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November 25, 2017

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Community Foundations:
A Fundraising Source and More

by Deane Brengle



Have you met your local community foundation yet?

You know, your locally run public foundation that pools the charitable givings of many donors. With a mandate to build and manage endowment funds to support charitable activities in your local area.

Your area probably has one, there are over 700 in the United States alone. Each community foundation is unique and will vary in the services it offers. But they are all united behind one common theme - improving the quality of life in their area.

Definition

A community foundation is a nonprofit and is tax exempt. Each is autonomous from all other community foundations. It is publicly supported, nonsectarian, and a philanthropic institution. Individuals, families, businesses, and organizations create permanent charitable funds and specify their use. The foundation invests and administers the funds. It distributes grants for charitable purposes for the benefit of residents of a defined geographic area, usually no larger than a state.

Community foundations are one of the fastest growing sectors of philanthropy in the United States today. They watch over billions of dollars in trust and were the source of $4.1 billion in grants in 2007.

Community foundations serve citizens in urban and rural communities in all 50 states. Each foundation's assets can range from billions of dollars to less than $100,000. It is governed by a body of volunteers, usually independently appointed, which strives to represent and be accountable to the community it serves.

Community foundations go beyond simply making grants. They also identify current and emerging issues, channel resources to address their communitiesí needs, and help their area prepare for the future.

Services and benefits

Community foundations offer donors and nonprofits many services and benefits.

  • General Endowment Funds

    Donors gift unrestricted funds which are not specifically designated for use by a particular nonprofit, cause or area of interest. The local foundation oversees these funds, setting priorities for their use and determining how grants will be distributed to support the charitable needs of the local community.

    Unrestricted funds give local foundations the ability to respond to pressing and often changing needs in the community.

    General endowment funds are important to nonprofits that don't fit any other fund or grant categories. Local foundations can and will use general endowment fund grants for operating expenses, staff salaries, emergencies, and more.

  • Donor Advised Funds

    Donor advised funds are established by donors who wish to actively participate in the grant making process. Individuals who establish a donor advised fund recommend charitable projects or organizations they want to support. Donor advised funds may give to multiple nonprofits.

    Donor advised funds are important to nonprofits who fall into the donors areas of concern. Your nonprofit group may be a perfect fit for a grant from a local donor via one of these local community foundation managed funds.

  • Designated Funds

    Donors who wish to support a specific agency or cause can establish a designated fund.

    This may be initiated by the donor without any knowledge of the nonprofit or at the behest of the nonprofit for their donor.

  • Field of Interest Fund

    Field of interest funds are established to support particular interest areas, specific program initiatives, causes or geographic areas. At the donor's request, use of the funds is restricted to a specified area of interest, but flexibility remains to meet changing situations.

    In talking with your local foundation you may find the perfect fit or each of you may exercise some creativity in tailoring a grant to your situation.

  • Scholarship Funds

    A scholarship fund is structured to benefit students at any education level, for a specific institution, or for a field of study. A scholarship fund can also be established to honor a loved one.

    You, an employee, or an intern at your nonprofit may be able to apply for a scholarship grant.

  • Nonprofit Management Assistance

    Larger and more established community foundations strive to provide management assistance to the nonprofits in their area. They seek to improve and expand access to organizational capacity building resources for nonprofit organizations.

    Some are providing consulting and other services:

    • Helping nonprofits brainstorm about opportunities, challenges or the needs they face.
    • Review information and tools that can help nonprofits develop effective management practices.
    • Discuss collaborative approaches with organizations addressing related issues or programs.
    • Refer nonprofits to consultants and other professionals with expertise in nonprofit management.
    • Grant Proposal Writing Interns - contacts with local resources.
    • Technical Assistance Grants - Grants for non-recurring, organizational capacity building needs.
    • Online and in house training programs and workshops.

    Help to strengthen your nonprofit by building the skills and talents of your board members, staff and volunteers may be available.

  • Financial Advisor Assistance

    A forward thinking community foundation will consider attorneys, accountants, financial planners, insurance agents and other professionals who have relationships with donors to be valued partners in charitable giving.

    A community foundation can offer many advantages to a financial advisor. Many have robust resources that they can provide to help financial advisors and their clients make informed planned giving decisions.

    Among the tools and resources they may offer:

    • The ability to accept a wide variety of assets to establish a charitable fund including cash, securities, real estate, and more.
    • The ability to work with local philanthropic specialists to offer charitable giving plans that maximize tax saving benefits.
    • Charitable Gift Calculators
    • Partnering for venture philanthropy.
    • Educational resources for both financial planners and their clients.
    • Matching the financial advisor's client with causes and nonprofits.

  • Networking

    Community foundations can often serve as a neutral party or key partner in bringing together different players in addressing community needs.

    Your local community foundation will often have the "big picture" of the nonprofit world in your community. They know the "players" and will be able to connect you with potential donors, board members, volunteers, funding, and other nonprofits that you may be able to collaborate or partner with.

  • Programs, Initiatives, and Partnerships

    A community foundation looks at the community as a whole. It may conduct research or surveys to better understand where a community is, where it is headed, and what the key issues are.

    Some community foundations seek to address longer term needs and emerging community problems. They will initiate a proactive approach and develop a program or initiative to focus attention and action where it will accomplish its goals.

    A community foundation may also facilitate a partnership among other nonprofits or with other nonprofits to address community needs and issues.

  • Planned Giving, Endowment Building and Stewardship

    A community foundation represents experience and knowledge of local needs. They have permanence and a strong record of financial stewardship. Their staff is skilled in working with donors who have multiple objectives and complex gift situations.

    Many nonprofits reach out to their local community foundation for help to build endowments and establish funds. Community foundations may support nonprofits with some of these services and features:

    • Gift processing and administrative services, including the ability to accept marketable securities and other noncash assets.

    • Professional investment management of an endowment, overseen by an Investment Committee and consultants.

    • Competitive investment and administrative fees through economies of scale, due to the size and breadth of the Community Foundation.

    • Reduced or eliminated ongoing administrative burdens on board and staff to oversee and maintain a separate endowment program.

    • State and Federal Tax Credits (when applicable) to encourage donors to make a gift to benefit the endowment of the nonprofit.

    • Technical assistance with planned gifts that benefit the endowment.

Find a Community Foundation

Many community foundations are listed on the Council of Foundations' website. You can use their free locator (http://www.cof.org/Locator/) to locate one near you. Community foundations are listed by state. Contact information includes: Name, address, phone, fax, contact person, and website (when available). The website is also available in Spanish.

Conclusion

Your local community foundation is a powerful resource for your community. Take your time and get to know it and your local community foundation will be a powerful resource for your nonprofit too.



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Fundraising Expert - Deane Brengle

About the Author:

Deane Brengle writes for several free online publications that cover fundraising for small nonprofit groups. You can visit these publications and read more about fundraising in articles by him and other experts in the field at The Fund$Raiser Cyberzine, The Fundraising for Small Groups Newsletter, and Fundraising Booklets.





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