What are Community Foundations?
Community foundations are placed-based, independent, community-owned philanthropic vehicles. They exist to create a financial asset and build social capital for public benefit in a specific geographic location, such as a town, city or region. They are managed or advised by voluntary boards made up of local people.
Community foundations play three key roles in their communities:
- they work with a range of donors to build endowment funds as long-term community assets
- they make grants and offer support to local organisations and initiatives, and
- they facilitate connections and collaborations, bringing people together to build social capital and strengthen their communities.
Their shared purpose is to support and strengthen their communities from within: building resilience, improving wellbeing, fostering networks and collaboration, and creating assets for public benefit.
This animation from Embolden (a communications agency in the USA) provides a quick overview of a community foundation from a donor’s perspective.
Community Foundations sit within the broader context of philanthropy: alongside family and private foundations; corporate giving; and other emerging forms of social enterprise and citizen action, such as giving circles, women’s funds and social innovation funds.
By their nature, community foundations are characterised by being community-owned and driven, grassroots organisations, which are highly responsive to local conditions and opportunities. Having local people involved as donors, advisors and volunteers generates strong community ownership and accountability, and creates valuable local knowledge.
The Australian context
The unique Australian not-for-profit regulatory environment is complex, and community foundations employ a variety of legal and tax structures, making it hard to generalize about how they operate.
Most organisations calling themselves ‘community foundations’ are independent entities with their own community-based boards, but not all. Some others are sub-funds or management accounts which sit within the structure of, and are managed by, a larger community foundation (or a Trustee Company or a Public Trustee). These geographic sub-funds usually have a voluntary advisory committee made up of local people.
Key points about community foundations, in general:
- they are community-owned, not-for-profit, charitable organisations which exist for public benefit in a specific, named geographic area.
- their shared purpose is to attract resources to support and revitalise local communities and build financial and social capital.
- they lead and connect communities and encourage civic engagement, volunteering and philanthropy.
- they make philanthropic grants, and often seek to build a perpetual financial asset for their community.
- they are managed by voluntary boards, or have input from advisory committees from the local area.
- community foundation people are experts in their region, with local knowledge and understanding of the strengths, needs and opportunities in their communities.
- they have multiple sources of funding from a range of donors and supporters.
- they are able to make grants or give support to a broad range of charitable purposes in their local area.
The majority of community foundations tend to take a long-term, asset-based approach (ie. contributing local money and energy to building long-term local community assets) rather than a deficit-based approach (identifying problems and working out how to solve them).
A few organisations call themselves community foundations but are fund-raising arms of charities, or act as flow-through foundations which raise funds and disburse them within the same year, rather than build a permanent corpus or endowment.
Unlike in other parts of the world (see below), community foundations in Australia may have had a relatively peaceful environment in which to grow, but increasingly they have emerged from the aftermath of natural disasters. In the wake of catastrophic floods and fires, we have seen great generosity from the Australian public, resulting in millions of dollars donated to communities affected by these disasters. Once the immediate response has passed, and communities have time and energy to plan their futures, community foundations come to the fore as excellent vehicles for generating and securing long-term assets, owned and managed by and for the community.
The global context
In the global context, community foundations have had a different journey in different regions of the globe. In the United States, Canada and the United Kingdom, as well as in Australia and New Zealand, they have emerged as vehicles for ordinary people (as opposed to the wealthy elite) to participate in philanthropy.
In other cultures, such as in Western Europe, Africa and parts of Asia, community foundations have gained traction in the face of disillusionment with conventional channels of aid, amid sometimes fraught political and conflict situations.