How it works
The idea of a charitable foundation is to set aside a tax deductible corpus of money, have it invested wisely, and make donations to eligible recipients each year.
Setting up a sub-fund with the Community Impact Foundation allows you to focus on the organisations and causes you want to support, while the Trustee focuses on the administration and governance.
Every member (or donor) has their own sub-fund of the Community Impact Foundation – with the minimum initial tax-deductible gift being $50,000. Your sub-fund can be built up over time through additional donations (subject to a minimum of $5,000) and any accumulated investment returns. Family and friends can also make tax deductible donations to your sub-fund.
Once your sub-fund is established, the funds are pooled with other sub-funds to form a corpus. Income and capital gains/ losses on this corpus are distributed pro rata to each sub-fund. These returns may help increase your sub-fund balance in time.
The administration, investment management and governance activities are all overseen by the trustee of the Community Impact Foundation.
The Community Impact Foundation donates 4% (or more) of the closing fund value each financial year to charities (all of which must have tax deductible gift recipient status, DGR Item 1). Each sub-fund is able to make recommendations to the trustee about which charities should receive their share of the giving pool.
Sub-funds can be started by individuals, couples or families, and provisions can be made as to who will be responsible for looking after the sub-fund beyond the lifetime of the original donors.
Sally sold an investment property and realised a large capital gain.
She set up a sub-fund called ‘Sally’s Gift’ with the Community Impact Foundation with an initial donation of $200,000. Her donation was fully tax deductible, saving her a substantial amount on her tax bill.
Sally’s money is invested, along with all other donors, into a portfolio of investments selected for their positive social and environmental impact as well as financial returns.
In line with the requirements that public ancillary funds donate 4% of their corpus each year, the Community Impact Foundation made donations from Sally’s Gift based on her recommendations. A total of $8,000 was donated to her four favourite charities - $2,000 each.
The Trustee ensured that the donations were directed to appropriate charities (all recipients need to have Deductible Gift Recipient Item 1 status).
Sally now enjoys giving to her favourite charities each year with all the paperwork and administration done for her. She tracks her giving and checks investment returns through her personal online portal.