What Are Community Foundations

Introduction

Community foundations are a new kind of charitable trust, each working in specific geographical areas as endowment builders, grant-makers and community leaders. Their broad purpose is to promote and support local voluntary and community activity through a programme of constructive grant-making. Individual donations, pooled in an endowment, and wise governance by a board of trustees who know the community, combine to make this possible.

Community foundations benefit donors and local voluntary organisations

Community foundations benefit:

donors and potential donors by giving them the opportunity to channel their help towards meeting local needs
local voluntary and community organisations by creating and strengthening connections between those who have the means, the knowledge and the capacity to develop local resources for local needs
the local community by the promotion of local charitable giving and activity and a sense of local identity and responsibility

They build funds from a variety of sources and use them to provide long-term support for local needs

For people wanting to support their local community it can be difficult to know how to choose which organisation to help; this is why many donors tend to support national charities. Important though these are, community foundations recognise that there is an increasing need to underpin community regeneration by support for small and local organisations. As voluntary and community services face a crisis in funding, the community foundation aims to establish a permanent, independent and flexible source of local funds which can respond to changing community issues.

The community foundation’s endowment is built with funds from local and national sources, to provide permanent and growing funding for activities which strengthen the community. Community foundations promote local philanthropy and help donors – individuals, businesses and charitable trusts – express their long term interest in an area and its needs. Donors appreciate that the permanence of endowment means their support will have a lasting effect.

Community foundations work flexibly with all sorts of donors

Community foundations work with a wide variety of donors, of significant or modest means. Donors can direct their funds to a favourite cause, organisation or geographical area. Unrestricted funds can be used more flexibly to make grants to a broad range of local activities. Themed funds addressing a particular issue, such as crime prevention, may be supported with donations from many people. Donors recognise the distinct advantages of giving through a community foundation. Intelligent management and pooling of funds means that investment returns can be maximised. Wise administration and personalised funds give larger donors the benefits of their own trust without the burden of management.

The flexibility which these arrangements permit can be seen in The Community Foundation serving Tyne & Wear and Northumberland, which has a general endowment fund, a fund for the neighbouring county of Northumberland, and many funds designed to meet the charitable interests of individual donors. Community foundations are able to advise donors on how best to direct their donations and on tax advantages. Donations vary widely in size and form, and the permanence of community foundations makes them ideally suited to receive legacies. They can also use their grant-making service for “flow-through” funds, channelling donations directly into community support.

Detailed understanding of local needs allows for effective grant- making

Income earned from donors’ endowed funds is disbursed in grants to local charities and community groups. The foundation’s board of trustees – drawn from all sectors of the community – ensures that a thoughtful and focused grant-making programme is in place. Local charities are able to apply for funding of projects that might be overlooked or not covered by other funders. The foundation can offer additional assistance through challenge grants or advice, and works in partnership with local charities to address important community needs.

Building knowledge of the local area, and the people and organisations contributing to its improvement, is essential in good grant-making. Community foundations have access to an accurate and up-to-date local picture through their boards and advisers, and through wide consultation. Grants are made to a varied spectrum of local activities, including health, children and young people, arts and culture, the environment and community development.

Major grants are generally made only after a site visit and a full assessment which is made available to the community foundation’s board. Evaluation and monitoring in the post-grant period are also an essential part of the process. A thoughtful grant-making programme sees that voluntary groups are assisted through the support and advice of the foundation’s small staff, and donors are assured of their funds’ effectiveness. Because of their local knowledge community foundations are able to fund well run voluntary groups tackling priority needs.

Their work benefits the entire community

With an area’s long term capacity and well-being in mind, community foundations make contact with and involve all sectors of the community. Each foundation has its own character, developing in ways appropriate to its location. A largely urban trust like South Yorkshire Community Foundation will be different from one in a predominantly rural area, such as Wiltshire Community Foundation. All share essential, defining features, however, and each must help local people to understand that the foundation is a lasting resource belonging to their community, through awareness-raising, effective grant-making and leadership.

Community foundations create effective partnerships

Community foundations also create partnerships through their work with local authorities and the corporate and voluntary sectors, and provide people with the information they need to make sound decisions about local charitable giving. Their work can generate new areas of action, and their independent status means they are ideally placed to take a strategic approach to supporting local initiatives.

Through their diverse contacts community foundations bring together people who might not otherwise meet, to find constructive ways of dealing with local priorities. They work closely with statutory services and intermediary agencies such as councils for voluntary service and rural community councils. Through these partnerships they aim to generate ideas, expand funding possibilities and improve service provision. In Bristol, for example, the Grant Makers Forum set up by Greater Bristol Foundation has increased understanding of the roles played by the area’s different grant-making bodies.

Community foundations are here to stay

Since the first foundations were launched in the 1980s, Community Foundation Network’s established members are increasingly seen as crucial local funders. Community foundations cover most of the UK and each year sees them increasing in number and strength, building up an effective network of support to voluntary groups, donors and local communities. The 61 community foundations already established or under development cover all of Scotland, Wales, Northern Ireland and most of England. They now have over £90 million in permanent endowment and make grants of over £20 million a year.