Community FoundationCOMMUNITY FOUNDATION of Northern Colorado is a local organization which helps connects peoples’ (and companies’) charitable strategies to the causes they support.

I had never heard of such a thing, so when I talked with Ray Caraway, their President, it really opened my eyes.

Their business proposition is fairly simple:

  • They help you set up a custom charitable giving foundation to benefit whatever causes are important to you.
  • They manage the investments in the manner you choose.
  • They charge a 1% fee for this service, similar to other investment fund managers.

This got me thinking about my own charitable giving.  Like many people, I have short term and long term giving, but I’m not sure I could say that there’s any overarching strategy behind it.  Just a number of causes which have tugged at my heart over the years – some more than others.  And certain organizations I trust to use the money very efficiently.

Am I doing as much good as I could possibly do with my giving?  I’m not sure.

But imagine that you (or your company):

  • Have a larger sum to allocate to this;
  • Wish to achieve larger impact with your giving, to make a REAL difference; and
  • Might like to have the giving outlive you and maybe go on for many generations.

That’s where a foundation comes in.  So you can go ahead and work with your lawyer to form your own foundation … OK, that’s going to be some work.  Then you need to steer it – not constantly, but having a review every quarter or every year probably isn’t a bad idea.  Then you need to manage the investments – but perhaps you want to manage them in a particular way consistent with your values, not just using a general investment manager.

That’s why the idea of the Community Foundation was created.  It turns out this is a national structure which is just over 100 years old.

I had no idea!

Caraway-RayRay described that there’s an additional feature which really makes this attractive for certain situations. This organization is itself a 501(c)3, which means that you get the full tax benefit of your charitable contribution when you create the fund and put money into it.  The investment grows without any tax penalty at all, and of course the charities receive the full value of what your fund gives them.

This can be very interesting to people or companies which come into a windfall and don’t appreciate the heavy tax burden associated with that.

Would you like your charitable giving to be magnified?  Do you want it to outlive you?  Do you want to make community improvement an integral part of your company?  This might be a very interesting model to look into.