What is a Community Trust Fund?

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  • Written By: Lea Miller
  • Edited By: A. Joseph
  • Last Modified Date: 02 June 2020
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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. A board of trustees is responsible for evaluation and approval of potential uses of funds.

A community trust fund can be structured as a traditional trust fund where the assets are managed by a bank. It also can be structured as a non-profit corporation and hire an investment manager who will oversee the investment of the funds. The goal of either structure is to maximize the earnings of the fund in order to provide a long-term stream of money for its charitable projects. Upon establishment of the fund, trust documents spell out how many board members there will be, how they will be elected or appointed and how long they will serve.

Wealthy donors might choose to contribute to a community trust fund because they have an attachment to the community. A person who has spent a lifetime in a certain area and watched it grow and develop might wish to aid the future growth and health of the area. The community trust fund can assist a donor to set up an endowment so that a portion of the donor's estate goes to the fund but is also directed to projects that are of particular interest to that donor.

A community trust fund will often issue grants to those seeking funds for specific projects. The fund will establish a procedure for persons or organizations to follow in order to request grants. The required information might include the mission or purpose of the project, the requested amount of money and the expected time period to complete or organize the project. The fund's trustees will assess the potential benefit to be derived from the project and decide whether to approve the grant.

Projects sponsored by a community trust fund can include a wide variety of goals. The focus can be on topics such as families and children, education, health, the environment or culture. Projects might include things such as scholarships for disadvantaged students or the purchase of equipment for schools or sports programs. Programs might offer educational opportunities for displaced workers or those on welfare, for example, or they might provide training and activity programs for youths to keep them in school and out of the criminal justice system. Community projects can do things such as promoting recycling or other environmental programs, helping to expand parks and gardens or sponsoring the conservation of historic buildings.

A local government might partner with a community trust fund to accomplish specific goals. When government budgets do not extend far enough to support special programs, the community trust fund can help fill the gap. This cooperation of public and private interests can benefit all of the citizens of a community.

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