Frequently asked questions

If you have any other questions that you would like to ask please contact us.

What is a Community Foundation?
Community Foundations are a new kind of charitable trust, each working in specific geographical areas as endowment builders, grantmakers and community leaders. Their broad purpose is to promote and support local voluntary and community activity through a programme of constructive grantmaking.

Community foundations allow donors to specify how, where and over what period of time their money is spent. Gifts of cash, shares, trusts, bequests and property are pooled in multipurpose endowment funds, creating a capital sum whose earnings address donors' specific interests.

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What does building an “endowed fund” mean?
Donations to East London Community Foundation are pooled to create a capital sum – an endowment. The capital sum is invested and grows over time. The income from the invested capital sum is used to fund an annual grants programme to support voluntary and community organisations.

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Why are community foundations different from other charities?

Community foundations are unique mechanisms for giving to charity. Their flexibility and personalised services allow donors to specify how, where and over what time period their money is spent. Community foundations offer an opportunity to channel help towards meeting local needs and allow donors to see tangible results in their local community.

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Where did community foundations start?

The first community foundation was established in Cleveland, Ohio, USA in 1914. Since then, they have spread round the world. In 2005, there were at least 1175 community foundations operating in 46 countries. At least 700 have been established in the United States alone. In 2005, US community foundations had collective assets of US$38.7 billion and made grants to the value of US$3.2 billion.

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What funds do UK community foundations hold?

By March 2006, community foundations held about £140 million in endowment, funds for the future. Community foundations offer a variety of funds: nearly all will have a general fund and most will have several others from which to make grants for specific purposes, such as women’s funds, community arts funds or health funds. By 2008, the funs have increased to over £220 million.

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How do community foundations finance their activities?

Sustainable development is the eventual aim of all community foundations, with most financing their work from their own resources.

Community foundations charge major donors for the grant-making done on their behalf. Donors agree that this costs less than the time and money that doing this work themselves would involve. Many foundations have members who pay an annual subscription towards running costs and/or do local fundraising.

Some foundations have built up an administrative endowment to produce a stream of income – usually made up of donations from trustees who want to fund the development of philanthropy itself. In the initial stages of development, foundations often receive help from other charitable trusts that support the community foundation model and are keen to see a revival of this kind of philanthropy.

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Are there any government links to UK community foundations?

Many community foundations distribute central and local authority monies as well grants from other funders. Until the programme ended earlier this year, many, including East London Community Foundation, distributed grants to assist children and young people through the Local Network Fund, part of the government’s strategy to eradicate child poverty.

And, like most of our sister foundations across the country, East London Community Foundation is distributing the Office of the Third Sector’s Grassroots Grants and endowment building match programme aimed at making a very real difference to the very small and emerging community groups. Some community foundations have also managed government funds such as Neighbourhood Renewal Unit community chests, or funds from the European Social Fund.

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How much do UK community foundations distribute in grants?

In 2005-06, they gave over £70 million. Nineteen community foundations each distributed over £1 million in grants, including four who gave out more than £5 million. Over £340 million has been distributed in grants by community foundations since 1992. Combined, community foundations are one of the largest non-government grant-making bodies in the UK. In 2006-07 the foundations gave almost £75 million.

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How is East London Community Foundation managed?
East London Community Foundation is a registered charity and a Company Limited by Guarantee. It is governed by a Board of Directors.

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ANSWERS FOR PROSPECTIVE DONORS

What are the benefits of giving through a community foundation?

Giving through a community foundation means you are giving locally and making a long-lasting impact. It is a convenient, cost-effective, simple and flexible form of giving. Community foundations are accountable for the grants they make – and can advise you on tax-effective ways of giving.

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Why should I give through a community foundation, rather than direct to a charity?

As a potential donor, picking your way round the charitable world can be an arduous task. Who, what, where or how do you wish to help? Uncertainty over the precise destination of gifts and lack of involvement in the decision-making process means many donors seek the tangible rewards and impact of giving locally. But without guidance, identifying and assessing the needs of grassroots groups can prove daunting. This is where community foundations help, with their in-depth knowledge of local communities.

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What are the benefits of corporate giving through a community foundation rather than direct donations or sponsorship?

Community foundations make corporate giving hassle-free and straightforward. They are ideally placed to help companies wishing to demonstrate commitment and involvement in their local community. Companies can outsource their in-house Corporate Social Responsibility function to their local community foundation and benefit from the efficiency, impact on staff motivation and recognition of giving locally.

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What kind of donations can be made through community foundations?

Community foundations work with a wide variety of donors - individuals, families, businesses, charitable trusts and statutory bodies - with a broad range of means.
Donations vary widely in size and form, including gifts of cash, trusts, bequests, shares or property. Donors can direct their funds to a favourite cause, organisation or specific geographical area. Donations can be pooled into themed funds to address a particular issue. A donation to a general endowment can be used more flexibly to make grants for a broad range of local activities.

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I can’t afford a big donation, but I want to support my local community. Can I still give through a community foundation?

All donations whether large or small, repeat or one-off are welcome, and under the Grassroots Grants endowment match programme and Gift Aid will be worth two and a half times the value of the original donation. A gift of £100 is worth £256.40 to us, and one of £1000 is actually worth £2564. Small donations are pooled in general funds. Advice on tax effective giving is also available.

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What is Gift Aid? What is Gift Aid? What is Gift Aid?
If you are a UK taxpayer, completing a Gift Aid Declaration when you make a donation to charity, enables the charity to reclaim tax on that donation, at no extra cost to you, on your behalf. For example a gift of £100 could be worth £128 to East London Community Foundation under the Gift Aid Scheme.

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How can I give tax effectively through community foundations?

The main ways are by using Gift Aid, giving shares or property, leaving a legacy or by joining a payroll giving scheme. You can get advice on tax effective giving appropriate to your particular circumstances from your local community foundation or from your own financial adviser.

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Is establishing a fund through a community foundation a good alternative to setting up my own trust?

Many donors have found establishing a fund at a community foundation a very straightforward and convenient alternative to setting up their own charitable trust.

Setting up a charitable trust

Establishing a fund through a community foundation

Set-up procedure and costs

must register as a Charity and apply to the Charity Commission

simple agreement: no start-up fees or costs

Investment, audit, accounting and tax

must fulfill financial and administrative requirements or contract or hire staff

community foundation handles all financial and administrative management, sorts out audit and reports to the Charity Commission

Grant management

must research and check activities and status of all recipient organisations: has ultimate say in all grant decisions

community foundation verifies activities and status of all potential grantees: donors have access to grant-making know-how and services; donors can be involved as much or as little as they want in the grant-making process; donors make recommendations to the community foundation's Board on grants to be made

Privacy

required to keep public records

anonymity of the donor can be maintained if wanted; if the donor wishes, the community foundation can serve as a buffer between donor and grant-seekers

Profile

responsible for own profile

community foundations can raise donor's profile in the community by making grants in donor's name and featuring the donor in publications

Networking

must find own networks and information sources

community foundations network like-minded donors; connects donors to a variety of groups and issues in the community

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ANSWERS FOR GRANT SEEKERS

Do you have to be a registered charity to apply for a grant?
No, any charitable, voluntary or community group working to a charitable purpose to benefit local people in East and North East London, particularly Barking & Dagenham, Hackney, Havering, Newham, Redbridge and Waltham Forest is eligible to apply for funding.

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Does East London Community Foundation give grants to support core costs?
Yes, in certain circumstances, although the Foundation is careful to monitor this so as not to create a dependency by funding core costs year on year.

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Can East London Community Foundation give grants outside the six boroughs?
Yes. It can make grants to organisations based anywhere in London and particularly in Tower Hamlets, Islington and Westminster, the UK or to charitable organizations in other countries, at the specific request of a donor.

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Does East London Community Foundation give multi-year funding?
Though East London Community Foundation recognises the importance of multi-year funding to voluntary organisations, however, our funding capacity does not currently allow us to commit to multi-year funding.

The Foundation will endeavour to meet the total amount requested by an applicant. However circumstances may arise which could lead the Foundation to only award a contribution to the amount requested. Generally most of our funding is for one year. In some cases we do manage funds which can award grants over several years, such as the Fair Shares Programme. Which operates for a specific part of Barking & Dagenham.

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Is there a limit of times you will fund an organisation?
No, the role of a community foundation is to support the community wherever possible. Therefore, an organisation can be funded more than once on the condition that satisfactory Monitoring and Evaluation has been received. Please note that subject to particular fund guidelines, an organisation can also apply to the foundation and can be funded more than once within a year.

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Is there a limit of money you will award to an organisation?
Generally the answer is no, however most funds have a limit on the amount awarded to an organisation. An organisation which has been funded by the Foundation before, is eligible to be funded again on the condition that satisfactory Monitoring and Evaluation has been received.

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Do you change the criteria of your grant making each year?
We review grant criteria every year and subject to donors’ wishes, but generally do not change them, unless the donor of the original funds so requires.

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My organisation has a large annual income, can I still apply?
Yes, but we tend to favour grassroots community and voluntary organizations with an annual turnover of less (often considerably less) than £100,000. As long as you have a presence in the six boroughs (Barking & Dagenham, Hackney, Havering, Newham, Redbridge and Waltham Forest) you are eligible for funding.

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My organisation is very small and we are all volunteers can we still apply?
Yes, East London Community Foundation would like to encourage those smaller organisations which would otherwise find it difficult to raise funds from other areas, to apply to us for funding.

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Will you share our information with anyone else?
Only if you have indicated to us that you are willing for us to talk to other funders. This way we can share our knowledge and experience with other funders within East and North East London and the region (which in the case of some groups for instance, may include Essex).

If we are unable to fund your application we may still be able to leverage in further funding from another funder on your behalf. If you are successful in securing funding we may publish your award on our website (not your contact details) and use any monitoring information to publicise our grant making.

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What is the maximum amount I can apply for?
This is entirely dependent upon the Fund. For the majority of our funds the maximum amount is £2,500 - £5,000. Our average grant is between £1,000 - £3,000.

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I have applied for a grant, when will I know if I am successful?
We aim to provide all grant applicants with a decision within 6 weeks of the grant deadline.

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Do I have to complete any Monitoring forms?
Yes you do. The information we gather from monitoring forms is incredibly valuable, it evidences the effectiveness of our funding to our donors, and to provides an excellent way to attract new donors and funds to enable us to increase our grant making.

As a funding organisation with over 10 years of grantmaking experience, we send out our monitoring forms with the grant offer letter so that organisations know right from the start what data they will need to think about and collect during the life of the project.

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We have never completed an application for funding, can you help?
Your local CVS will support you, their details can be found at www.navca.org.uk and on our Links page. Otherwise, do sign up for our workshops later in the year.

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Will you support something that we have already paid for?
No, we will not fund retrospectively.

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If you have any further questions please contact us or call on 0300 303 1203.

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