North East Community Foundation

FAQ For Donors


Why should I establish a named fund at The North East Community Foundation?

The mission of The North East Community Foundation is to assist a diverse group of donors in improving the quality of life in and around North East, Pa. by creating permanent and flexible endowments, making it easy to carry out the donor’s philanthropic interests in a professional and timely manner.

We do not annual fund goals or campaign deadlines. Our goal is to help you, accomplish your objectives.

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Who do I contact if I have questions?

Your primary contact is Susannah Weis Frigon, vice president of Investor Relations at (814) 454-0843.

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How do I create a fund?

The North East Community Foundation uses a "Letter of Agreement" format to establish a fund. This simple document outlines the purposes of the fund so that we are clear on the donors intentions. Funds can be created in a matter of minutes with no costs. If you’d like some sample documents for your office, please e-mail Susannah Weis Frigon.

While there is no requirement that you consult a professional advisor, The North East Community Foundation always recommends donors consider doing this before making any significant philanthropic decision. The Foundation annually distributes our sample documents to a wide-array of professional advisors.

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Are you interested in endowments or gifts that help charities today?

Actually, both. Most of our named funds are permanently endowed. This creates a growing source of hope and support for generations to come. It is also possible to create funds that spend-down all, or part, of the original gift. There is actually no limit to the charitable goals that can be accomplished through The North East Community Foundation.

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Are you interested in current gifts, or a gift through my will or estate plan?

Many donors like to establish funds during their lifetimes. This lets them see the good work that can be done through a partnership with The North East Community Foundation. We are also interested in helping donors who want to leave a legacy through their will or other estate plan.

A number of named funds operate within The North East Community Foundation. Most of these are endowed to provide perpetual support for causes or organizations favored by the original donors. It is also possible to create funds that distribute part, or all, of the original gift over a period of time.

At other times, 100% of a gift immediately passes-through The Foundation to a favored charity.

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How is a community foundation different from a private foundation?

A community foundation is a collection of named funds all operating under the administrative umbrella of a single, publicly-supported, entity. Community foundations typically operate broad-based grant making programs. They also distribute specific grants as defined by original donor agreements.

Donations to a community foundation generally qualify for higher tax deductions. As many different funds are pooled, administrative costs are typically less. A single audit and a single 990 form cover all funds operating within a community foundation. Community foundations also pay no tax on their earnings. There are no minimum payout requirements and funds can accumulate for some future charitable purposes.

While professional advisors vary on the specific amount, many will agree that private foundations are not cost-effective for donations of $1 million or less.

The end result of this pooling of funds is the saving of administrative costs; making more funds available for deserving charities.

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How much money is needed to create a named fund within The North East Community Foundation?

Generally speaking, named funds are established with gifts of $10,000 or more. We can also work donors interested in building up a fund over time.

It is also possible to make gifts, of any size, that simple pass-through The Foundation to a cause or organization or your clients choosing. Finally, many of the funds established within The Erie Community Foundation accept gifts of any size from the general public.

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How much to I need to give?

Funds are normally established with a minimum $10,000 gift. If this figure fits with your plans, you can also give smaller amounts and build-up your fund over time. Grant distributions from your fund should be a minimum of $250.00.

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What is the spending policy?

Endowed funds support favored causes or organizations forever. To accomplish this, we establish a spending policy that would allow charitable distributions equal to 5% of a rolling average of fund balance.

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Can my grant making be more than just the income from an endowment fund?

Absolutely. You can create funds that spend down principal balance over time. NECF can also handle immediate "pass-through” gifts where 100% of the donation is granted in accordance with your wishes. Our goal is to be a flexible tool to assist with your charitable giving. There is virtually no limit to the charitable objectives that can be accomplished through The North East Community Foundation

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Is The North East Community Foundation just for donors interested in helping local organizations?

Many donors also create funds dedicated to a specific local nonprofit organization(s) or cause. Donors can also create, in their lifetimes or through a planned gift, other funds that benefit favored causes throughout the country.

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Can I create a fund that benefits individuals?

To be a tax-deductible activity, there must be a broad charitable class.

Grants can not be made to a specific person. Grants from named funds must go to a qualified charity. This is actually one way our staff can help. If there are ever any questions, we can do the due diligence needed to insure a grant is legal and charitable.

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What about scholarships?

Scholarships are very popular with donors. Grants from these funds may go to individuals; but you can not earmark a specific beneficiary. Foundation staff can help with language to insure the scholarship is operating legally. There is no need for advance IRS qualification of the scholarship fund.

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What is a donor advised fund?

This is one of our more popular options. These funds are created during a donors lifetime. You receives a 100% tax deduction for the original, and any subsequent, gifts. The Erie Community Foundation then typically endows the fund. In future years, you then make recommendations regarding grants from income or, in some cases, principal. The Foundation takes care of all due diligence, with recognition from the charity flowing to the donor.

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Why is this helpful?

Many donors are using the income from investments to fund charitable gifts. A donor advised fund lets this continue, with the added benefit of a 100% tax deduction for the principal transferred to NECF. Many donors appreciate the ability to have ECF handle the check-writing and due diligence. NECF also offers educational services to help your client maximize their philanthropic impact. If needed, we can also help keep your donation anonymous.

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What about fees?

There is no fee to establish a fund. Once established funds are assessed a small annual fee to cover administrative and investment management costs. As funds are pooled for investment management purposes, there can be some significant economies of scale.

Typically yearly costs are less than 1%. This helps fund a wide array of educational, administrative, donor service and program work of The North East Community Foundation staff.

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How does The North East Community Foundation manage its endowment?

Generally speaking, all endowed funds within The Foundation are pooled and operate under a single investment management policy. Our primary investment objective is to preserve, and enhance, the charitable “purchasing power” of endowed funds over time.

To accomplish this, we work with an independent investment consultant to create strategies designed to surpass a hurdle rate of 9%. Endowed funds typically return 5% to charities. Inflation will be about 3%. Expenses will be about 1%. If our net investment returns are not surpassing 9% or more, over time, we are not doing our job.

The Foundation's finance committee closely monitors investment performance. Individual managers are all held accountable to specific benchmarks. When necessary, changes are made. We also measure ourselves against our peers. Over time, we are confident our endowment management policy is working.

There are times when donors can have some input into investment management. Generally speaking, these are limited to funds of $1million or more.

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What else do I need to know?

We are here to help. We understand decisions are made on the donor’s timetable. There is never any specific time pressures related to a charitable gift to The North East Community Foundation. Consequently, we are always happy to meet with you to discuss plans and alternatives.

Our goal is to help you, and your client, accomplish your objectives. Please view us as a resource and do not hesitate to contact Susannah Weis Frigon, VP of Investor Relations with any questions.

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