Frequently Asked Questions

What is a Community Foundation?

A community foundation is a tax-exempt public charity that enables individuals and qualified organizations to establish charitable funds. It is estimated that there are more than 700 community foundations throughout the country. They serve small communities, counties, whole regions of the state, whole states, and in some cases, multiple state areas. The assets of the individual funds are placed in a pooled investment account and managed in accordance with the Foundation’s investment policy. Grants are awarded from individual funds to support nonprofit efforts in accordance with the donor’s wishes. CFFK donors and grantees live or work primarily in the Florida Keys although there are no geographical restrictions on making grants outside the Keys.

When was the first community foundation started?

In 1914, Frederick Goff, a Cleveland, Ohio attorney and president of the Cleveland Trust Company, started the first community foundation as a component of his bank. He had two goals: to create a philanthropic vehicle to facilitate donors’ charitable intentions in perpetuity even if their original purpose became obsolete (“variance power”); and second, to establish a system whereby people of modest means could also engage in large-scale philanthropy, by pooling their contributions.

Is the Community Foundation of the Florida Keys really a “charity”?

Yes. CFFK is a 501(c)(3) charitable organization, Tax ID #65-0648968. Our primary role is to encourage, channel and administer philanthropy to benefit effective organizations throughout Key West and the Florida Keys. A donor gives through the Foundation to the community by way of a charitable fund administered by the Foundation. A copy of the IRS Letter of Determination or IRS Form 990 is available by contacting CFFK.

Why establish a fund with the Foundation instead of giving directly to a favorite charity?

Donors who want to ensure that their gifts will do the most good in the community and support organizations over the long term, find that community foundations offer them the expertise, flexibility and community resources that can add useful value to their gifts. Some donors also prefer to be shielded from fundraisers by giving through the auspices of the Foundation.

What’s the difference between the Foundation and the United Way?

The United Way raises money each year and distributes all that it collects to qualifying, pre-designated organizations. In this manner, it is the community’s charitable checkbook. The Foundation manages, for the most part, permanently endowed funds that distribute only a portion of income in grants each year. In this manner, it is the community’s charitable savings account.

Do I need to come to your office to discuss establishing a fund?

The CFFK President – and individual Board members, for that matter – will be happy to talk with you on the phone or visit you in your home or office to discuss a possible gift or gift plan. Setting up a fund agreement usually takes about half an hour.

Do I need a lawyer to talk to the Foundation?

The fund agreement forms that establish Donor Advised Funds in CFFK are made available to each donor during preliminary conversations with Foundation staff. It is always recommended that donors review their charitable gift plans with their financial counselors. Once the donor and appropriate counselors of the donor approve the fund agreement form, the initial contribution is made, and the Fund is established. The donor may then make grants from the Fund to qualified charities. All Funds and grants are subject to CFFK Board approval.

Must contributions to the fund be cash?

No. CFFK is able to accept gifts of appreciated securities (this may be particularly advantageous to the donor), real property, or in some cases, personal property. The Foundation offers the maximum charitable deduction available for estate and gift-planning opportunities. Our staff and attorneys on the CFFK Board are able to provide fully current information on giving techniques, and can assist donors to evaluate the most financially effective ways to accomplish their charitable goals.

What is an endowment fund?

An endowment fund intends to maintain the real value of its principal in perpetuity. Grants are made out of investment returns only at a rate that is sustainable over the very long term, usually four to five percent per annum. This is in contrast to a spend-down fund in which the plan is to spend the entire fund over some time period. Because endowed funds build a savings account for our future, the Board of Governors strongly recommends that individuals choose to establish “endowed” donor funds.

What happens to the corpus in an endowed fund?

It remains invested in the Foundation. After the donor’s lifetime, either his heirs (acting as advisors to the fund) or the Foundation Board will continue to make grants. Grants will be made in the donor’s name and according to the donor’s wishes

Are CFFK’s assets professionally managed?

All CFFK’s investments are in professionally managed mutual or money market funds. Oversight is the responsibility of the Foundation’s Investment Committee, which operates in accordance with the Uniform Prudent Investor Act and in accordance with the principles of modern portfolio theory.

How are the assets of CFFK invested?

The fundamental objective is for the Foundation’s endowed funds to achieve a total rate of return that facilitates a spending policy of 4.25%, after administrative expenses ranging from 1% to 2%, while maintaining the long-term purchasing power of the endowment.

Funds in the investment pool are commingled.  A fund accounting software program tracks each fund’s activity separately.

Our Investment Policy statement describes the investment philosophy, long-term investment goals, and management procedures CFFK uses in managing its endowed funds. This policy also provides the ongoing framework for CFFK’s Investment Committee and is available upon request.

How does CFFK select the funds in which my money is invested? Can I influence this decision?

CFFK believes that long-term investment performance, in large part, is primarily a function of asset class mix. CFFK has reviewed the long-term performance characteristics of the broad asset classes, focusing on balancing the risk and rewards. The Investment Committee meets quarterly to review all aspects of the Investment Policy, including the asset allocation, performance vs. benchmarks, etc.

At the time a fund is established, a donor may request his fund be invested in low-risk instruments. We do not currently offer a self-directed option.

Is the investment performance of CFFK assets consistent with the returns of other community foundations?

Yes. In fact, our performance has generally equaled or exceeded the performance of many large community foundations with greater assets. We have consistently performed in the second quartile of all community foundations, most of which have much larger portfolios.

How can I review the Investment Policy? How will I know if it changes?

The Investment Policy is available on our website and by request to the Foundation office. Any material changes in the Policy will be communicated to our donors via our website or in a regular mailing. Our investment consultant conducts a meeting in Key West every year to update fund donors on market conditions, investment returns and changes in the Investment Policy.

How are earnings applied to the fund?

All interest, dividends, gains and/or losses are allocated proportionately among the individual funds in the investment pool at the end of each month.

How can I access the fund balance and investment performance?

Fund advisors may contact CFFK at any time to inquire about the balance in their fund.  Quarterly donor statements detailing the activity of the fund are mailed or emailed to fund advisors by the 15th of each month following the quarter.  Additionally, fund advisors have access to their statements online at Statements include gifts, grants, earnings, investment expenses and administrative fees.

How can I request grants from the fund?

Requests for grants for qualified charitable purposes may be made in writing from the fund advisor stating
1) Name of Donor Fund, 2) Name and Address of Grantee, 3) Amount of Grant, 4) Purpose of the Grant, and
5) any special handling instructions.  Requests may be sent via email.   

Grant requests may also be made online at

Grants are processed within two weeks of receiving the request.  Grant checks are mailed to the grantee with a CFFK grant transmittal cover letter, a copy of which is simultaneously mailed to the fund advisor.

Grants may not be made for membership dues, pledges, or event tickets and sponsorships for which there is an exchange of goods or services (such as seats at a fundraising event or admissions to performances).

Is it true that the Board must approve a grant from any Donor Advised Fund?

The Foundation’s objective is to respect the wishes of its donors. As required by law, the Foundation’s Board reviews all grant requests on a regular basis, to ensure compliance with IRS regulations on charitable giving

How does CFFK cover operating expenses?

Our operating expenses are covered by administrative fees ranging from 1% to 2% for donor services, along with our endowment earnings.

Why does CFFK charge an administrative fee to manage the funds?

Donors make a small contribution for CFFK to cover administration associated with all funds, including: staff consultation; individual fund accounting; fund statement preparation and distribution; receiving, processing, and acknowledging contributions; oversight of investment management; receiving and processing grant suggestions; grant evaluation and follow up; and compliance with federal and state reporting requirements.

How does the fee structure work? How does it compare with other community foundations?

CFFK applies all investment returns to your fund. We charge an annual fee of 1% for endowments or operating reserve accounts we manage for other nonprofit organizations, 1.5% on a Donor Advised Fund, and 2% on Scholarship Funds. Fees are calculated and automatically charged on the fund balance quarterly. These fees are consistent with the standard administrative fees charged by other community foundations.

Is there a minimum to open a donor fund?

An Endowment, Scholarship or Donor Advised Fund may be created with a gift of $10,000 or more.

Once a fund is created, can I make additional contributions?

Additional gifts may be added to the fund at anytime.

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