Community Foundation of Shelby County - Charitable Fund Distribution Account

Questions & Answers about Charitable Distribution Accounts

Is there a minimum I must contribute to a Charitable Distribution Account?
There is no minimum deposit and additional gifts are welcome at any time. Contributions can be made in cash, publicly traded or closely held stock and other property whose value can be ascertained and the which the Foundation can reasonably expect to realize. Gifts of closely held stock, real property and other property are subject to rules which must be satisfied before the gift is accepted. See our Gift Acceptance Policy for more information

What are the best times to establish or add to a Charitable Distribution Account?
Gifts to a Charitable Distribution Account are particularly useful and advantageous in the following circumstances:

In a year of unusually high income when you want to set aside additional dollars in order to make gifts later,
When you are making a large number of charitable gifts and you want to keep track of one gift receipt from The Community Foundation instead of several from the charities you support,
Before the sale of a highly appreciated asset in order to reduce capital gains taxes while maximizing your giving options,
As an alternative to a private foundation, where a smaller portion of the donor’s adjusted gross income qualifies for a deduction, and considerable red tape and expense are involved.

What are the tax consequences of my Charitable Distribution Account contributions?
Contributions are deductible as of the date they are given and may be deducted at the highest level allowed by law. Value of a stock gift is determined by the average price of the stock on the day it was gifted to The Community Foundation. Grants from a Charitable Distribution Account have no tax implications. Although you recommend the charitable recipients, the account is not considered your property; it pays no tax on earnings and no estate tax when you die.

Use of a Charitable Distribution Account simplifies the task of your tax preparation. The only charitable giving records you need are those of your contributions to the Charitable Distribution Account.

Are there limitations on distributions from the account I establish?
Distributions may be made to any unit of government (such as a school or a parks commission) or charitable organization currently recognized by the Internal Revenue Service as a 501(c)(3) charitable organization under Sections 509(a)(1), 509(a)(2), or 509(a)(3) of the Internal Revenue Code. This includes almost all organization to which deductible contributions may be made. Foundation staff can help you research organizations whose tax status is unknown.

Distributions may not be made:

To an organization where the donor will benefit via a product or service of more than a nominal value. CDA grants must be fully deductible.
To private foundations, to political campaigns, or for lobbying purposes;
To pay for dinners, entertainment, golf tournaments, tickets to events and other benefits of substantial value. To cover personal needs of an individual, such as educational expenses;
To pay a membership in an organization such as a fraternal or veterans organization or a nonprofit golf or fitness club. You may be able to support capital campaigns or foundations associated with these organizations, so long as no membership benefit is given to you return for your contribution.
To purchase raffle tickets, games of chance, or charity auction items.
To satisfy personal commitments that you have made to a charity (e.g. a promise to make future gifts to a church’s capital campaign).

Are there fees and charges?
The Community Foundation does not assess a fee for services. The way that we pay for this service is by retaining any earnings accumulated on the account balance. A broker may charge a fee to sell donated securities, which is deducted from the amount placed in the Charitable Distribution Account. Actual costs related to accepting a donation of personal or real property, such as appraisals or environmental assessments, are charged to the Charitable Distribution Account.

What additional services and benefits can I receive?
Donors receive quarterly statements showing activity in the account. The Charitable Distribution Account can also provide donors with privacy by enabling them to distribute grants anonymously, if they so choose. Most donors approve of the use of their name when a grant is made to a charity. A brief letter accompanies all checks and states the donor’s name as desired.

Can others participate in my account?
If you desire, you can authorize immediate family members to recommend grants from the account.

What happens to the balance in the Charitable Distribution Account on the death of the donor?
Any balance remaining in the Charitable Distribution Account on the death of the donor may be distributed in accordance with preauthorized instructions from the donor or it may be placed in an endowed charitable fund with The Community Foundation.