Community Foundation Basics For Board Members

1. Community Foundation Basics • For Board Members Unit 8 Life Cycles of Community Foundations

2. Major Influences in the Development of Community Foundations • Community type and size • Large counties, with large urban areas • Large counties, with large rural areas • Rural counties, with smaller city centers • Rural counties, with few incorporated communities • Multiple counties, with various population sizes

3. Major Influences in the Development of Community Foundations • Community make up • Income diversity of population base • History of philanthropy • Existence of a reasonable number of ‘centers of influence’ • Existence of strong private foundations in an area • Economic growth experience of the community • Age of population base

4. Major Influences in the Development of Community Foundations • Foundation history • How quickly staff was hired • Continued influence by long-term or retired board members or staff • Original practices still in place • Ingrained values and beliefs • Presence or absence of appropriate leadership at various growth cycles • History of board fundraising, especially for operating

5. Major Influences in the Development of • Indiana GIFT Community Foundations • Lilly Endowment Inc. GIFT matching programs • Series of 5 phases over first several years • Provided operating funds, re-granting funds, endowment match funds • Different components as foundations • Increased capacity to start a community foundation • Increased urgency to establish many funds • Increased urgency to establish community needs • Increased urgency to hire staff and open an office

6. Growth Cycles of Community Foundations • Organizational development theory Larry Greiner • Phase 1 - Creativity • Phase 2 - Direction • Phase 3 - Delegation • Phase 4 - Coordination • Phase 5 - Collaboration

7. Growth Cycles of Community Foundations • Phase 1 - Creativity • Management: • Community Foundation concept is new • Mission is unclear • Incorporation, bylaws, 501(c)(3) status • Many meetings • Few policies • Board members responsible for fundraising and management activities • Finances/Assets: • Asset growth: $50,000 to $1 million • Raising operating funds is essential but difficult • Funds: 1 to 25 (many designated/scholarships) • Average fund size $10,000 • Bank or local broker manages assets • Small operational budget • Marketing & Communication: • Basic collateral material • Talking points for board members • New fund stories in local media • Grantmaking: • Few designated or scholarship grants - $500 to $2,500 • No unrestricted grantmaking

8. Growth Cycles of Community Foundations • Phase 1 - Creativity • Community Leadership: • Community needs conversations • No community projects • Little collaboration • Challenges: • Scramble for operating support • Temptation to ‘try everything’ • Volunteer burnout • Establishing correct policies • Finances handled by volunteer Treasurer • Forming the right relationships • Building the right board • Determining community needs • Educating new donors and community

9. Growth Cycles of Community Foundations • Phase 2 - direction • Management: • One staff member – ED/CEO is ‘happy juggler’ • Shared or individual office location • Roles and responsibilities for committees are well-defined • Policies are well-defined • Create strategic plan for asset development • Board members responsible for fundraising and fewer management activities • Finances/Assets: • Asset growth: $2 - $4 million • Funds: 25 to 75 (more diversity, unrestricted) • Average fund size $25,000 • Purchase fund accounting program or outsource fund accounting • Initial RFP for new investment manager/advisor • Marketing & Communication: • Produce first website • Annual report • Grantmaking stories in local media • More defined marketing materials • Begin relationships with professional advisors • Grantmaking: • More grants from funds • Small unrestricted grantmaking - $1,000 - $5,000

10. Growth Cycles of Community Foundations • Phase 2 - direction • Community Leadership: • Conversations with local agencies • Small community projects • More conversations about collaboration • Challenges: • Educating board • Operating support a major concern • ED/CEO burnout • Convince community of permanence • Bringing in many small gifts • Funds for all donors • Board more interested in grantmaking than fundraising • Fear of competing with other non-profits • Determining community needs • Educating new donors and community

11. Growth Cycles of Community Foundations • Phase 3- delegation • Management: • Additional staff added (admin asst or progassoc) • Shared or individual office location • CEO priorities: staff management, administration, fundraising • CEO education concerning planned giving • More committees and inclusion of community members • Less involvement from board in management activities • Finances/Assets: • Asset growth: $5 - $10 million • Funds: 75 to 150 • Accountant hired to handle fund accounting, staff or contract basis • Review/update of investment/spending policy • Increase in administrative fees • Inquiries from many investment firms • Marketing & Communication: • Continual updating of website including online giving • Audit, finance reports included on website - more transparency • Social media marketing • Develop planned giving program • Relationships with professional advisors are vey important • Grantmaking: • Opportunities to work with DAFs for more impact in grantmaking • Unrestricted grantmaking process more strategic • Evaluation process of grantmaking established

12. Growth Cycles of Community Foundations • Phase 3- delegation • Community Leadership: • Larger community projects • Community foundation is asked to be at the table for community discussions • Challenges: • Founding board rotating off • Sustainability issues • Capital purchases • Audit policies, establish controls • Establish personnel policies • Board evolves from owners to customers • Stewardship of current fund founders • Educating community

13. Growth Cycles of Community Foundations • Phase 4- coordination • Management: • Additional staff added (Program Director, Development Director) • Larger office secured – own or lease space • CEO priorities: staff management, administration, stewardship • Board looks to the CEO for direction • Improved policies for board recruitment and orientation • Finances/Assets: • Asset growth: $10 - $25 million • Funds: 150 to 300 • Average fund size $50,000 • Diversity in investments • Increase in minimum fund sizes • More gifts go to existing funds • Marketing & Communication: • “Branding” • Marketing plan developed • Professional advisor network established • Stewardship plan established • Grant impact used in marketing • Grantmaking: • Reactive vs. Proactive grantmaking processes explored • Non-profit capacity grants • Site visits for volunteers and donors

14. Growth Cycles of Community Foundations • Phase 4- coordination • Community Leadership: • Community foundation asked to convene groups • Many grassroots programs look to the community foundation as an umbrella • Challenges: • Sustainability issues • Growth in unrestricted funds • Greater emphasis on human resources • Transfer relationships from CEO to staff • Succession planning • Community politics/neutral convener challenged • Stewardship of current fund founders • Educating community

15. Growth Cycles of Community Foundations • Phase 5 - collaboration • Management: • Change in leadership - CEO • CEO priorities: staff management, stewardship, bequests • Community foundation involved in major initiatives • Planned gifts mature – majority of annual gifts • Supporting organizations • Re-focus on donors as customers • Board membership is selective and exclusive • Finances/Assets: • Asset growth: $25 - $50 million • Funds: 300 to 500 • Average fund size $100,000 • Donor investment manager advice • More than one investment advisor/manager • Marketing & Communication: • Continuing education credit for professional advisors • Training for non-profit organization staff and board • Donor stories used for website and specific marketing • Board becomes more involved with donor stewardship • Grantmaking: • Proactive grant process in place • Collaboration with other funders for additional impact • Giving circles allow for smaller grants

16. Growth Cycles of Community Foundations • Phase 5 - collaboration • Community Leadership: • Catalyst, convener, collaborator • Policies for moving community projects out of community foundation • Challenges: • Sustainability issues • Growth in unrestricted funds • Staff issues/disagreements • Donor find it hard to be heard • Community politics • Admin vs. entrepreneurial issues • No longer can be everything to everyone • More strategic in saying ‘yes’ • Can become too internally focused • Maintaining balance between initiatives and responding to the community

17. References • Exploring the Growth Cycles of Community Foundations-Rawl, Michael J., 2003 • Organizational Growth Cycles-http://www.accel-team.com/techniques/orgGrowth.html • Growth Cycles of Community Foundations-McInnes, Barbara, • Stages of Development – Building your Community Foundation–Endowment Development Institute, LLC

18. What phase best describes your community foundation? How has your community foundation overcome the challenges to move to the next stage? Does your strategic plan include steps to move to the next stage?