow and become a permanent source of capital, helping do good work today and in the future.

Many donors want to know that the things they care about - a place, a community service, an institution or organization - will be supported long after they are gone. An endowed fund through the Fort Dodge Community Foundation and United Way can support the charitable causes that donors care about most and offer them a 25 percent Endow Iowa state tax credit in addition to the normal federal charitable income tax deductions for charitable gifts.The Community Foundation exists as a trusted resource for making sure that a donor's endowed fund will be sustained and will grow so it can continue to do good work for the long-term. An endowed fund can create a vision for a better community and create a personal or family legacy that will last long after the donor's lifetime.

Planned gifts: Planned giving is a method of supporting nonprofits and charities that enables philanthropic individuals to make larger gifts from their estate by using estate and tax planning strategies to maximize the gift and minimize its impact on the donor's estate. A planned gift can be established through any of the following giving options: endowed funds, gifts designated in a will or estate plan, gifts through a life insurance policy, IRA, 401(k) plan, life estate agreements, charitable gift annuities, charitable remainder trusts, or gifts of cash, real estate or other appreciated assets made during their lifetime. Planned gifts play a critical role in the development of funds that will support the community for decades to come.

The Fort Dodge Community Foundation and United Way is here for one purpose, to foster community philanthropy - making it easy for citizens to give back to their community and invest in its future. Jack Schultz, a renowned author and economic developer has stated; "communities that invest in themselves through philanthropy and by leveraging private and public dollars will be the ones that flourish in the 21st century. Those that don't, hoping that funding from their state or federal government will be there to sustain them, will be greatly disappointed and will find themselves in a state of decline."

No question - these are uncertain times. With the looming federal debt and the Bush-era tax laws set to expire at the end of the year, there is a great deal of uncertainty about pending changes in the federal tax code. No matter the outcome of fiscal decisions that will need to be made by Congress, many believe it is likely that income taxes, capital gains taxes and estate taxes will increase and changes in exemptions may occur. Your best opportunity for receiving the most advantageous charitable tax benefits may need to be accomplished before 2012 comes to an end. The Fort Dodge Community Foundation and United Way can show you a number of tax advantaged charitable giving options that can help make a positive difference in our community.

For more information on how establishing a fund with the Fort Dodge Community Foundation and United Way can make a difference in your community and fulfill your charitable goals, please give us a call (573-3171) or stop in a see us. Our office is located at 822 Central Ave. (Wells Fargo Bank Building, Suite 405) in Fort Dodge.

Randy Kuhlman is chief executive officer of the Fort Dodge Community Foundation and United Way.



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