Introduction to Community Foundations

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Introduction to Community Foundations

• The Hope Institute
• The Beautiful Foundation
• Barnett F. Baron
• The Asia Foundation
• February 13, 2008

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What is a community foundation?

• An independent, nonprofit, grantmaking
  organization
• Usually limits its grantmaking to a defined
  geographic area (city, county, urban or rural
  area)
• Governed by a voluntary board of directors
  usually composed of representatives of the
  communities it serves
• Provides the legal framework to manage multiple
  separate funds or endowments named for specific
  donors, or created for specific purposes or
  locations
• Funded from multiple sources individuals,
  families, corporations, foundations, sometimes
  local governments
• Provides expert staff advice and services to
  multiple community donors and grantees
• Seeks to initiate, engage, or facilitate
  community discussion about critical community
  issues

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U.S. community foundation statistics (2005)

• 707 community foundations (413 in 1995)
• 44.5 billion in assets (the total has more
  than tripled since 1995, but half of all
  community foundations still have assets of less
  than 10 million)
• 5.6 billion in gifts received in 2005
• 3.2 billion in grants made in 2005 (400 growth
  since 1995, but three-fifths give less than 1
  million)
• Account for 1 of grantmaking foundations but 9
  of total giving (compared to 10 by corporate
  foundations and 68 by independent foundations)
• Source Foundation Center, Key Facts on
  Community Foundations, September 2007 and
  Community Foundation Giving and Assets 1981 to
  2005, available at foundationcenter.org/findfunder
  s/statistics/pdf/02_found_growth/00_05.pdf.

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Top 10 Community Foundations (2006)
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Community leadership roles

• Convening stakeholders around a common problem or
  theme
• Forging partnership to leverage additional public
  or private resources
• Brokering new relationships within community,
  including bringing contending parties together
• Providing training and technical assistance to
  nonprofit grantees
• Speaking out on issues to the media
• Commissioning research and needs assessments to
  identify service needs
• Collaborate in creating new institutions (e.g.,
  Martin Luther King Library in Atlanta, Georgia)

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Community foundation advantages

• Located in the communities they serve, community
  foundations are closer to and may be more
  responsive to community needs
• You do not have to be wealthy to donate gifts
  can be made at any level
• Alternative to setting up a private foundation
• Provide expert staff services to donors and
  grantees
• Governance structures are more likely to reflect
  the demography and politics of local communities
  than the governing boards of independent,
  corporate, or family foundations

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Community foundation advantages

• Community foundations have contributed to the
  democratization of philanthropy in the U.S.,
  through
• Donor-advised funds
• Providing relatively more support for basic human
  services

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Donor-Advised Funds (DAFs) Creating a Charitable
Checking Account

• Separately managed charitable giving accounts
  that exist under the umbrella of a larger public
  charity, such as a community foundation
• DAFs can be as little as 10,000 or as large as
  several millions anyone can be a
  philanthropist
• Donors receive an immediate tax benefit
• Distributions (grants) can be made over time
• Donor has the privilege of advising to whom the
  grants can be made
• Donor gets the benefit of expert staff who work
  for the community foundation
• Donor does no administrative work
• An alternative to establishing a private
  foundation

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Donor Advised Funds

• Fastest growing segment of the US charitable
  sector
• Assets under management have more than tripled in
  the last decade
• Offered by both philanthropic institutions (such
  as community foundations) and commercial
  financial firms (e.g., Fidelity Charitable Gift
  Fund)
• In 2007, Fidelity had 4.6 billion in assets in
  42,000 separate DAFs. It made 995 million in
  donor advised grants.
• Between 1991 and 2007, Fidelity made 7 billion
  in grants to 111,000 organizations.

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Fidelity Charitable Gift Fund 1991 2007
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Charitable divide in the U.S.

• Research shows that less than 10 percent of the
  money Americans give to charity addresses basic
  human needs, like sheltering the homeless,
  feeding the hungry and caring for the indigent
  sick, and that the wealthiest typically devote an
  even smaller portion of their giving to such
  causes than everyone else.
• Stephanie Strom, Big gifts, tax breaks, and a
  debate on charity, New York Times, September 6,
  2007 Nicole Wallace, Donors overestimate their
  antipoverty giving, Chronicle of Philanthropy,
  January 24, 2008.

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Charitable divide in the U.S.

• 80 of donations of 10 million or more go to
  elite colleges or universities, medical
  institutions, or arts and cultural institutions.
• Households with annual incomes below 100k
  provide 49 of all contributions to organizations
  that provide food, shelter, and other basic
  necessities to needy people.
• Holly Hall, A Charitable Divide As wealthy
  institutions report record fund-raising gains,
  social service groups struggle to stay afloat,
  Chronicle of Philanthropy, January 10, 2008,
  citing Gary A. Tobin and Aryeh K. Weinberg,
  Megagifts in American Philanthropy, Institute for
  Jewish Community Research, December 2007,
  available at www/jewishresearch.org/PDFs/MegaGift.
  EWeb.07.pdf.

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Charitable Gifts of 1 Million or More

• Private higher education 25
• Public higher education 19
• Health and medical 16
• Arts and culture 12 72
• Public and society benefit 5
• Human services 5
• Secondary/elem education 4
• General educ 4
• Environment 4
• International 3
• Religion 2
• Federated appeals 2
• Other 1

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Grant Priorities
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Community foundation grant priorities (2005)

• Education 23
• Human Services 22
• Health 14
• Arts Culture 14
• Public Affairs/Benefit 12
• Environ/Animals 6
• Religion 4
• Science/Tech 3
• International 2
• Other 1

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Grant Priorities
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Human services

• Not only do community foundations provide more
  support to human services organizations, but
  within the human services category, community
  foundations are more likely to than either
  independent or corporate foundations to focus on
  people with disabilities, the aging, victims of
  crime or abuse, and substance abusers.

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Globalizing the community foundation model

• Cleveland Community Foundation 1914 Winnipeg
  Foundation 1921
• US model originally based on gifts from wealthy
  local families and corporations
• Later expanded to middle-class through DAF and
  pooled funds
• UK in 1980s prominent role of government
  funding for start-up costs and basic operations
  (Community Foundation for Northern Ireland)
• Central, Eastern Europe, Russia, and Africa
  strong role of USAID and international ODA
  community. Mott Fdtn, CAF
• Asia role of international NGOs and foundations
  (Ford, Synergos).
• Growth of international support organizations
  WINGS-CF, World Bank
• WINGS now identifies 1175 community foundations
  in 46 countries (274 outside the US, UK, and
  Canada)

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Issues What is a community?

• There are widespread Asian traditions of
• Clan associations
• Guild associations
• Religious trusts
• Self-help associations for internal migrants and
  international immigrants based on place-of-origin
• Village self-help organizations
• There are even examples of clan-based endowed
  agricultural estates during the Sung dynasty in
  China, which distributed grain and money to needy
  members of the clan.
• Are these good models for contemporary community
  foundations? Or are they obstacles?

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Issues Confucian ideals?

• Benevolent government is the best philanthropy.
• Beyond ones own network of personal and family
  relationships, is benevolence the duty of
  government?
• Why does Asia lag in the growth and popularity of
  community foundations?
• Does The Beautiful Foundation represent a break
  from those traditions? Can it be a model for
  other Asian (Confucian) societies?

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Issues Dependence on Foreign Aid?

• The recent surge in interest in community
  foundations around the world has been largely
  initiated and funded by external donor agencies,
  including foundations, international NGOs, USAID,
  and the World Bank.
• Can funding for local community foundations be
  sustained by local sources? At what levels?

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Resources WINGS

• WINGS Worldwide Initiatives for Grantmaker
  Support
• 2005 Community Foundation Global Status Report,
  at www.wingsweb.org/download/GSR2005_p1a.pdf
• International Connections Resources that
  support the growth and development of community
  foundations globally, at www.wingsweb.orf/download
  /InternationalConnections.
• pdf