Community Foundations

Written by Hannah Saeger

Definition

A community foundation is a not-for-profit organization that is supported by multiple sources of local funding, and which returns the money to a dedicated geographical location usually in the form of grants. Community foundations are place-based institutions embedded in the development of community - regardless of how community is defined (Mazany & Perry 2014). Community foundations are additionally defined by having a board of local citizens that maintain the organization and determine the needs of their region, being all inclusive in the demographics they serve, non-political, operating in a manner that encourages transparency, and allowing for regular reports back to the people they serve (Sacks 2000).

Funding sources for community foundations include individuals, families, and businesses, but each foundation is made up of a unique combination (Council on Foundations). Community foundations focus on supporting local nonprofits and building infrastructure to improve their immediate community (WINGS 2010 ). The main roles of community foundations are teaching and promoting philanthropy, acting as intermediary organizations, community leadership, promoting community development, increasing accountability of nonprofits, focusing resources in times of disaster, and promoting social justice (Sacks 2014).

Community foundations range from very small in size (revenues less than $100,000) to very large (more than $1 billion). There are currently more than 750 community foundations in the United States, with at least one in every state. Forty-six percent of community foundations are outside of the United States with an estimated total number of 1,680 across 51 countries - although many of these have been founded more recently than United States based community foundations (Council on Foundations).

Historic Roots

The community foundation is a concept created in the United States at the beginning of the 20th century. The first community foundation was in Cleveland, Ohio and was founded by Frederick Goff, a local banker and entrepreneur (Sacks 2014). Originally, community foundations were marketed as a way for banks to serve their local communities. After the Cleveland Foundation was established in 1914, the 22 largest cities in the United States were quick to follow suit. In 1916, the Indianapolis Foundation (now the Central Indiana Community Foundation or CICF) was the first community foundation to be formed with the support of multiple banks, creating a new standard funding form for community foundations (Sacks 2014).

Community foundations were created to solve a community’s social and economic problems by addressing root causes (Sacks 2000). Because of this easily applicable model, the community foundation model spread quickly into Canada (Sacks, 2014). Despite the early boom of community foundations, the Great Depression put extreme stress on the banks that were the core support for the early foundations as well as greater demand on the resources available. Many foundations were forced to close during the 1930's. Community foundations made a resurgence after World War II and into the 1950's (Sacks 2014). Most major cities that closed their foundations during the depression reformed, although in some cases it took many years.

The community foundation model spread from North America across to the United Kingdom in the 1970's and then across Europe and beyond in the 1980's (Sacks, 2014). The number of community foundations globally has increased from 905 in 2000 to 1,680 in 2010. The most dramatic growth has come from Europe where community foundations have increased from 103 to 631 from 2000 to 2010 and in particular in Germany where community foundations have increased 200% (Knight 2012). While the number of community foundations is growing across the world, the majority of community foundation assets are still concentrated in the United States, with Canada distantly next in line. International community foundations tend to be small in both assets and operations but still play important roles in their communities (Forrest 2010).

Importance

In the United States, community foundations are critical in identifying and solving community problems. Recent estimates have community foundations giving over $4 billion to not only health and human services but also the arts, education, the environment, and disaster relief (Council on Foundations). One strength of community foundations over other forms of nonprofits is that they pull resources that exist within the community and redistribute them for public benefit, giving the community better access and control over resources (WINGS).  

Internationally, community foundations played a significant role in bridging the human service provision gaps that emerged in eastern European countries after the fall of the Soviet Union and the rollback of the welfare state (Sacks 2000). Community foundations were also seen by western governments as a way to integrate former communist states into western political and economic systems (Sacks 2014). In more recent years, community foundations have spread to traditionally poor regions like Africa, enabling community members to have more control in the aid they receive and improving trust in the sector despite limited support (WINGS 2010).

Ties to the Philanthropic Sector

Today there are at least 760 community foundations in the United States who are actively making grants – more than a dozen have assets over a billion dollars. Of the largest 100 grantmaking foundations, 16 are community foundations (Foundation Center).

There was doubt as to whether community foundations could be adapted to vastly different charitable traditions and giving cultures. “Community foundations have a track record of achievement and innovation,” (Mazany 2014, xi). However, the community foundation concept has been successfully translated to the United Kingdom which gave local and international funders the confidence that this form of community philanthropy could be successful outside its original context.

Over the last several decades, community foundations have been established in every part of the world (Sacks 2014) (Sacks 2000). Part of what makes the spread of community foundations possible is the variety of forms they can take and how easily they can be adapted to fit different civic and political environments (Knight 2012).

Key Related Ideas

• Community: A community is a group of people who are socially interdependent, who participate together in discussion and decision-making, and who share certain practice that both define the community and are nurtured by it. Community foundations are designed to serve the community in which they exist (www.learningtogive.org/resources/community).
• Foundations: A foundation is a nonprofit, nongovernmental organization with its own funds, managed by its own trustees and directors. It maintains or aids charitable, educational, religious, or other activities serving the common good, primarily by making grants to other nonprofit organizations (www.learningtogive.org/resources/foundations).
• Nonprofit Organization: A nonprofit organization is organized for public or mutual benefit and does not return a profit to owners or investors. Community foundations are a type of nonprofit organization. (www.learningtogive.org/resources/nonprofit-organizations-definition-and-examples).

Important People Related to Topic

• Emmett Carson is the CEO and President of the Silicon Valley Community Foundation. He has guided the foundation from its beginning in 2007 with $2 billion in assets to it’s current domination as one of the largest foundations in the world, managing $8 billion. Carson has a history of serving both private and community foundations. You can learn more at the Silicon Valley Community Foundation website: www.siliconvalleycf.org/emmett-d-carson-phd .
• Frederick Goff  (1858-1923) was an Ohio lawyer, banker, and local politician in the early twentieth century. He founded the Cleveland Foundation, the original community foundation and is credited with formulating the concept of community foundations. Goff's biography is provided by the Cleveland Foundation (www.clevelandfoundation100.org/foundation-of-change/invention/frederick-goff/) .
• Jenny Hodgson is the executive director of the Global Fund for Community Foundations based in South Africa. The Global Fund for Community Foundations is focused on promoting and supporting institutions of community philanthropy across the world, enabling the continued growth of international community foundations. You can learn more about Jenny Hodgson and GFCF on the Global Philanthropy Forum website: https://philanthropyforum.org/people/jenny-hodgson/ .

Related Nonprofit Organizations

• Central Indiana Community Foundation (CICF):  This foundation was the first community foundation to seek funding from multiple sources. Originally known as the Indianapolis Foundation, it merged with the Legacy Fund to create the Central Indiana Community Foundation in 1997. CICF manages $720 million in assets and “exists to make central Indiana a better place” (www.cicf.org).
• The Cleveland Foundation was the first community foundation. It was founded in 1914 by Frederick Goff and is still operating today. It is a self-described “civic-progress fund” with $1.8 billion under management serving three counties around Cleveland, OH (www.learningtogive.org/resources/cleveland-foundation).
• The Council on Foundations is a nonprofit professional organization for grantmaking foundations and corporations. They offer resources specifically for community foundations in addition to a community foundation locator interactive map, as well as resources for facts on community foundations (www.learningtogive.org/resources/council-foundations).
• The Silicon Valley Community Foundation is the largest community foundation in the world. The Silicon Valley Community Foundation is unique in that its main focus is serving the local bay area, but it also supports organizations across the United States and the world. It is ten years old and controls more than $8 billion in assets (www.siliconvalleycf.org/).

Reflection Question - If you were going to create a community foundation in your area, what do you think would be the most pressing needs that it would help address?
 

Bibliography

• Council on Foundations. Community Foundation Programs & Services. https://www.cof.org/    
• Foundation Center. Foundation Stats: Guide to the Foundation Center's Research
• Database - Foundation Center. http://data.foundationcenter.org/#/foundations/community/nationwide/total/list/2013
• Knight, Barry. The Value of Community Philanthropy. Flint: The Mott Foundation, 2012.
• Mazany, T. & Perry, D.C. (2013). Here for good: community foundations and the challenges of the 21st century. ME Sharpe
• Sacks, E. (2014). The Growing Importance of Community Foundations. Indianapolis: Lilly Family School of Philanthropy.
• Sacks, E.W. (2000). The Growth of Community Foundations Around the World. Washington: The Council of Foundations 
• WINGS. WINGS Community Foundation Global Status Report 2010. http://wings-community-foundation-report.com/   

This paper was developed by students taking a Philanthropic Studies course taught at the Lilly Family School of Philanthropy at Indiana University in 2017. It is offered by Learning to Give and the Center on Philanthropy at Indiana University.