- Accepts contributions
- Growth in assets comes partly from new gifts, generally significant in size and often initially from a small number of donors. As community foundations mature, the number of donors increases.
- Address emerging and changing needs
- Many community foundations play a leadership role in identifying immediate and emerging needs in the community, especially as they affect underserved populations, and support new ideas and programs designed to address those needs.
- Broad range of charitable activities
- Records indicate that grants, loans and other services promote the public good in a wide variety of fields of interest (e.g., arts and culture, education, community development, health care, social services, etc.).
- Community foundations are operated for exclusively charitable purposes and all legal and public relations materials reflect a mission of philanthropic service.
- Common governing instrument
- The community foundation* meets the requirements for treatment as a single entity contained in the regulations of the U.S. Department of Treasury 26 C.F.R. 1.170A-9(e)(11). (*see Community foundations)
- The organization must be commonly known as a community trust, fund or foundation or similar name conveying the concept of an endowment fund which supports charitable activities in the geographic area served.
- All funds must be subject to a common governing instrument (i.e., articles and/or bylaws or a master trust agreement).
- The organization must have a common governing body which directs the distribution of all funds for charitable purposes.
- The governing body must have the power to:
- modify any restrictions or conditions on the distribution of funds if such limits become unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community or area served;
- replace any trustee, custodian or agent for breach of fiduciary duty; and
- replace any trustee, custodian or agent for failure to produce a reasonable return of net income.
- The organization must prepare periodic financial reports treating all funds as funds of the organization.
- Community foundations
- Community foundations are described in U.S. Department of Treasury 26 C.F.R. 1.170A-9(e). A full and careful reading of the regulations is required and suggested.
- Component funds
- Component funds are individual funds treated as part of a community foundation and permitted by the Internal Revenue Service to be included among the exempt assets of the foundation. The community foundation’s governing board controls all assets of component funds.
- Defined geographic area
- The community foundation serves a geographic area such as a municipality, county or group of contiguous counties that has adequate indigenous resources to support the long-term growth and development of the foundation. The community foundation’s name and legal and public relations materials indicate the geographic area of service. Grantmaking records demonstrate the grants are overwhelmingly made for the benefit of the defined area.
- Independent governing body
- Legal and public relations documents and practices indicate that the governing body is not controlled by other entities. When appointing authorities are in place, no one appointing agent or related agents names a majority of members.
- Knowledgeable about and generally representative of the community
- The composition of the organization’s governing body, advisory committees, and staff reflects the demographic characteristics of the community such as ethnicity and gender, and includes members who are informed about the community and recognized for their personal involvement in civic affairs.
PermanentLegal and public relations documents state endowment funds are a primary mission of the community foundation.
Publicly supportedA community foundation is publicly supported as defined by the regulations of the U.S. Department of Treasury, 26 C.F.R. 1.170A-9(e)(10), and meets the public support test through direct contributions.
Supporting organizationsA supporting organization does not meet the public support test, but derives its publicly supported status from its close affiliation with another public charity or similar organization. There are many different ways of affiliating a supporting organization with a community foundation, including having the community foundation appoint board members of the supporting organization.
Tax ExemptA community foundation qualifies for exemption from federal tax under section 501(c)(3) of the Internal Revenue Code, as evidenced by receipt of an IRS tax exemption letter and continued listing in IRS Publication 78.