Community foundation

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Community foundations (CFs) are instruments of civil society designed to pool donations into a coordinated investment and grant making facility dedicated primarily to the social improvement of a given place. Community foundations are a global phenomenon with 1700 existing around the world, of which over 700 are in the United States. [1] Private foundations are typically endowed by an individual or a single family.

Contents

Operation

Community foundations are independent registered philanthropic institutions serving geographically defined territory, typically a city or administrative area (county, region and the like). The six main characteristics of the CFs are: [2]

  1. Act as grant-making foundations – e.g. give grants to support development projects
  2. Their mission broadly defined – e.g. to improve quality of life in a community
  3. Serve geographically defined communities – a city, state, region, district or province
  4. Are supported by a broad range of private as well as public donors and seek philanthropic contributions primarily from inside the community
  5. Are governed by multi-sectoral, local boards reflecting the community
  6. Build capital endowment, which is an important element of sustainability

It is a combination of all these basic characteristics what makes true CF, although there are many other types of community organizations that have some of these characteristics.

Families, individuals, businesses, and nonprofit groups establish funds within community foundations into which they can contribute a variety of assets to be used for charitable purposes. The people or organizations that establish the funds can then recommend that grants be distributed, in the name of the fund or anonymously, to qualified nonprofit groups and schools. In the USA the donor receives a charitable tax deduction in the year that gifts are made into their funds, but not all countries where community foundations currently operate provide such incentives for donors. Increasingly, community foundations are hosting giving circles as a way to further support giving in their communities.

The assets of community foundations are pooled and invested, with donors typically having a choice of investment products.

The funds established at community foundations can be non-endowed or expendable funds (i.e., the corpus of the fund can be spent in its entirety) or they can be endowed, which limit distributions to the interest earned on the assets and/or the amount granted by the foundation as long as the corpus is not spent. Endowments last in perpetuity due to the corpus never being able to be spent.

History of community foundations

The first community foundation was set up in Cleveland in 1914 by Frederick Goff and operates now as The Cleveland Foundation. [3] Others soon followed including the California Community Foundation and the Chicago Community Trust. The first Community Foundation in Canada, The Winnipeg Foundation, was established in Winnipeg in 1921. [4]

Since the 1980s, a number of private foundations in the United States have created initiatives to develop community foundations in various states. One of the earliest such initiatives was in Michigan. In Indiana, the Lilly Endowment funded a program that has spurred development of community foundations in each of the state's 92 counties. [5] On a smaller scale, the Grand Victoria Foundation supports development of Illinois community foundations. The Kansas Health Foundation operates a similar program in Kansas communities. [6]

Notable community foundations

Canada

There are 191 community foundations in Canada, accessible to more than 90% of Canadian communities. [7] The Winnipeg Foundation was Canada's first community foundation, established in 1921. [4]

United States

According to the latest data available, from October 2014, on the Foundation Center website, [8] the top five largest community foundations, by assets, were:

RankNameTotal GivingAssetsGifts Received
1 Silicon Valley Community Foundation $956,834,000$6,529,547,000$1,970,996,000
2 Tulsa Community Foundation $130,381,000$4,015,187,000$298,907,000
3 New York Community Trust $157,785,699$2,570,966,941$184,255,136
4 Greater Kansas City Community Foundation $263,297,742$2,401,067,229$391,353,262
5 Chicago Community Trust $170,984,481$2,290,734,371$200,798,791

Statistics made available by the Foundation Center enable also financial comparison of the largest community foundations with the largest corporate and private foundations and illustrate the fact that community foundations in the United States tend to be larger than corporate foundations in both assets and grants given.

United Kingdom

There are 46 Community Foundations in the UK [9] and UK Community Foundations (formerly the Community Foundation Network) acts as an umbrella organisation for some of them.

Related Research Articles

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<span class="mw-page-title-main">Tides Foundation</span> American public charity and fiscal sponsor

Tides Foundation is a left-leaning donor advised fund based in the United States. It was founded in San Francisco in 1976 by Drummond Pike. Tides distributes money from anonymous donors to other organizations, which are often politically progressive. An affiliated group, Tides Advocacy, is a "massive progressive incubator." Tides has received substantial funding from George Soros.

A foundation is a type of nonprofit organization or charitable trust that usually provides funding and support to other charitable organizations through grants, while also potentially participating directly in charitable activities. Foundations encompass public charitable foundations, like community foundations, and private foundations, which are often endowed by an individual or family. Nevertheless, the term "foundation" might also be adopted by organizations not primarily engaged in public grantmaking.

<span class="mw-page-title-main">Fundraising</span> Process of gathering donations

Fundraising or fund-raising is the process of seeking and gathering voluntary financial contributions by engaging individuals, businesses, charitable foundations, or governmental agencies. Although fundraising typically refers to efforts to gather money for non-profit organizations, it is sometimes used to refer to the identification and solicitation of investors or other sources of capital for for-profit enterprises.

<span class="mw-page-title-main">Financial endowment</span> Legal structure for managing investments

A financial endowment is a legal structure for managing, and in many cases indefinitely perpetuating, a pool of financial, real estate, or other investments for a specific purpose according to the will of its founders and donors. Endowments are often structured so that the inflation-adjusted principal or "corpus" value is kept intact, while a portion of the fund can be spent each year, utilizing a prudent spending policy.

Matching funds are funds that are set to be paid in proportion to funds available from other sources. Matching fund payments usually arise in situations of charity or public good. The terms cost sharing, in-kind, and matching can be used interchangeably but refer to different types of donations.

Lilly Endowment Inc., headquartered in Indianapolis, Indiana, is one of the world's largest private philanthropic foundations and among the largest endowments in the United States. It was founded in 1937 by Josiah K. Lilly Sr. and his sons, Eli Jr. and Josiah Jr. (Joe), with an initial gift of Eli Lilly and Company stock valued at $280,000 USD. As of 2020, its total assets were worth $21 billion.

In the United States, a donor-advised fund is a charitable giving vehicle administered by a public charity created to manage charitable donations on behalf of organizations, families, or individuals. To participate in a donor-advised fund, a donating individual or organization opens an account in the fund and deposits cash, securities, or other financial instruments. They surrender ownership of anything they put in the fund, but retain advisory privileges over how their account is invested, and how it distributes money to charities.

Baton Rouge Area Foundation is a community foundation dedicated to enhancing the quality of life in Louisiana's capital region, and is registered with the IRS as a 501(c)(3) tax-deductible nonprofit organization. Since inception, the Foundation has granted over $650 million.

Richmond Jewish Foundation is a charitable foundation based in Richmond, Virginia, USA. It is a non-profit organization.

<span class="mw-page-title-main">Private foundation</span> Type of charitable organization

A private foundation is a tax-exempt organization that does not rely on broad public support and generally claims to serve humanitarian purposes.

A foundation in the United States is a type of charitable organization. However, the Internal Revenue Code distinguishes between private foundations and public charities. Private foundations have more restrictions and fewer tax benefits than public charities like community foundations.

Until 1969, the term private foundation was not defined in the United States Internal Revenue Code. Since then, every U.S. charity that qualifies under Section 501(c)(3) of the Internal Revenue Service Code as tax-exempt is a "private foundation" unless it demonstrates to the IRS that it falls into another category such as public charity. Unlike nonprofit corporations classified as a public charity, private foundations in the United States are subject to a 1.39% excise tax or endowment tax on any net investment income.

Western Indiana Community Foundation ("WICF") was incorporated on November 30, 1990 for the betterment of Fountain County, Indiana and Vermillion County, Indiana and its citizens. The community foundation is a U.S. registered 501(c)(3) non-profit charity.

National Philanthropic Trust (NPT) is an American independent public charity that provides philanthropic expertise to donors, foundations and financial institutions. NPT ranks among the largest grantmaking institutions in the United States.

The Illinois Prairie Community Foundation (IPCF) is a community foundation that helps connect donors with those causes they wish to benefit. It serves McLean, Livingston, DeWitt, Logan and adjacent areas of Tazewell, Woodford, LaSalle, Ford and Piatt counties. The IPCF is in full compliance with the national standards developed by the Council on Foundations. It facilitates charitable giving for individuals and businesses, helps organizations with their endowment funds, and serves as a fiscal agent for charitable community projects. A donor-advised fund at the Community Foundation is an economical and simplified version of a private foundation.

The Community Foundation of the Eastern Shore (CFES) was established in 1984, and is located in Salisbury, Maryland. Its mission is to "To strengthen our community by connecting people who care with causes that matter to improve quality of life in our region" and its vision is for "...a community where all can live, learn, work, create and prosper". It serves the three lower counties of the Eastern Shore of Maryland: Somerset, Wicomico, and Worcester.

UK Community Foundations (UKCF) is a registered charity that leads a movement of community foundations committed to positive social change in the UK through the development of “community philanthropy”. Community philanthropy involves people from all parts of a community working together locally to use the financial and other resources available to them to improve others’ lives.

In philanthropy, donor intent is the purpose, sometimes publicly expressed, for which a philanthropist intends a charitable gift or bequest. Donor intent is most often expressed in gift restrictions, terms, or agreements between a donor and donee, but it may also be expressed separately in the words, actions, beliefs, and giving practices of a philanthropist. Donor intent is protected in American law regarding charitable trusts, and trustees' primary fiduciary obligation is to carry out a donor's wishes.

The Foundation for the Carolinas is a donor-advised charity with a non-exclusive focus on North Carolina and South Carolina.

References

  1. "Community Foundation Programs & Services". Council on Foundations. 2015-10-06. Retrieved 2019-04-13.
  2. "What is a Community Foundation?". www.tamworthfoundation.org. Retrieved 2019-04-15.
  3. "Cleveland Foundation 100 - Decades". The Cleveland Foundation Centennial. Retrieved 2018-09-21.
  4. 1 2 "Canada's community foundations - Overview" (PDF). Community Foundations of Canada. 2007. Retrieved 2018-09-21.
  5. "Lilly Endowment Continues its Community Foundation Initiative". Lilly Endowment. Retrieved 2024-02-07.
  6. Willhite, Chase (2019-04-04). "New KHF initiative builds upon community foundation partnerships". Kansas Health Foundation. Retrieved 2024-02-07.
  7. "About CFC - Community Foundations of Canada". Community Foundations of Canada. Retrieved 2018-09-21.
  8. "Foundation Stats: Guide to the Foundation Center's Research Database - Foundation Center". data.foundationcenter.org. Retrieved 2017-06-20.
  9. "UK Community Foundations". UK Community Foundations.

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