Community foundations – a new solution to charitable gifts?

Posted on
By leaving a gift to a community foundation in your Will, you can contribute to a range of small charities in your local area – ones that often get overlooked. 

The Blake Morgan Oxford office recently hosted a meeting of the Oxfordshire Community Foundation. If you are unfamiliar with the work that your local community foundation carries out, then here are a few key facts about these organisations:

  • Community foundations began in the U.S. in 1914 and today there are more than 750 operating across the U.S. and 46 within the UK.
  • While a community foundation is a charitable trust in its own right, it is better understood as an organisation that encourages and coordinates philanthropic giving in its respective local area. They aim to:
    • Build up a stock of charitable endowments from individual and corporate donors;
    • Advise donors on how best to structure their contributions, so as to meet their desired charitable ends; and
    • Distribute charitable grants to local charities.

Why leave a gift to a community foundation?

1.) By leaving a gift in your Will to a community foundation your gift will be contributing to a range of small charities in your local area.

This means that your gift stands to make a real impact, as small charities are often overlooked when it comes to charitable donations. According to figures from the National Council for Voluntary Organisations, charitable giving in the UK is heavily skewed towards large, well-known, national charities. Small charities account for 97% of all charities in the UK but they still account for only a small share of charitable gifts received, shown by the fact that in 2015 80% of all UK charitable income went to the largest 3% — by endowment— of registered charities.

2.) If you are not familiar with the charities in your local area you may have not considered leaving a donation to a local cause, in this case community foundations can help. 

A study conducted on behalf of TSB found that a third of the 1000 UK adults surveyed were unable to name a single local charity. Maybe you would like to leave a legacy that will benefit a particular cause in a local community but you are not sure which local charities might best achieve your objectives.

When you make a donation to a community foundation, you can still specify that your gift should be used for a particular charitable purpose (such as homelessness, for example) but you do not need to single out an individual charity. Instead, many local charities working for your chosen cause will benefit from your donation.

3) Less chance that the gift will fail.        

Perhaps you are concerned that by leaving a gift in your Will to a small local charity, there is a greater chance that the charity in question will no longer exist by the time your estate is distributed. An obvious advantage of leaving money to a community foundation is that it significantly reduces this possible drawback.

4) The option to establish a 'named fund'.

Community foundations also allow you to set up a named fund as a way to structure your gift. A named fund functions in quite similar ways to a charitable trust, but without the same level of administration and expense that is required. This makes it particularly suitable for smaller charitable endowments.

Many existing charitable trusts, which have already been established by a Will or a lifetime settlement, become dormant over time. By taking over the administration of such dormant trusts, and turning them into named funds, community foundations have been able to make sure that these funds are once again used for the charitable purposes that they were originally established.

To find out more information about making a charitable gift in your Will contact the Blake Morgan succession and tax team.