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Frequently Asked Questions by Professional Advisors

If you don't find the answer to your question here, please feel free to call our general counsel, Jane Wilton, at (212) 686-2563. 

General Questions about The Trust

What is the difference between The New York Community Trust and Community Funds, Inc.?

What is known to the public as “The New York Community Trust,” is in fact two organizations. The first, The New York Community Trust, is organized as an unincorporated association of trusts. Each component fund is held in trust with a bank trustee that is a member of our Trustees Committee, and every gift instrument incorporates by reference The Resolution and Declaration of Trust creating “The New York Community Trust” (the R&D).

The second entity is Community Funds, Inc., a New York not-for-profit corporation. No bank trustee is required; rather, component funds are invested by money managers retained and overseen by our distinguished Investment Committee.

The two organizations file a combined Form 990 with the Internal Revenue Service, share a board and staff, and together operate as the community foundation serving metropolitan New York. The determining factor in setting up a fund with either organization is the inclination of the donor.  The service we provide is the same.  

What are the Long Island Community Foundation and the Westchester Community Foundation?

Through these affiliates, which are not separately incorporated but operate as divisions, we are able to serve Long Island and Westchester County. Each of these divisions has a Board of Advisors of local experts. These affiliates serve donors from their communities as well as making grants to operating charities serving their respective communities.

What is the Distribution Committee of The New York Community Trust?

The Distribution Committee is the name given to our governing board under The Resolution and Declaration of Trust creating "The New York Community Trust." It makes policy and grant decisions like any board of directors. It should not be confused with our Trustees Committee, which is a committee of bank trustees that have adopted the R&D and does not have the power of a board of directors.

Why should my client establish a fund at The Trust rather than create a private foundation?

The New York Community Trust offers the advantages of a private foundation without most of the expense and hassle. Professionally staffed, The Trust can handle all aspects of grantmaking.

Although The New York Community Trust is an aggregate of separate funds, it qualifies as a public charity under Internal Revenue Code Sections 501(c)(3) and 170(b)(1)(A)(vi). That status entitles our donors to tax deductions that are often superior to those accorded private foundation donors, particularly clients who make large inter vivos gifts relative to income or who contribute appreciated property other than publicly traded stock.

And as a single charity, the filing costs are spread among all of our more than 2,000 funds. A fund can be set up in a day.

What is the variance power?

The long passage of time can sometimes cause a fund’s purpose to become outdated. 

Our board has the authority without going to court to change the fund’s purpose, “if and whenever it shall appear to the Distribution Committee…that circumstances have so changed since the execution of the instrument containing any gift, grant, devise or bequest as to render unnecessary, undesirable, impractical or impossible a literal compliance with the terms of such instrument, said Committee may at any time or from time to time direct the application of such gift, grant, devise or bequest to such other public educational, charitable or benevolent purpose as, in their judgment, will most effectually accomplish the general purpose [of The New York Community Trust]…”

How can I obtain financial information and other materials about the Trust?

Information not available on our website can be obtained by contacting us at 909 Third Avenue, New York, New York 10022, (212) 686-0010, or as stated below:

Colorado: Secretary of State (303) 894-2680, re: Reg. No.20033000084. Florida: SC No. CH9514. A COPY OF THE OFFICIAL REGISTRATION AND FINANCIAL INFORMATION MAY BE OBTAINED FROM THE DIVISION OF CONSUMER SERVICES BY CALLING TOLL-FREE, WITHIN THE STATE, 1-800-HELP-FLA. Maryland: For the cost of postage and copying, documents and information filed under the Maryland charitable organizations laws can be obtained from the Secretary of State, Charitable Division, State House, Annapolis, MD 21401. Michigan: MICS No.22265. Mississippi: The official registration and financial information of The New York Community Trust may be obtained from the Mississippi Secretary of State's office by calling 1-888-236-6167. New Jersey: INFORMATION FILED WITH THE ATTORNEY GENERAL CONCERNING THIS CHARITABLE SOLICITATION AND THE PERCENTAGE OF CONTRIBUTIONS RECEIVED BY THE CHARITY DURING THE LAST REPORTING PERIOD THAT WERE DEDICATED TO THE CHARITABLE PURPOSE MAY BE OBTAINED FROM THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY BY CALLING (973) 504-6215 AND IS AVAILABLE ON THE INTERNET AT New York: Upon request, a copy of the latest annual report can be obtained from the organization or from the New York State Attorney General Charities Bureau, Attn: FOIL Officer, 120 Broadway, New York, NY 10271. North Carolina: Financial information about this organization and a copy of its license are available from the State Solicitation Licensing Branch at 1-888-830-4989. Pennsylvania: The official registration and financial information of The New York Community Trust may be obtained from the Pennsylvania Department of State by calling toll-free, within Pennsylvania, 1-800-732-0999. Virginia: Financial statements are available from the State Office of Consumer Affairs, P.O. Box 1163, Richmond, VA 23218. West Virginia: West Virginia residents may obtain a summary of the registration and financial documents from the Secretary of State, State Capitol, Charleston, WV 25305. REGISTRATION IN A STATE DOES NOT IMPLY ENDORSEMENT, APPROVAL, OR RECOMMENDATION OF THE NEW YORK COMMUNITY TRUST BY THE STATE.

Can my client’s private foundation hire your grant staff for advice?

We appreciate this recognition of our staff’s ability, and we hear this question all the time. A private foundation may establish a fund with us by either transferring all or part of its principal or by making an annual grant to that fund, and our grant staff will assume grantmaking responsibility. Unfortunately, our staff is not available to consult directly with a private foundation.

More on private foundations and funds in The Trust

Questions About Establishing a Fund at The Trust

What kinds of funds can my client establish?

Generally, there are four types of funds available:

Unrestricted Fund

An unrestricted fund maximizes the flexibility for concerned New Yorkers. Our professional grantmaking staff is expert in a variety of fields and specializes in figuring out how to help our community most effectively. Guided by a board of distinguished New Yorkers, our staff carries out a rigorous process of identifying issues, setting priorities, and devising strategies for tackling New York City’s most pressing problems.

Field-of-Interest Fund

A field-of-interest fund has the advantage of drawing upon our staff grantmaking expertise in addressing an area or areas of particular interest to the donor. For example, a fund for girls and young women may be used to address domestic violence, train girls for leadership roles, and provide childcare for single mothers who wish to complete their college educations. Or a fund may have a more specific focus, such as drug abuse prevention. Because our board has the ability to modify the fund’s purpose, using its “variance power,” a field-of-interest fund has timeless flexibility.

Donor-Advised Fund

A donor-advised fund may be the answer for a client who wants to create a fund during his or her lifetime and stay involved in the grantmaking decisions, or who wants to have his or her children involved. People identified as advisors to such a fund may recommend grants to charities anywhere in the United States. While the tax law is clear that your client’s recommendations cannot be binding, we take these recommendations very seriously. Our staff scrutinizes basic information furnished by the recommended charity. We protect the donor by making sure the charity is above-board and actively serving a public, charitable purpose.

Designated Fund

A designated fund may be used to solve the problem of a client who wants to support a charity, or even a particular program at a charity, but isn’t sure the organization will stand the test of time. Our variance power allows our board to redirect the donor’s funds without the time and cost of going to court.

For more information see Types of Funds.

What types of assets can be used to establish a fund?

Funds can be created with cash, publicly traded stock, closely held stock, copyrights, retirement plan assets, and life insurance.  For additional information, and to discuss other types of assets your client is considering contributing, please contact Jane Wilton, general counsel. 

What is your minimum fund size?

Our funds range in size from $5,000 to nearly $100 million. The minimum size of a fund in Community Funds, Inc. is $5,000. If your client wishes to establish a fund in trust form, the minimum size varies depending on the trustee bank chosen; most of our trustee banks require at least $500,000 in order to establish a charitable trust and many have minimums of $1 million or more.

Scholarship funds can be established with a minimum of $100,000 or $250,000, depending on certain factors. Please contact Jane Wilton, general counsel, to discuss further.

Can you give me language for a will or for an inter vivos gift?

Recommended language for a fund in The New York Community Trust, Community Funds, Inc., the Long Island Community Foundation division, or the Westchester Community Foundation division is available from Jane Wilton. As you think about the purpose of the fund your client wishes to establish, Jane will be happy to help you customize language.

Why do you need to review and approve will language in advance?

We understand and respect that your client may desire anonymity in the estate planning process. However, because we have fairly technical requirements for language to be included in wills and trusts, we prefer to review will language before your client signs his or her will.

There is no need to disclose the identity of your client if that is his or her preference. In addition, we find it is helpful to understand the charitable purposes your client may wish to accomplish before the gift comes to us; sometimes we are unable to accept a gift because it is too narrow, or does not meet other requirements, such as incorporating our variance power. 

My client would like to terminate a private foundation, can you help?

My client would like to terminate a private foundation into The New York Community Trust. Can you help?

The process of terminating a private foundation—whether organized in trust form or corporate form—is described here, in our Winter 2015 issue of Professional Notes. In addition, if you prefer not to handle the dissolution yourself, through an arrangement with a firm that specializes in such matters, we can help your client terminate the foundation.

Please contact Jane Wilton, general counsel, to discuss further.

Will you come to my office to meet with my client or make a presentation about The New York Community Trust to my colleagues?

We would be happy to meet with you. Please call us at (212) 686-0010 and speak to either Bob Edgar or Gay Young in our Donor Services Department, or Jane Wilton, our general counsel, to make arrangements.  

Questions about Planned Giving at The Trust

What are the advantages of creating a CRT—either in the form of an annuity trust or unitrust?

A Charitable Remainder Trust, whether set up as an annuity trust or a unitrust, is an extremely useful estate and financial planning tool. Typically, CRTs offer three important tax benefits:

  • A current income or estate tax deduction for the present value of the remainder committed to charity;
  • The avoidance of capital gains tax when the appreciated assets are sold;
  • Exemption from tax of earnings of the trust until they are distributed to the income beneficiary.

In addition, because the assets of a CRT are exempt from tax on the income earned by the trust, the proceeds are available for reinvestment by the trustee. This means the donor can potentially realize more spendable income from the CRT’s investment and conversion of assets than he or she could in an individual capacity.

Whether the trust is structured as a unitrust or annuity trust, The Trust is an ideal remainderman of a CRT. Donors can rely on The Trust’s expertise in philanthropic administration and grantmaking as well as investment management, and benefit from The Trust’s flexibility with respect to the variety of charitable funds it offers and the types of gifts that it can accept.

For more information on charitable remainder trusts, please see our March and June 2008 issues of Professional Notes, discussing charitable remainder annuity trusts and unitrusts, respectively.

What if the assets in a charitable remainder unitrust won’t generate enough income... cover the payment to the income beneficiary?

If the donor does not want to invade principal to pay the income beneficiary, an income-only unitrust may be the answer because it makes payments only out of income. In addition, the trust instrument may provide that if income has not been enough to cover the unitrust payments in prior years, income in excess of that amount in later years can be used to make up the shortfall.

Or a "flip" trust might be the solution, changing from a net income unitrust to a standard unitrust upon the occurrence of an event, such as the sale of low-income producing assets contributed to the trust.

Will you serve as trustee of my client’s charitable remainder trust?

Where the remainder will come to Community Funds for a purpose we have approved, we are happy to consider serving as trustee. We will need to review the proposed trust agreement, the asset proposed to be contributed, the payout terms, and likely duration of the trust. Please contact Jane Wilton to discuss further.

What is a charitable lead trust and its advantages?

Under a charitable lead trust, which can be created by a deed of trust or will, an annuity or unitrust payment from the trust is paid to a fund in The New York Community Trust for a designated period of time, at the end of which the principal would be paid to a non-charitable beneficiary selected by the donor.

A charitable lead trust created by will can cut down substantially on estate taxes because of the charitable deduction for our charitable interest in the annuity or unitrust payment. The value of the charitable interest, of course, depends on the length of the trust and amount or percentage to be paid out each year. The savings in estate taxes means that the members of the donor's family may ultimately receive more than if the property were left to them at the donor's death.

Similarly, a charitable lead trust created during the donor's lifetime generally eliminates income taxes on the income from the assets placed in the trust because the amounts paid to charity are fully deductible against the trust's income. It also reduces the gift tax on the property eventually passing to children or grandchildren, provides for charity, and ensures that the property passes intact.

Will you serve as trustee of my client’s charitable lead trust?

Unfortunately, we cannot serve as the trustee of your client’s charitable lead trust. If your client is considering establishing a charitable lead trust naming The Trust as a lead beneficiary, please call Jane Wilton, general counsel, and she will be happy to discuss possible alternatives for selecting a trustee.

How can life insurance be used to create a fund in The Trust?

Many people find in later years that they don't need all the insurance they did when they were younger. They donate the policies to the funds they established here. If a policy is fully paid up, the tax deduction is either the replacement value or the donor's cost, whichever is less.

If a policy is not paid up and the donor decides to contribute the premiums, those amounts become deductible as charitable contributions. In either case, the donor gets an immediate tax deduction and substantial estate tax savings later.

Can IRAs and similar pension assets be used to create a fund in The New York Community Trust?

Yes. In fact, IRAs and similar pension assets, such as 401(k)s, 403(b)s, and defined contribution plans, as well as non-statutory stock options and deferred compensation, are ideal assets to consider contributing to charity. Such assets, which constitute “income in respect of a decedent” (IRD) under the U.S. Treasury regulations, are the most highly taxed assets at death and are both included in the value of the decedent’s taxable estate and deemed income to the beneficiary. Individuals who designate a charitable recipient as beneficiary of IRD property avoid the income tax that would otherwise be due and generate a corresponding charitable deduction that reduces their taxable estate. In so doing, donors are able to further their philanthropic interests while leaving more to heirs.

Your client may also wish to use IRA assets to establish a charitable legacy during his or her life. Current law permits up to $100,000 in tax-free distributions from individual retirement plans to qualified charitable distributions for individuals who are 70 1/2 or older, and excludes from income up to $100,000 annually in qualified charitable distributions from a traditional or Roth IRA, while counting these distributions toward the minimum distribution requirements that apply to such individuals. While a contribution to a donor-advised fund is not deemed a qualified charitable distribution, and thus is not eligible for this tax-advantaged treatment, contributions to a designated, field-of-interest or unrestricted fund do qualify. By taking advantage of this provision, your clients can see their charitable gifts put to work while reducing their current income tax and the value of their taxable estates. If enacted, the Public Good IRA Rollover Act of 2009 (H.R. 1250 and S. 864) would extend these provision to donor-advised funds, supporting organizations, and private foundations. The bill would also lift the $100,000 cap on distributions and allow planned gifts beginning at age 59 1/2.

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The New York Community Trust is a 501(c)3 public charity.