In nearly every community across the United States—and increasingly in cities and towns around the world—you’ll find an important and sometimes puzzling entity called a community foundation.
“They make grants to us,” says one nonprofit executive director.
“No, we get grants through them from other people,” says another. “I’ve never really understood how that works.”
A board member chimes in, “Well, they manage my family’s foundation—they’re our charitable giving service. I guess I’ve heard they make grants of their own, too.”
Truly, there has never been an organization more perfectly suited to the blind men/elephant parable. You know the story—three blind men try to describe an elephant as one touches the ear, another the trunk, and the third puts his hands on the wide, solid side of the animal. Each describes something completely different. The same is true of community foundations. To nonprofit fundraisers, they are grantmakers; to donors, they are a way to manage charitable giving without setting up a private foundation; to civic leaders, they are often an important partner in improving life in their regions. And just as the elephant is the sum of its parts, so does the sum of a community foundation’s roles make it a powerful resource for the community.
What are community foundations?
Community foundations are based on a wonderful idea: Each generation should give succeeding generations the resources to meet changing needs. Started in Cleveland in 1914, community foundations were originally pooled collections of charitable trusts from local banks. The idea was simple: Give community leaders decision-making power over grants from these trusts, and as community needs change, the new leaders would make good decisions about where the money would go. For instance, a fund set up in the 1920s to help people who suffer from polio could be re-purposed for a current health issue, such as HIV/AIDS, which didn’t exist those many years ago.
Today, 717 community foundations in the United States steward billions of dollars in trust for the current and future needs of their communities. In an April 2008 report, Key Facts on Community Foundations, the Foundation Center noted that community foundations are the fastest growing source of foundation dollars, giving grants of $4.1 billion in 2007 alone.
To maximize this home-grown resource, it’s important to understand all the different roles that your local community foundation plays. Here’s a brief look at the community foundation’s various roles:
Grantmaker: Community foundations may be a source of funding for your organization. Most community foundations have an endowment made up of gifts from individuals, families and businesses, often through estate planning. At The Denver Foundation, we call ours the Community Endowment. The investment earnings from community foundation endowments generate dollars for grants to nonprofit organizations.
Convener/Partner: Community foundations can often serve as a neutral party or key partner in bringing together different players in addressing community needs. The Greater Cincinnati Foundation played this role in addressing race relations in its region, through “Better Together Cincinnati.” This “funders collaborative” brought a diverse group of corporations and foundations together to provide resources and support to organizations working on lasting solutions to the community’s racial issues.
Creator of initiatives and programs: Sometimes community foundations develop special programs to address longer-term needs. Ten years ago, The Denver Foundation asked over 100 local leaders what would most help strengthen our community. They indicated that helping local neighborhoods would be the best direction. A decade later, our Strengthening Neighborhoods Program has given over $1.5 million in small grants to residents in 10 partner neighborhoods to work on community issues they identify.
Partner with donors: Community foundations were the first entity to offer a tool called a “donor-advised fund” to individuals, families and businesses who wanted the power of a private foundation without the administrative hassle. While the donor-advised fund has been popularized by for-profit banks and investment companies, community foundations steward thousands of these funds for donors who value personalized service and knowledge of local needs. These funds act like “foundations within the foundation” for donors—the donors establish the funds with their own gifts and recommend grants to the charities of their choice. Community foundations also steward scholarship funds, field-of-interest funds and funds designated to support specific agencies.
The important thing to know about these funds is that they are generally not open for nonprofits to apply for—the grant recommendations come from the donors themselves. When I was a nonprofit grantwriter, I saw the list of funds at our local community foundation as an excellent list of prospective donors with whom to look for connections.
Provider of endowment stewardship: Some community foundations steward endowments for local nonprofit organizations. This option can help a nonprofit access the investment expertise of the community foundation, while providing potential donors with the knowledge that their gift will be stewarded in perpetuity by community leaders.
This list of community foundation services and roles really only scratches the surface—and may not apply to every community foundation. The only way to find out all of the valuable assets offered by your community foundation is by getting to know it. You can visit http://www.cof.org/Locator/ and click on the map to find the community foundation nearest you.
Just remember: They may help bring people together to help address your agency’s mission, they may offer a critical source of grant dollars, or they may serve as a partner to your most valued major donor. In so many ways, community foundations are quietly working to improve life across the United States.
By Rebecca Arno, vice president of communications for The Denver Foundation (http://www.denverfoundation.org/), a community foundation serving the seven-county Metro Denver area.