What Is a Community Foundation?
A community foundation is a grantmaker with a mission to serve a specific community or region. Distinct from a private foundation — which is usually funded by a single individual, family or corporation — a community foundation is a public charity funded by many donors and governed by a board that reflects the community it serves.
A community foundation is:
- A nongovernmental, nonprofit 501(c)(3) organization that gives money.
- Funded by many donors.
- Governed by a board of directors that reflects the community.
- Typically focused on making an impact in a specific geographic area.
- Often a host of donor-advised funds and giving circles.
There are more than 900 community foundations in the United States, with at least one in every state, and more than 1,800 worldwide. Community foundations vary widely in size and capacity. Some community foundations have assets in the low six figures, and others — like the Silicon Valley Community Foundation — have, and give, billions.
What do community foundations do?
The classic community foundation has a broad mission to improve the quality of life in a given geographic community — usually no bigger than a state. Some community foundations focus on a demographic community, for example the Astraea Lesbian Foundation for Justice, which supports LGBTQI communities and movements around the world, and the American Muslim Community Foundation, which supports the Muslim community in the United States.
Community foundations fulfill their mission through activities such as:
- Making grants to support nonprofits working on an array of issues across the community, including human services, education, arts and culture, and more.
- Giving scholarships to local students.
- Hosting donor-advised funds (or DAFs), giving vehicles for individual donors.
- Offering trainings to community organizations and hosting convenings of local nonprofits.
- Putting their endowments in impact investments.
- Engaging in policy advocacy to benefit the community.
- Providing services like managing the endowments of smaller local nonprofits.
How do community foundations work?
- Community foundations receive funds from many donors, and then regrant and invest the funds to benefit the community. A community foundation’s funders are usually a mix of individuals, families, businesses and government.
- Most community foundations have endowments, with which they engage in impact investing to benefit the community. DAF holders can maximize the impact of their mission-aligned investments by pooling their funds with all of the funds held at the community foundation.
- There is no minimum payout requirement for community foundations (or the DAFs held at them) – unlike private foundations, which have to pay out at least 5% of the value of their assets every year.
What types of grants do community foundations make?
Community foundations give two main categories of grants:
- Programmatic grants. These are the grants the community foundation makes as a community foundation — that is, grants that the foundation’s staff and community-based board decide to make, and that are paid from the community foundation’s general pot of money to community organizations. These grants are focused on the community that the foundation has a mission to support.
- Grants from donor-advised funds. Community foundations also make grants on behalf of donor-advised fund holders. In this case, individual donors set up charitable-giving accounts that are hosted by the community foundation. The individual fund holder tells the community foundation where they would like to make donations. The community foundation facilitates the transaction and is technically the grantmaker, but the grant is directed by the DAF holder. A large number of the grants coming out of community foundations today are moving through DAFs. These grants can be made to organizations outside the community foundation’s area of focus, including nationally or globally. In some cases – for example, the DAFs of tech billionaires at the Silicon Valley Community Foundation – DAF giving accounts for substantial grantmaking from community foundations.
How can my nonprofit get grants from a community foundation?
There are several ways to apply for grants from a community foundation, such as:
- Looking for grant program information or application guidelines on the community foundation’s website.
- Getting to know the community foundation – perhaps by introducing yourself or attending events – and asking about grant opportunities.
Getting grants from donor-advised funds held at a community foundation, on the other hand, is more like individual donor fundraising. When you cultivate individual donors, you may learn that some of them give through a DAF at a community foundation.
Also, being on the radar of your local community foundation means that if a DAF holder is looking for ideas of where to give for a particular cause, philanthropic advisors at the community foundation may suggest your organization – another good reason to connect with a community foundation that serves the same community your nonprofit does.
How can I get involved with a community foundation?
Ways for funders to get involved with a community foundation:
- Make a donation.
- Set up a donor-advised fund.
- Join or start a giving circle.
- Attend events hosted by the community foundation.
Ways for fundraisers to work with a community foundation:
- Does your nonprofit already have a relationship with the foundation? If so, introduce yourself to the community foundation staff your organization generally works with. You might do this by attending an event or giving them a call.
- Attend events hosted by the community foundation.
- Do good work in the community and let the community foundation know what your organization is doing – you might invite them to events or for a site visit, or send them your organization’s annual report.
What is the role of community foundations in philanthropy?
- A community foundation can have a big impact on a community. Community foundations generally fund an entire ecosystem of nonprofits, making grants for local groups focused on issues from education to health to the arts. Community foundations may not have the assets of large private foundations (though some do), but even small community foundations can make a big impact in local communities. Since they are rooted in the communities they serve and close to the nonprofits they fund, community foundations often have a good vantage on what is needed in the local community and how to fill gaps and fund solutions.
- Are often conveners and leaders in a community’s philanthropic ecosystem. Community foundations play an important role in connecting local nonprofits and funders. They also engage in cross-sector collaboration to tackle big issues in their community, such as the San Francisco Foundation and Silicon Valley Community Foundation’s participation in Partnership for the Bay’s Future, a public-private initiative that brought together some of Northern California’s top funders to support community-backed solutions for affordable housing.
- Serve as important funders of emergency aid and disaster response. With their deep knowledge of and connections to local nonprofits, community foundations are important distributors of disaster aid. In a natural disaster or other emergency, community foundations can often move funds quickly to where they are needed most and will be used most effectively.
- Invest in historically under-resourced or marginalized populations. There are a number of women’s funds and women-focused giving circles housed at community foundations, as well as community foundations dedicated to demographic groups such as the Latino Community Foundation, Pride Foundation or Asian Pacific Community Fund.
- Move individual donors’ gifts. Many community foundations host donor-advised funds, pooled funds, and giving circles. Through these vehicles, billions of dollars of individual giving happens through community foundations each year.
How is a community foundation different from a private foundation?
A private foundation is:
- Usually funded by a single individual, family or corporation.
- May have a representative board, though not required, while many are governed by the endowing funder, their family or others they have selected.
- Can have any charitable mission, from supporting the art of filmmaking to ending hunger worldwide.
A community foundation is:
- Funded by many individuals as well as businesses and government.
- Governed by a diverse board representative of the community.
- Guided by a mission to serve a particular community, whether that is geographic or demographic.
Getting technical, there is no legal definition of a “foundation,” community or otherwise, but there are some relevant U.S. tax classifications.
- All 501(c)(3)s are considered “private foundations” by the IRS unless they qualify as public charities by proving that at least one-third of donations to the organization are given by donors who give less than 2% of the organization’s overall funding.
- As a result, a community foundation, which is funded by many donors, is classified as a public charity – that is, a charity that is publicly rather than privately funded.
Are donations to a community foundation tax-deductible?
Contributions to community foundations are tax-deductible to the extent allowed by the IRS.
What is the history of community foundations?
The world’s oldest community foundation is the Cleveland Foundation, which was incorporated in 1914 by Frederick Harris Goff. The idea was inspired by the Jewish federation model, which also inspired the Community Chest movement that led to today’s United Way. Goff’s idea, as described by the Cleveland Foundation on its 100th anniversary, was to “pool the charitable resources of Clevelanders from all walks of life, both living and deceased, into a single, great, permanent trust administered for the betterment of the community.” Within a decade, dozens more community foundations had been established across the United States. Today, there are about 1,800 community foundations around the world, according to the Global Fund for Community Foundations.
Are community foundations part of a network?
Community foundations often collaborate, such as the Humboldt Area Foundation and the Wild Rivers Community Foundation’s joint work on regional climate resilience. Some community foundations are members of the Council on Foundations. Many community foundations are part of regional, national or even global networks, such as the League of California Community Foundations, the Community Foundation Opportunity Network and the Global Fund for Community Foundations. Community foundations that adhere to best practices and have a track record of excellence can be accredited by the Community Foundations National Standards Board.
