Frequently Asked Questions
The Foundation for Northwest IllinoisWhat is The Foundation for Northwest Illinois?
The Foundation for Northwest Illinois is one of nearly 700 community foundations in the United States. We are a publicly supported, nonprofit, tax-exempt organization that serves Stephenson, Jo Daviess, and Carroll Counties. Individuals, families, businesses, and organizations create permanent charitable funds that help our community meet the challenges of changing times and to improve the lives of those living in our community. The Foundation for Northwest Illinois invests and then administers these funds through a grant process to nonprofit organizations that serve our communities, thus improving the quality of life in our area. The Foundation for Northwest Illinois makes giving easy with the best combination of tax savings and philanthropic choices for donors. We are a proud member of the Alliance of Illinois Community Foundations, a network representing 33 community foundations in Illinois.
What geographic location do you serve?
When awarding grants, The Foundation for Northwest Illinois generally awards to organizations that serve communities in Stephenson, Jo Daviess, and Carroll Counties.
Any individual, family, business, or organization who has an interest in supporting these communities can contribute to the Foundation in a variety of ways.
Who governs the Freeport Community Foundation?
A volunteer governing board of eleven directors comprised of individuals who are representative of Northwest Illinois Communities.
Why should I donate to the Freeport Community Foundation?
There are many reasons to donate to The Foundation for Northwest Illinois. We go beyond simply making grants that advance charitable activities. We also provide a giving vehicle that is easy to set up, manage and can provide a tax benefit. In addition, the leadership of The Foundation knows their community; they are able to identify current and emerging issues, channel resources to address the needs, and help our community prepare for the future.
Where does the grant money come from?
Grant money comes from our donors: people of relatively modest means to those with large financial resources. When donors establish a fund or donate to an existing fund, The Foundation prudently invests the donated dollars; a percent of those earnings provide the grant dollars awarded to local non-profits.
What do you fund?
The Foundation awards grants to a variety of charitable organizations developing solutions to improve health and human services, civic and community betterment, reform and innovations in schools, and advancement of arts and literature in our community. We believe in an improved quality of life for everyone.
How do people apply for grants?
When grant funds are available, The Foundation for Northwest Illinois posts the information under the grants section of this website and sends announcements to local media. We currently award grants four times a year. The first step is to contact the Foundation or look at the grant guidelines and application form posted on this website.
How do I set up a fund?
The Foundation for Northwest Illinois has a number of different types of funds to accommodate donors who prefer the long-term strategy of endowments, as well as those who want to give more actively each year. The first step is to decide between a permanent endowment fund and a non-endowed fund.
An endowment fund is invested using a long-term strategy. An endowed fund is the right option for those who are striving for a permanent legacy and a permanent way to contribute to the community.
A non-endowed fund comes with all the same staff and administrative services as an endowment fund, but is set up so that the fund may be spent down to zero and then rebuilt. It appeals to donors who would like to award grants more frequently, or would like an opportunity to get to know the Foundation before choosing a permanent fund.
The donor may wish to establish the fund to help meet a variety of needs within the community or may specify a purpose or area of concern for which income from the fund is best used. Donors may also name the fund that they endow for themselves, spouses, a family member, a business, or a special interest or need. Funds may also be anonymous.
How can I make a gift to The Foundation for Northwest Illinois?
Some people prefer the simplicity of cash gifts. There are, however, many other ways to give, including securities, real estate, or planned giving through an estate or will. Tax benefits vary with the type of gift made.
While most people give to charity throughout their lifetime, only 6% include a gift for charity in their estate plans. By proactively planning, you may be able to make a much more substantial gift than previously imagined and leave a legacy that stretches long into the future.
Whether it is supporting safe places to play for kids, preserving our streams and wildlife, or encouraging artists to create beauty in our world, the gift you plan today will ensure the exceptional quality of life in our region continues for generations to come.
What are the financial benefits and tax advantages of gifting through The Foundation for Northwest Illinois?
The Foundation for Northwest Illinois’ approach offers a number of important financial benefits to donors. The Foundation manages a number of funds; and therefore, administrative costs and service fees for any one fund are minimized – meaning less overhead cost to a donor’s fund.
We are a 501(c)(3) nonprofit organization and gifts made to the Foundation generally qualify for the maximum deductions allowed by law for income and estate tax purposes. Donors also appreciate the flexibility and ease of using The Freeport Community Foundation. Because the legal apparatus is already in place, existing forms are available so that a fund is established, including obtaining all applicable tax advantages, in a very short time.
We encourage consultation with your financial advisor, attorney, accountant, or insurance representative.
I always thought foundations were for rich people. Why should I think about giving a small amount through The Foundation?
Most importantly, donors are people with a strong sense of community and personal commitment to contributing to the communities in which they live. Most donors want to support worthwhile causes in our area, and The Foundation for Northwest Illinois, which offers considerable expertise and familiarity with the region, can help them find the best way to commit their donation, large or small.
The Foundation for Northwest Illinois offers a variety of options for donating. By pooling your resources with others who share your interests and care about the community, you can maximize the impact of modest contributions with minimal administrative costs.
Explain the difference between a community foundation and a private family foundation. Does this have importance for my taxes?
Often, people establish a private family foundation because they do not know that, in most cases, working through a community foundation offers an easier alternative. In addition to tax benefits, setting up a fund through The Foundation for Northwest Illinois has an extremely short turn-around time. Additionally, the staff of the foundation becomes available to help with grants and take care of auditing and financial reporting requirements.
The IRS regulates private foundations more strictly than community foundations. Private foundations are subject to an annual two percent excise tax on investment income and must pay out five percent of their assets’ market value every year. Private foundations can be costly and time consuming to set up and to administer and provide for financial auditing and record keeping.
Tax deductions for gifts to private foundations are significantly more limited than deductions to public charities, like the Community Foundation. Setting up a named fund within the Community Foundation is usually more cost effective for the donor as well. The Foundation for Northwest Illinois takes care of all of the financial record keeping and auditing and tax obligations required, freeing the donor to focus on enjoying his or her charitable giving.
How can the Freeport Community Foundation assist existing private foundations?
- Assist with Required Payout.
On occasion, the trustees of a private foundation have had difficulty deciding on a sufficient number of grants to meet the annual five percent payout requirements. A solution is to create a fund at The Foundation for Northwest Illinois, named for the private foundation, and to contribute all or part of the current year’s income to the fund. The private foundation’s contribution to The Freeport Community Foundation is a “qualifying distribution” that counts toward the payout requirement. You can take your time and deliberate on what grants to recommend from the fund and gain the added benefit of our philanthropic services. - Relieve Administrative Burden.
Families, individuals and others who are responsible for managing private foundations often find themselves burdened by the administrative requirements and/or concerned that they are not doing justice to the foundation’s charitable purposes. With private foundations increasingly subject to regulatory scrutiny and onerous reporting requirements, private foundations are weighing the costs of continuing to conduct their work as they have over the years against looking for ways to minimize their costs and maximize their impact. Private Foundations are permitted to terminate and transfer their assets to a public charity. The Foundation for Northwest Illinoisis a public charity. By transferring a private foundation to The Foundation for Northwest Illinois, you can be assured not only that thoughtful grant making will continue in the name of the private foundation for generations to come; but also significant savings and efficiencies will result from an affiliation with a public charity that is favored by the tax laws.
How are the Funds invested and managed?
The Foundation for Northwest Illinois pools all permanent funds in order to capitalize on the additional buying power of a larger fund and to decrease financial administration. All assets are professionally managed according to our Investment Policy. We invest funds with skilled financial managers who have proven performance records and who meet our Investment Policy guidelines. Endowed funds are invested in a diversified portfolio to mitigate risk and provide long-term growth of capital.
The Foundation for Northwest Illinois adheres to the highest standards of organizational behavior, transparency, and accountability. The Board of Directors have fiduciary responsibility for investment and financial oversight. Investment guidelines, a copy of the certified financial audit and copies of the most recent IRS Form 990 are available upon request. Please contact the Foundation office for more information.
Can a donor influence or tell you how and with whom to invest his/her funds?
No, a donor cannot direct how their Fund is invested, although depending on the kind of fund, the Board of Directors is very respectful to the donor’s wishes when making a recommendation.
At any time we can provide information on the investment strategy. We will also provide an earnings report as stated in the signed fund agreement.
What services do I receive as a donor and is there a fee for this?
The Foundation for Northwest Illinois provides all IRS reporting, accounting and accountability. The Foundation staff and Board of Directors does an extensive grant review and practices due diligence in their grant making activities. The Foundation for Northwest Illinois assures that all grant recipients meet the tests to assure tax-deductible status.
When appropriate, the Foundation can solicit proposals to fund certain categories of interest to the donor. The Foundation can also keep donors apprised of special community needs. We can also help donors publicize their funds or, conversely, act as a community liaison to provide anonymity for donors.
There is a minimal fee for the setup and administration of the fund and it is in accordance with our fee Schedule established by the Board of Directors.
How do I contact you?
You can reach the Executive Director at 815-801-3035, or through email at michelle@fornwil.org