These days, Bill and Pam Costabile are happily retired to the sunshine of Lehigh Acres, Fla., near Fort Myers. But both still feel strong ties to their old hometown of Flint, Mich., where they lived and worked for more than 40 years–a connection so strong that they’ve become long-distance philanthropists.
Bill, age 69, and Pam, 70, are using the Community Foundation of Greater Flint to stay in touch and “pay it forward,” Pam says. They support Big Brothers and Big Sisters, as well as youth scholarships through the Zonta Club of Flint, a women’s service organization. And they established a legacy fund for a residential treatment center for children recovering from trauma.
Community foundations are public charities that generally focus their grantmaking on a defined geographic area, supporting local nonprofits with donations from individuals, families and businesses. There are more than 780 community foundations in the U.S., managing assets ranging from less than $100,000 to more than $7 billion, according to the Foundation Center, a nonprofit philanthropy resource organization.
Retirees sometimes choose community foundations as the vehicle to give back to their hometowns where they made their wealth or still maintain contacts, says Johnne Syverson, a wealth manager in Des Moines, Iowa, who specializes in charitable planning.
Community foundations know who is doing the “boots on the ground” work locally, and they can advise donors on the most pressing needs, Syverson says. Over the past two decades, community foundations have become more sophisticated and can handle complex gifts, such as privately held stock and real estate, he says.
Foundation donors also have a lot of flexibility on where their financial aid flows, and a foundation will help them make choices based on their interests, says Clint Mabie, president of the Community Foundation for Southern Arizona. The Costabiles, for example, met with local foundation staffers to review options from grants to local charities to scholarships. And rather than a straight out grant to a community foundation, you also can create a donor-advised fund, just as you can at big financial firms such as Fidelity or Vanguard.
If you use a donor-advised fund, a community foundation takes care of the vetting and oversight of the local nonprofits that you are considering. And if you need help identifying candidates for your generosity, the foundation will happily make recommendations.
You pay an administrative fee based on the fund balance; it typically runs about 1% on up to $1 million in assets. Fees at big name financial firms can sometimes cost slightly less. But you are paying the community foundation for its local expertise and research and to support its work in the community, Syverson says.
With a donor-advised fund, you cede control of the money. A community foundation aims to honor donors’ wishes, but it also has the final say as to where the money goes. You can take a charitable tax deduction of up to 50% of your adjusted gross income for cash gifts to the fund and up to 30% for gifts of property.
Finding a foundation
You can start your search for a community foundation through the Council on Foundations locator tool.
Be sure the foundation is a good fit. Talk with the development director, and be clear on how much money you intend to donate, now and in the future.
Define your goals, and create an “inspiration statement,” Mabie says. Decide how involved you want to be. Do you want to do on-site visits to charities or just attend occasional meetings at the foundation?
Ask about financial incentives. Donors who set up endowed funds at Iowa community foundations are eligible for a 25% state tax credit plus a federal tax deduction, Syverson says.
The Costabiles trust their local foundation, Bill says, and feel comfortable using it even from far away in their new Florida home. “They know where the dollars are going to do the most good,” he says.
Copyright 2017 The Kiplinger Washington Editors
This article was written by <i>Kiplinger’s Retirement Report</i>, Mary Kane and Associate Editor from Kiplinger and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to firstname.lastname@example.org.