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Introduction to Community Foundations. The Hope Institute The Beautiful Foundation Barnett F. Baron The Asia Foundation February 13, 2008. What is a community foundation?. An independent, nonprofit, grantmaking organization
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Introduction to Community Foundations The Hope Institute The Beautiful Foundation Barnett F. Baron The Asia Foundation February 13, 2008
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
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/findfunders/statistics/pdf/02_found_growth/00_05.pdf.
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)
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
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
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
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.
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.
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.
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
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
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.
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)
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?
Issues: Confucian ideals? Benevolent government is the best philanthropy. • Beyond one’s 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?
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?
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