Community foundations and older people

Charitable giving is often a significant thought in the mind of the older person. The saying goes: “Better give a shilling than lend half a crown.” The modern equivalent: “Better give five new pence than lend 0.07 Euros” doesn’t sound quite as snappy. However, Clare Brooks, of Community Foundation Network, reminds readers of one of the more recent and most successful developments in charitable giving linked with the local community.

An introduction to community foundations

Although almost 70 per cent of people regularly give money to charity in their lifetime, according to research by the Charities Aid Foundation, less than five per cent leave a charitable donation in their will. Many solicitors also feel clients are often poorly prepared to write that will and that clients are often in need of guidance in respect of charitable giving. However, they are wary of recommending giving to charity. This is due to the lack of information available and a reluctance to suggest particular charities for reasons of undue or unwarranted influence. Solicitors with elderly clients who have an income surplus to their needs or capital to give freely at death might feel safer recommending giving to their local community foundation. Community foundations are grant-making trusts with significant experience in planned charitable giving. They build and manage endowments for the long-term benefit of voluntary and community groups operating in specific geographical areas.

A network of 64 community foundations are now spread across the UK. They aid those wishing to give to local charities and groups by applying the financial expertise and knowledge of the local community and its needs to maximise giving for lasting value. Community foundations are collaborative partners to advisers and can provide an appropriate vehicle to consolidate and simplify charitable intent while maximising tax advantages.

Many elderly clients wish to give something back to the community in which they have spent all or much of their lives. They often appear to feel that community spirit is something increasingly lacking in society. Community foundations support local projects that are charitable, educational or benevolent in nature, covering a range of causes from children to the elderly, from arts to the environment. They work to foster a sense of togetherness and help rebuild or retain local community spirit.

Community foundations are unlike other charities in that they are fully independent and make grants to a wide variety of local and voluntary community organisations. As such, they can be recommended with a clear professional conscience. Clients can choose between leaving a legacy in order to set up their own “named fund” within the foundation, or make a general donation that will be pooled in a constantly growing general endowment fund, with the income providing a flow of funds for local good causes.

Community foundations offer donors the opportunity to direct their giving to a specific cause or theme. A client may feel they received particularly good care and support from a local nursing home or community centre and, in turn, wish to direct their donation to organisations and charities benefiting elderly people in their area. They may feel their local community offers children little by way of after-school activity or community clubs, and choose to support children’s organisations in their area. The choice is theirs but, to be sure, it is always a wide choice.

Solicitors with clients wishing to establish a private charitable trust can recommend setting up a named fund at their local community foundation as an alternative. Larger donors who wish to target their giving even more precisely can opt for a tailor-made, ring-fenced, named fund, which will be created and managed on their behalf by foundation staff.

Named funds offer the same benefits of a private charitable trust, but much of the work involved in registering a private trust and the consequent time and expense is removed. Community foundations already have the people and the paperwork in place. Named funds can be set up in one day, with just a simple agreement. Foundation staff take care of all aspects of the fund’s operation, from identifying and researching appropriate causes to looking after all the day-to-day work involved in administering a grant-making programme.

Many elderly clients also wish to donate in their lifetime and enjoy the fruits of their giving. Given that the hassle factor is removed, what could be better if the aim is to benefit the locality? According to recent research by the Institute of Philanthropy, many donors would like to know precisely where their money is going and see the impact of their giving, but are offered few opportunities to do so. Retired clients may wish to set up a fund in their lifetime to provide new interest and direction, as well as to make social connections with other like-minded people.

Community foundations offer a vehicle to leave a legacy that will be carefully administered and maintained according to instructions for years to come, associating the client’s name with the community they belonged to practically forever. When appropriate, clients can either hand over the reins to foundation staff or appoint family members as trustees. This is an enjoyable and constructive way of developing a shared family commitment to and interest in charitable giving.

Brian Hughes of Sherwood Financial Planners Ltd was able to help a widowed client wanting to set up her own grant-making charity for elderly people in her local area, Welwyn Garden City. With his financial-planning experience, Brian knew that a charity building up at the rate of £10,000 per year would be expensive and difficult to manage but with the help of the Hertfordshire Community Foundation’s director, Tony Gilbert, he was able to help set up a named fund in one meeting. Four years on, the capital is building up and, with reclaimed tax on top, it is being used exactly as the client hoped.

As to tax, foundation staff are on hand to ensure solicitors and other professional advisers and their clients exploit all available tax concessions. Tax breaks on charitable donations introduced in the 2000 Chancellor’s Budget make giving an even more attractive option. Bequests to charities are tax exempt, which not only greatly increases the value of the donation to the charity but also reduces inheritance tax on the donor’s estate. Additionally, tax concessions on gifts of shares and securities are particularly generous and foundation staff can ensure advisers are able to help gifts make the greatest impact.

In summary, legacies to community foundations are a way clients can make a real and lasting difference in that community. They also act as partners to solicitors and other professionals with gift-oriented clients, strengthening client relationships by offering the opportunity to add value to services while benefiting the community in which they live.

Clare Brooks is director, resources and development at the Community Foundation Network. For more information, please call the Community Foundation Network on 020 7713 9326 or visit www.communityfoundations.org.uk.