What is a community foundation?
Community foundations are regional charitable trusts. There are 14 throughout New Zealand and more than 1800 worldwide.
How do community foundations work?
Community foundations connect generous local people with the people, projects and charitable causes making a real difference in their community. Their donations and gifts in their wills are invested in perpetuity with the interest distributed every year to benefit the community.
What is Te Karaka Foundation?
Te Karaka Foundation is the community foundation for the Taranaki region.
My community group needs funding – can you help?
Te Karaka Foundation was launched in June 2016 and is currently building Taranaki’s fund, however we do have a modest distribution programme – keep an eye on our website and Facebook page for notification of available funding.
Why give through Te Karaka Foundation?
- Satisfaction of giving back to Taranaki: If you donate during your lifetime you receive the pleasure of seeing the results of your generosity through the impact on your local community. If you leave a bequest in your will, you can be confident that even after you have gone, you are leaving a lasting legacy that will benefit your community for many generations to come.
- Your gift endures: The endowment model means your gift keeps on giving, even after you are gone. Unless you request anonymity, your name will always be associated with grants made from your fund.• Economies of scale reduce costs and risks: An endowment fund through Te Karaka has the benefits of your own charitable trust, yet is easier and more cost effective to establish. We work with your legal adviser to make the process as easy and transparent as possible.
- Personal and flexible model allows for donor participation and changing interests: A Named Endowment Fund enables you to respond to changing needs in the community and align your fund in accordance with your philanthropic goals.
- Reputable trustees and prudent stewardship of funds: All Foundation Trustees and Committee Members are volunteers who view themselves as stewards of Te Karaka for the Taranaki community.
- Tax benefits: Donations of money made during your lifetime qualify for a tax credit of 33.3% of the value of your gift (up to the limit of your taxable annual income).
How are donated funds managed?
Although each endowment fund is monitored and accounted for individually, the capital is combined with the other funds managed by the Te Karaka, in order to reduce risks and lessen administration costs. The funds are managed by Craigs Investment Partners, with supervision from our Investment Management Committee.
How is the income from invested funds distributed?
Subject to investment returns, we aim to distribute around 4% from each Fund as grants to the community on an annual basis. A further 1% is retained by Te Karaka to fund operating costs. Remaining income is reinvested in order to grow each fund.
How are grant recipients selected?
Experts in charitable giving, our Distributions Advisory Committee make grants in line with your stated wishes or based on the needs of the community for non-designated funds.
What is the cost?
Te Karaka directs 1% of the income earned on invested funds towards operating expenses. Donors are also encouraged to consider making an establishment donation towards operating expenses. This donation can be made when the fund is established, over a five-year period, or when the Fund is received by Te Karaka as part of the donor’s estate.
What does a donor need to do to set up their own Named Endowment Fund?
A representative of Te Karaka will meet with the donor to discuss how much they would like to give, whether they wish to donate during their lifetime or as part of a bequest and what charities or charitable purposes they wish to designate as the beneficiaries of their fund. Te Karaka will then liaise with their financial adviser to set up their fund and once established, will provide them with an annual update on their fund’s earnings and distributions. Donors will also be invited to keep up-to-date with Te Karaka’s progress through regular newsletters and annual donor events.
What if a donor would like to establish a Named Endowment Fund but currently lacks sufficient funds to do so?
We encourage you to create your fund and begin making contributions to it as you are able. As your fund grows, the income earned on it can be granted through a Special Interest Fund or the Community Fund, or can be retained to build your fund. Once your fund reaches $50,000 you will be able to direct grants to specific charities or charitable causes.
What happens if the donor’s designated charity ceases to exist?
If this occurs during the donor’s lifetime, Te Karaka will notify the donor that this has occurred so that they can nominate a new beneficiary of their fund. Where this occurs after the donor’s passing, Te Karaka will endeavour to identify another organisation that operates within the same charitable purpose as the original beneficiary.Where this is not possible, Te Karaka will allocate the income earned on these funds to priority needs in the region through the Community (General) Fund.
What if a donor would like to make capital distributions from their fund?
Donors can opt to establish a “pass-through” fund where funds are invested for a period of time and then distributed to the community. For example, an individual could donate $50,000, to be paid out in $10,000 increments over a five-year period.
Can Te Karaka help Community Groups and Schools?
Funds management – Most charities, community groups and schools would agree that regular donations and funding enable them to plan and achieve their goals more effectively.We encourage community groups to help future-proof their organisation by establishing a Named Endowment Fund. Income earned on the fund is granted back to the organisation annually, providing a regular income stream that can be relied upon in years to come. Community organisations can grow their fund by encouraging donors to make contributions to the fund either during their lifetime or in the form of a bequest. As the capital held in the endowment fund is off your organisation’s balance sheet, your eligibility for other sources of funding is unlikely to be affected.
Grants management – Te Karaka Foundation can assist community organisations and trusts that are struggling to meet their objectives by offering a grants management service.Through this service, the organisation or trust effectively becomes a “sub-fund” of Te Karaka. Te Karaka becomes responsible for the investment of endowed funds and the distribution of grant funds however the organisation retains the ability to identify grant recipients should they wish.
What are the benefits for Community Groups in creating a Named Endowment Fund or utilising Te Karaka’s Grants Management Service?
- Convenience and versatility: Creating an endowment through Te Karaka Foundation is an easy, cost-effective alternative to managing your own endowment fund and enables your organisation to benefit from the expertise of Te Karaka’s Investment Committee.
- Regular income stream: The endowment model means your organisation receives regular income that can be relied upon in years to come. As your fund grows over time, so does the income your organisation receives. Directing bequests to your fund also reduces the risk of an unexpected donations affecting your eligibility for other sources of funding.
- Economies of scale reduce costs and risks: A Named Endowment Fund through Te Karaka has the benefits of your own trust, with reduced risks and administrative costs.
- Reputable trustees and prudent stewardship of funds: All Foundation Trustees and Committee Members are volunteers who view themselves as stewards of Te Karaka and its funds for the Taranaki community.
- Transparency: Te Karaka provides regular updates on your fund’s earnings and distributions and maintains a low administration fee of 1% of invested funds.
- Tax benefits: Donations of money made during donors’ lifetime qualify for a tax credit of 33.3% of the value of your gift (up to the limit of your taxable annual income).