FAQ - Donors

What is a Community Foundation?

A Community Foundation is a type of charitable trust whose purpose is to

promote and support local voluntary and community activity through a

programme of constructive and strategic award making.

What is an endowed fund?

This is a fund, invested over the long term, where awards are made either

from the interest earned on investments, and/or by use of some of the capital if

appropriate. Our investment approach is to seek a return over time equivalent

to around 8% per annum so that around 5% is distributed in awards and the

balance enables pace to be kept with inflation. The benefit of this type of fund

is that it is permanent, unlike many other sources of funds which the voluntary

sector relies on.

How is the Foundation managed?

The Foundation is a Registered Charity and a Company Limited by Guarantee.

Its work is overseen by a board of Trustees and it has a full time Head of Development and Head of Grantmaking. These people are responsible for all management, development and award making issues.

Three awards panels (one for the Luton Youth Fund, one for our Kingsbrook & Cauldwell Fund and one for all other awards) are maintained and are made up of experienced local people from a range of business, voluntary and business sector organisations.

Where does the Foundation get its money from?

Our funding comes from a variety of sources including:

  • Our endowed fund on which it earns interest. Anyone can add to this fund if they wish. It is used for general award making.
  • Named funds. These are endowed funds created by donors wishing to make a long term contribution to the community and who would like their name linked to the grants made.
  • Themed funds. These are created by donors who wish to support a specific type of issue (e.g. the elderly, arts, sport and health, young people, mental health, community development, etc.)
  • National funds. Many national groups recognise the fact that Foundations know their own area’s needs and contract with us to distribute funds on their behalf.
  • Existing trust funds that we manage on behalf of those who set them up many years ago and can’t find trustees to oversee them.

What are our administration charges?

These vary according to the amount of work required, but as a rule of thumb we

make an annual charge of 1.0% on the capital value of our pooled endowed

funds as at 31st March each year or a charge of 10% - 15% on flow-through

funding (i.e. on donations given for distribution over a short term period)

depending on the level of work carried out.

How can donors benefit from making a donation?

Benefits fall in to two categories:

  • We can use our knowledge of local needs to advise donors on the projects that should be funded and supported.
  • We can advise on tax relief on donations, not just Gift Aid (where we can reclaim an additional 25% on the donation from a tax paying individual), but also Capital Gains Tax relief on gifts of shares, Corporation Tax relief etc.

As well as the obvious savings in administration, donors can chose to give visibly and benefit from the added prestige of having a dedicated charitable fund or give anonymously. Donors also have the ability to select specified charities or choose an area of interest to benefit from their fund.

 

What area does the Foundation cover?

The vast majority of awards are made to voluntary sector groups in the theee

Unitary Authorities of Luton, Bedford Borough and Central Bedfordshire.

We also make awards to groups outside this area at the specific request of our

donors.

What is a named fund?

A donor can establish a personal endowed fund and all grants made from this are named as being from the donor to recipients and in our publicity. In general we would need a minimum donation of £25,000 to establish a named fund.

What is a themed fund?

A donor can give to one of our themed funds and the money will be given to specific areas of personal interest. Examples include care of the elderly, activities for young people, the arts, community development etc. Other themes can be addressed if required.

Can I set up a trust fund with the Foundation?

In fact a fund at the Community Foundation acts just like a charitable trust. It allows you to support issues and areas of your choosing but saves the trouble of appointing trustees, handling investments and dealing with administration.

Funds are normally set up through an agreed series of donations; these can be spread over several years or by a one off donation. The fund is invested within a portfolio and is credited with income on a quarterly basis which is then used to make awards as agreed.