What Is a Community Trust Fund? Overview, 5 Facts About It

A community trust fund can be used to build a community garden or help start up a local food bank.

The fund also helps people who have lost their homes due to fire or flood damage to repair their properties, so that they can return to living in the area where they grew up. Read more at the article below. 

What Is a Community Trust Fund?

A community trust fund is a non-profit organization established to improve and strengthen a certain town or municipality. It gets contributions from contributors who desire to support the fund’s work. A board of trustees is accountable for evaluating and approving prospective fund usage.

What Is a Community Trust Fund?

A community trust fund can be formed as a standard trust fund in which the assets are administered by a bank. It may also be organized as a non-profit business and employ a fund manager to monitor the investment of the money.

The objective of either form is to optimize the fund’s revenues to ensure a steady flow of funds for its philanthropic endeavors. Trust agreements specify the number of board members, how they will be chosen or appointed, and the duration of their terms upon the fund’s inception.

Due to their ties to the community, wealthy donors could opt to give to a community trust fund. A person who has spent a lifetime in a given place and witnessed its growth and development may desire to contribute to the area’s future growth and health.

The community trust fund can assist a donor in establishing an endowment so that a percentage of the donor’s legacy is given not just to the fund, but also to initiatives of specific interest to the donor.

Typically, a community trust fund awards grants to persons seeking funding for specific initiatives. The fund will provide a framework for individuals and groups to request funding.

The needed information may include the project’s aim or purpose, the sought amount of funding, and the anticipated duration to complete or arrange the project. The trustees of the fund will evaluate the project’s potential benefits and determine whether to approve the funding.

What Is a Community Trust Fund?

A community trust fund may finance a broad variety of projects with diverse objectives. The emphasis may be on families and children, education, health, the environment, or culture.

Scholarships for disadvantaged children and the purchase of school or sports program equipment are examples of such projects.

For example, programs may give educational opportunities for displaced employees or welfare recipients, or they may provide training and activity programs for juveniles in order to keep them in school and out of the criminal justice system.

Community projects may include the promotion of recycling and other environmental initiatives, the expansion of parks and gardens, and the preservation of historic structures.

To attain specified objectives, a local government may collaborate with a community trust fund. When government funds do not extend far enough to support particular initiatives, the community trust fund can assist cover the gap.

This cooperation between public and private interests may be advantageous for the entire society.

What Is a Community Trust Fund?

Setting Up a Community Trust Fund

Prior to the twentieth century, community trusts were referred to as “community funds.” As implied by the name, these monies were designed to assist a specific city, town, or hamlet.

As they did in the past, modern community trust funds may include permanent endowments as well as smaller independent trusts supported by various sources. Typically, community foundations now hold these money. In 1914, Cleveland founded the first-known community foundation.

Community Foundations

The majority of community trust funds are established by community foundations. These are public charities that serve certain regions. The majority of these organizations have clear, uncomplicated names, such as the Middletown

Community Foundation serving Middletown, Ohio. Depending on the social, political, and geographical qualities of a town, its foundation may aid an entire county rather than a single city. There may even be municipal, county, and even neighborhood foundations servicing the same region.

The majority of community trust funds are established by community foundations. These are public charities that serve certain regions. The majority of these organizations have clear, uncomplicated names, such as the Middletown Community Foundation serving Middletown,

Ohio. Depending on the social, political, and geographical qualities of a town, its foundation may aid an entire county rather than a single city. There may even be municipal, county, and even neighborhood foundations servicing the same region.

What Is a Community Trust Fund?

If there is no existing community foundation in your region, you can form one. Forming a legal body is the first step in establishing a foundation, often by incorporating and registering a name as needed by state law.

The following stage is applying for and receiving 501(c)(3) status from the Internal Revenue Service. In addition to a goal statement, your foundation need an organizational structure, membership standards, and bylaws. You will then need to do outreach and fundraising, as well as prepare for future fundraising initiatives.

How Are Community Trusts Funded?

Community foundations usually create their own endowments. These are permanent trust funds whose principles are invested to promote growth over the long term.

When an endowment is established, it will be accompanied by a set of rules dictating how its money must be utilized. Some endowments are managed internally by the foundation, while others are managed by external investment firms.

While the principle of an endowment stays invested, a portion of the annual interest is utilized for the fund’s declared objective. Along with the initial investment, the remainder might be reinvested and allowed to compound over time.

As indicated earlier, community trusts can also take donations directly from contributors. Individuals can donate to community foundations without indicating how the funds should be utilized.

Others donate to certain funds, such as the scholarship fund of a foundation. Community trusts can also develop through pledge drives, matching donations from employers, and bequests from the estates of dead persons.

Individuals, families, corporations, and charitable organizations can also establish trust funds directly with a community foundation. The entities that establish these trusts often support them through endowments or regular contributions.

What Is a Community Trust Fund?

Occasionally, these trusts bear the names of the original donors who formed them. Some exist as memorial funds or scholarships honoring a departed individual with good effects.

How Does a Community Trust Fund Work?

A community foundation often holds and administers many funds simultaneously. Some are allocated funds that benefit certain local charity. In addition, there are field-of-interest funds, which are designated for concerns such as food insecurity, homelessness, and the environment.

Scholarships give financial assistance to prospective students who satisfy specific criteria. Last but not least, unrestricted grants support emergency needs and catastrophe assistance.

In addition to these four categories of funds, community foundations frequently handle additional forms of trusts. Donor-advised funds are accounts created with a public charity that provide donors with instant tax benefits. These funds can be used to distribute grants, with donors having influence on their usage.

Trusts established by individuals, families, corporations, or charity organizations may have their own distribution rules. For example, each applicant for a memorial award may be required to submit an essay and transcripts.

Eligibility requirements may include a minimum GPA, residency in a specified neighborhood, or participation in particular extracurricular activities (such as marching band in high school).

What Is a Community Trust Fund?

Each year, a selection committee is in charge of evaluating eligibility, examining applications, and distributing the monies to a suitable winner.

Conclusion

A community trust fund is a form of pooled money to be used for community projects. You can set up a community trust fund as a nonprofit corporation or a non-profit foundation.

With this type of fund, all of the partners contribute a certain amount each year, but the contributions are not required to be equal.

FAQ

Some community trust funds are earmarked for programs that benefit local kids and adolescents. A community trust fund is a not-for-profit entity created for the purpose of improving and enriching a particular community or municipality. It receives money from donors who wish to support the efforts of the fund.
Community land trusts – or CLTs – are democratic, non profit organisations that own and develop land for the benefit of the community. They typically provide affordable homes, community gardens, civic buildings, pubs, shops, shared workspace, energy schemes and conservation landscapes. Run by ordinary people.
The Liberty Community Trust (“LCT” or “the Trust”) aims to improve the learning outcomes of young people in South Africa by investing in education initiatives that enable sustainable economic inclusion. The Trust was established as part of Liberty’s BEE deal in 2004.
A Community Land Trust (CLT) is a form of shared ownership of a property, where the land component of a residential property is owned by community based, not-for-profit legal entity and the actual building is owned (or leased long-term) by an individual household.27 thg 9, 2018

A charitable trust is not incorporated, so it cannot enter into contracts or own property in its own right. To set up a trust your group must write and sign a trust deed, which must show that the organisation is legally charitable. There is a model trust deed on the Charity Commission website.

A CLT is usually constituted as an Industrial and Provident Society or Company Limited by Guarantee, and may or may not have charitable status. Despite these different forms and activities, CLTs tend to have in common the aims of meeting local housing need providing long-term community benefit.
5/5 - (1 vote)
Pat Moriarty
Follow me
Latest posts by Pat Moriarty (see all)

Leave a Comment