In this age of ever-increasing requests for taxpayer dollars and shrinking school budgets, school districts need an education foundation to serve as a crucial source of additional funds, resources and support for the school district. School districts have been looking at the fundraising efforts of colleges, universities and private schools as models for increasing their revenue. Colleges, universities and private schools have been using foundations to enlist dedicated and focused groups of individuals in the task of raising funds for these institutions. Education foundations are a relatively new concept for public school districts, but since they are being incorporated into communities across the country, public school districts are realizing the education foundations' importance.
With the budget shortfalls faced by school districts, numerous school districts have started education foundations to supplement projects within the school district that would not be covered by taxpayer dollars. Understanding the benefits of an education foundation, and the ease of establishing such a foundation, can provide any school district with not only improved fund-raising abilities, but also a strong sense of community involvement.
What is an education foundation?
An education foundation is a tax-exempt organization that raises funds on its own behalf and then distributes those funds to its associated school district to support priority projects. The education foundation is a separate entity from the governing structure of the school district. A new nonprofit corporation must be formed with the school district's Department of State and submit the required Internal Revenue Service filings to obtain tax exemption. This separation gives the education foundation the ability to independently argue the financial need for the school district and focus on building community support. The school district is then able to focus on running the school while the education foundation is able to focus on fund-raising efforts. Money is raised by the education foundation to provide opportunities and funds for schools in the school district that are not covered by tax dollars. With an experienced attorney and a committed board, the process of setting up an education foundation is relatively straightforward and benefits the school district's students, teachers, schools and community.
What are the benefits to having an education foundation?
School districts across the country are faced with cutting numerous programs due to the lack of funding through taxpayer dollars. Rather than cut these programs, a school district's education foundation may raise funds to support initiatives not funded with current tax revenues. An education foundation may work with the school district to add new programs, supply teaching tools to teachers and improve facilities. In addition, the monies raised by an education foundation may pay for sports equipment, SAT prep classes, athletic facilities upgrade, teacher supplies for interesting class project ideas, after-school tutoring, summer programs and musical instruments. School districts are able to prioritize and support non-funded projects with the funds made available through the education foundation. The school district's students benefit from the programs and facilities made available to them, and the school district's teachers benefit from the grants and supplies provided by the education foundation.
The purpose of an education foundation is not only to provide funds for projects not supported by taxpayer dollars but also to generate interest and support from the business community and community as a whole. Individuals benefit by donating money locally and, in turn, improving the school district and their homes' property values. Businesses benefit by strengthening their community and obtaining local recognition for their donations. Also, businesses are more likely to give to an education foundation instead of a single school. In addition, donors benefit because of the state and federal tax incentives to donate when the education foundation obtains its 501(c)(3) status. Depending on the education foundation's state, certain state tax credits are available to businesses that donate to education foundations. The school district's schools benefit by having a separate entity solicit these funds so that the schools' administration can focus on running the schools and not on fundraising.
An education foundation is not just limited to gifts of money. Donations of equipment, services and volunteers also may be accepted by the education foundation. School districts across the country are finding that education foundations are a great way to get community members focused on donating their time and resources to teach children. By volunteering, community members become involved in the school district's happenings, and also realize that they have a vested interest in helping the school district succeed. The schools district's community as a whole benefits by involving its leaders in teaching its students.
The sources of funds come not only from individuals and businesses, other foundations, nonprofit corporations, and state and federal governments also donate to education foundations. Certain nonprofit entities have money set aside specifically for education foundations. These funds are not made available to school districts directly but rather only through the education foundations. So it is crucial for school districts to establish education foundation.
How is an education foundation established?
Establishing an education foundation for your school district can be a relatively straightforward process if the school district has an experienced team of professionals. The first step is to find enthusiastic corporate and community leaders who support public education and will dedicate some of their time to an education foundation. The next step is to form a nonprofit corporation within the school district's state and then apply to the Internal Revenue Service for a federal tax exemption. This is where having an experienced attorney is crucial. An experienced attorney will be able to navigate through the process of establishing the nonprofit corporation and make the necessary Internal Revenue Service filings.
Each year school districts are realizing the benefits and importance of establishing education foundations to access crucial funds for non-funded programs and educational supplies. The benefits far outweigh the costs associated with creating an education foundation especially once the individuals and businesses in the community realize the importance of supporting the public school district.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
