Community chest
Community chests, commonly referred to as community trusts, community foundations and united way organizations, are endowment funds pooled from a community for the purpose of charitable giving. In practice, community members donate funds to accrue the community chest endowment. Interest from the endowment is distributed to nonprofit and charitable organizations throughout the community.
A community chest may apply for 501(c)(3) tax exempt status from the Internal Revenue Service (IRS).
History
The community chest movement began in Cleveland, Ohio, in 1914. Frederick H. Goff established the Cleveland Foundation in order to leverage the city's disparate philanthropic assets into a single endowment dedicated to community improvement. Though The Cleveland Trust Company held the financial assets in trusts, the Cleveland Foundation made the grant-making decisions. Over the next five years, the cities of Boston, Chicago, Minneapolis, Milwaukee and Buffalo, N.Y., established their own community chests. Other communities followed suit and organized community chests using the community trust structure.[1][2][3]
In 1940, many community fundraising organizations began to adopt different structural models such as the corporation and unincorporated association. Therefore, though the term "community chest" is still used by the Internal Revenue Service (IRS), a reference to "community chest" by the IRS may include community trusts, community foundations and hybrid organizations.[3]
During the 1950s and 1960s, the phrase "united fund" gained popularity to better include the different structural models of community foundations. Today, many of these organizations use the name "united way" to position themselves in line with the national movement, which aims to move beyond strictly fundraising and focus on providing resources to impactful community programs. As of 2015, over 750 community foundations operate in the United States and more than 1,700 exist around the world.[2][1]
Examples
- The Cleveland Foundation
- United Way of Greater Chattanooga
- United Way of Greater Los Angeles
Tax status
A community chest may qualify as a 501(c)(3) tax exempt nonprofit organization. Its 501(c) designation refers to a section of the U.S. federal income tax code concerning charitable, religious, and educational organizations.[4] Section 501(c) of the U.S. tax code has 29 sections which list specific conditions particular organizations must meet in order to be considered tax exempt under the section. Organizations that have been granted 501(c)(3) status by the Internal Revenue Service are exempt from federal income tax.[5] This exemption requires that any political activity by the charitable organization be nonpartisan in nature.[6]
See also
External links
- United Way Worldwide homepage
- Community Foundations National Standards Board homepage
- Community Foundation Atlas
Footnotes
- ↑ 1.0 1.1 The Cleveland Foundation, "Our history," accessed November 19, 2015
- ↑ 2.0 2.1 United Way of Chattanooga, "About us," accessed November 19, 2015
- ↑ 3.0 3.1 Internal Revenue Service, "Community Foundations," accessed November 20, 2015
- ↑ Internal Revenue Service, "Exempt Purposes - Internal Revenue Code Section 501(c)(3)," accessed January 13, 2014
- ↑ Internal Revenue Service, "Life Cycle of a Public Charity/Private Foundation," accessed July 10, 2015
- ↑ Internal Revenue Service, "Exemption Requirements - 501(c)(3) Organizations," accessed January 13, 2014
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