Frequently Asked Questions

What is a Community Foundation?

Answer:  A community foundation is an independent public charitable foundation established to meet the current and future needs of local communities.  A community foundation receives donations and makes grants and is typically place based.  It helps local individuals, families, businesses, and not-for-profits achieve their charitable and financial goals by providing tools and resources that make giving easy, flexible, and effective. It enables donors who wish to make donations to create permanent endowments that will benefit the community in perpetuity.  Using the investment earnings on endowed funds, a community foundation makes and builds capacity within the community to address needs and opportunities. 

They engage in a range of community leadership and partnership activities, serving as catalysts, convenors, collaborators and facilitators to solve problems and development solutions to important community issues.

What does Australian Communities Foundation do?

Answer:  Australian Communities Foundation helps donors establish a charitable fund without all the other hassles of a private foundation.  Donors establish a named sub-fund under Australian Communities Foundation’s legal structure and all contributions are pooled and invested.   Australian Communities Foundation then works with donors to make grants to the causes, organisations and issues they want to support.

Australian Communities Foundation’s role is to encourage and make it easy for people and organisations to be philanthropic. As such, we provide all the necessary structures, systems and tax and compliance environments within which individuals, families, groups and organisations can establish named charitable funds under our structure.

Our next job then is to work with our donors and funds to make sure they achieve their charitable giving objectives, by matching our donor interests and passions with the needs of the community.  To do this well, we need to know what’s happening in the community – where the needs are, what the emerging trends and issues are.  Collectively, we are working together to build healthy resilient communities and positive social change.

What is a sub-fund?  Is it the same as a foundation?

Answer:  No.  A sub-fund is a management account established as part of one of Australian Communities Foundation’s charitable trust funds.   A sub-fund is not a legal entity. A sub-fund owner is not the Trustee.  Sub-funds cannot be called a ‘foundation’ or a ‘trust’. 

Who is the Trustee?

Answer:  Australian Communities Foundation is governed by a not-for-profit company limited by Guarantee, the Community Foundation Network Ltd, which is the Trustee.  It consists of a Board of Directors made up of voluntary leaders representing a broad cross section of the community.

How easy is it to become a donor?

Answer: Australian Communities Foundation offers a range of options from starting a named sub-fund, or a Supporting Foundation, to opening a Gumnut Account, a general donation to the community fund and leaving a bequest. 

How do you start a sub-fund?

Answer:  Very easily and quickly. Simply fill in an establishment form and make the initial donation. There are no establishment fees, no waiting period – you can be up and running in a day. You can also start a sub-fund through a bequest.

Why start a sub-fund and not just give direct to a charity?

Answer: By building an endowment, donors can support an issue or an organisation over a long period of time.  The capital invested to establish the endowment earns income each year to distribute. Having a sub-fund with Australian Communities Foundation helps develop a more planned and strategic approach to giving.

How much money do I need to establish a sub-fund Australian Communities Foundation?

Answer: Minimum entry level is $20,000 There must also be an understanding that a sub-fund will grow to at least $100,000 over time. There is no upper limit.

What if I want to have a sub-fund, but don't have $20,000 now?

Answer: Australian Communities Foundation makes philanthropy accessible - You can open a Gumnut Account for as little as $5.45 per day or $2,000 per year.  Regular contributions are made until your account reaches $20,000.  It can be transferred into a named sub-fund and start your giving program.

Can a sub-fund close?

Answer:  Yes.  A donor can request to close a sub-fund and the balance be granted to a specific project or organisation or to Australian Communities Foundation’s Community Fund.

When can grants be made?

Answer:  Grants can be made so long as the sub-fund balance does not fall below $20,000.  Minimum grants size is $500.

What’s the difference between a sub-fund at a community foundation and a private ancillary fund?

Answer:    A donor does not have to worry about the on-going compliance and administration, they can concentrate on giving.  Donors have access to Australian Communities Foundation’s extensive support and research services to help them research the projects and issues they are interested in, with the confidence of knowing that all the due diligence and formal administration is taken care of. 

Are donations tax deductible?

Answer: Yes. Donors have the ability to donate to a tax deductible fund.

What if a tax deduction is not required?

Answer:  Australian Communities Foundation has a non tax deductible extension fund.  All earnings are exempt from tax.  Grants can be made to for charitable purposes to both organisations and individuals.  Generally bequests and corporate donations are made to an Extension Fund.  Corporates can claim their donations against their marketing/sponsorship budgets.

Can the donor choose their grants?

Answer: Grants are only made from sub-funds at the donor’s request.
However, the Trustee has to approve all grants as part of its due diligence and formal responsibility.  This gives donors the confidence of knowing their grantmaking is both effective and is fully compliant with the regulations. 

How do donors choose their grants?

Answer: There are lots of options. If a donor knows what they want to support, they can simply make the requests when they are ready to grant.  Australian Communities Foundation also undertakes bespoke research for our donors, in their areas of interest, where we will identify grant opportunities against a specific brief.  Australian Communities Foundation also frequently and regularly receives a broad range of requests for funding from community organisations.  Once we’ve done our due diligence, these requests are passed onto donors.

What charities can I support?   What ‘community’ do you cover? 

Answer: The Australian Communities Foundation trust deed allows grants to be made to charitable organisations anywhere in Australia and overseas to Australian registered charities.  At the same time, Australian Communities Foundation also undertakes its own research and identifies strategic initiatives for funding, such as MacroMelbourne which has a focus on Greater Melbourne.

How do I ensure that my donations to Australian Communities Foundation are used effectively?

Answer: All our donors have access to Australian Communities Foundation’s significant community and grantmaking knowledge as well as the opportunity to participate in a range of thought-provoking, insightful forums, site visits and other events enabling you to deepen your knowledge and connect with other like-minded people.

How are donors kept updated?

Answer: Australian Communities Foundation communicates regularly with all our donors and the website has a donor only area which donors can access for updates, reporting on investment performance, grantmaking requests, as well as newsletters and event information.  Twice a year you will receive a detailed statement for your sub-fund.  This identifies all the donations to and grants from the sub-fund and calculates the income available for distribution.
 

How much can I give away each year?  Do I have to make a minimum distribution each year?

Answer: Australian Communities Foundation is obliged to distribute 80% of its income from investment annually.  This is calculated at the consolidated trust fund level.  This allows flexibility for sub-funds to either give away capital in addition to the income or alternatively to accumulate and grow for a period of time, without making grants.  However, should this change in any given year, we may need to ask these funds to distribute in order to achieve the 80% requirement. 

How are the funds invested?

Answer:  The Australian Communities Foundation Board, through its Finance and Investment Committee is responsible for the investment policy and approach. Australian Communities Foundation has appointed an investment manager, Beulah Capital, who work to a mandate and service agreement. Full details of the investment policy and guidelines are available on the Australian Communities Foundation web site.

How is the Australian Communities Foundation operations funded? 

Answer:  Australian Communities Foundation’s major source of income to cover operating expenses is the administration fee charged to sub-funds.  Australian Communities Foundation also offers a fee for service grantmaking and consulting research and advice to individuals and other organisations, including private trusts and foundations.  In addition, it relies on gifts and donations from supporters and board members.