Lake Area Foundation Questions & Answers

 

What Is A Community Foundation?

A community foundation is a tax-exempt public trust available to individuals, companies and organizations to facilitate fund development, fund management and grant making. Serving as the area’s largest pool of charitable endowments, the Lake Area Foundation offers ease, convenience and expertise for parties who wish to make a lasting impact upon the charitable needs of non-profit organizations and programs.

 

What Is The Mission of the Lake Area Foundation?

The Lake Area Foundation exists to build a better area in which all of its citizens can enjoy life – work, play and retirement.

Your community foundation can do this by providing grants each year in the fields of education, health and human services, economic and community development, the arts, public recreation, beautification or other specific fields of interest suggested by individual donors.

For these purposes, your community foundation accepts financial gifts which are deposited in perpetual trust funds administered by Lake Area Foundation’s trustee banks. Only the income from these funds is spent; the principal remains intact forever.

While other non-profits may ask for your gift because of what THEY want to do, the Lake Area Foundation asks that you give because of what YOU want to do. Facilitating your charitable goals and objectives is a large measure of LAF’s mission.

 

Who Gives?

The Lake Area Foundation is a vehicle through which individuals, families, companies and organizations can make current and planned gifts to benefit the community both today and for years to come. Funds can be created with a minimum gift of $2,000 and built over a five-year period, or immediately started with a $10,000 donation.

Any individual, family or business may make a contribution in any amount to an existing endowment. LAF also receives many memorial gifts; we send formal acknowledgements to both the donor and to the family of the individual remembered by these permanent gifts. Gifts will also be accepted in honor of birthdays, anniversaries, retirements, and to honor special service.

 

What Kind Of Funds Can I Establish?

Discretionary or Unrestricted Funds: Address the community’s most pressing needs and promising opportunities as they change over time.

Donor Advised Funds: Allow you to remain actively involved in your giving. You make recommendations to the Board of Directors regarding distributions of gifts from your fund. The Board of Directors review your recommendation only for legality and compliance with tax law.

Designated Funds: Support specific charities named by the donor.

Scholarship Funds: Provide access to education to deserving students. Donors define the selection criteria and the initial review of applicants.

Agency Endowments: Enables non-profit organizations to ensure their own future through the creation of an endowment to support their operations or a particular program.

Field of Interest Funds: Benefit an area of need such as education or the arts rather than a specific charity.  

Contribute to an Existing Fund: You can make a contribution of any size simply by writing a check to the Lake Area Foundation. If your gift is for the general charitable needs of the community, it will be placed in one of the general endowments which receive memorial gifts, honorary gifts and undesignated gifts, large and small. If you have a special charitable purpose in mind, you can direct your gift to any of our funds which meet that purpose. If you would like to assist in the work of the Foundation and help defray administrative expenses, you can direct your gift to the Pat Bell Fund which was created to address these needs.

 

What Kind Of Assets Can I Give?

Cash: This is the simplest and most convenient way to give and share in the work of the Lake Area Foundation. Checks should be made payable to the Lake Area Foundation. You receive the maximum permitted tax deduction for your contribution in the year your gift is made.

Securities: Marketable securities such as stocks and bonds can be donated to the Lake Are Foundation. If your securities have appreciated in value over their original cost, this may be the most advantageous way for you to make your contribution. Transfer ownership of the securities to Lake Area Foundation and avoid paying capital gains taxes while getting a tax deduction for the full market value on the date of the gift, subject only to certain percentage of income limitation. Check with your accountant for further information.

Real Estate: Gifts of appreciated real estate offer tax advantages similar to gifts of appreciated securities. Real estate will usually be sold by the foundation and the proceeds reinvested according to the Lake Area Foundation’s guidelines.

Life Insurance: If you own a life insurance policy which you no longer need for protection, you can contribute it to the foundation and receive an immediate tax deduction usually in an amount equal to the cash surrender value of the policy. If you wish to keep the policy in force, your continued payments are also tax deductible. Charitable remainder trusts and charitable lead trusts offer still other charitable giving options.

Personal Property: You can use works of art, jewelry, antiques or other items of personal property as a gift to the Lake Area Foundation. They must be items which can be readily sold and converted to other types of investments because the Lake Area Foundation is not permitted to hold assets which do not produce distributable income. Consult with your tax advisor prior to making contributions of tangible personal property.

Make a Bequest in Your Will: You can designate the Lake Area Foundation as a beneficiary of your estate, to receive a certain dollar amount or as the residuary or contingent beneficiary. Such bequests are free of estate and inheritance taxes.

 

Why Should I Give?

Perpetuity: Your gift to the community is administered by the Foundation and becomes a perpetual trust. Its income continues through the years to satisfy your charitable purpose.

Tax Advantages: As a publicly supported organization, the Lake Area Foundation offers maximum deductibility for income, gift and estate tax purposes.

Ease: Creating a fund is simple and quick, requiring minimal paper work. The Foundation manages investments through the trustee banks, processes distribution of gifts, and files all appropriate tax returns, administering the fund on your behalf.

Flexibility: You can invest many kinds of assets, select the type of fund you want and add to any fund at any time.

Recognition or Anonymity: You may receive public recognition or remain anonymous. You may name your fund for an individual, family, group, business entity or special purpose.

Economy: The Lake Area Foundation operates very economically. All services of the Board of Directors are provided voluntarily. Administration is provided by professional staff at Lake Cumberland Area Development District. The trustee banks have generously reduced their fees for managing the Lake Area Foundation’s assets. Legal services to prepare the trust agreements are provided by attorneys who are familiar with trust, estate and foundation law.

The Lake Area Foundation will make IRS Form 990 filings and annual audits available for review upon request in the Lake Area Foundation office: 2384 Lakeway Drive, Russell Springs, Kentucky.

 

Who Reaps The Benefits? Who Decides What The Lake Area Foundation Funds?

As endowment funds are created and mature, the income generated from these funds has the potential to benefit literally hundreds of charitable organizations and scholarship recipients in the ten county region.

Donors determine the purpose of the funds they create. Income from funds created to benefit a specific purpose or organization will be automatically provided to the designated recipient on an annual basis.

Distribution of income from Donor-Advised funds will be determined by the donor or their designee on an annual basis.

Non-profit organizations recognized as 501 (c) (3) by the IRS and certain education and government agencies can apply for grants from income generated by the foundation’s discretionary or unrestricted funds. A Distribution Committee reviews all grant proposals and makes recommendations to the Lake Area Foundation Board of Directors. This committee is made up of a cross section of citizens from throughout the region specifically selected for their knowledge and awareness of community needs. The final decision regarding all distributions rests with the Board of Directors.

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