What Is A Community Foundation?
A community foundation is a tax-exempt, independent, nonprofit organization that provides support primarily for the needs of the geographic community or region where it is based from funds that it maintains and administers on behalf of multiple donors. They are governed by a volunteer board of directors of community leaders and employ professional staff.
Community Foundations are a type of hybrid nonprofit possessing the characteristics of both a public charity and a private foundation. Like a public charity, community foundations seek support from the public, and like a private foundation, they also provide grants for charitable purposes.
The common mission of every community foundation is to enhance the quality of life in the local area. They carry out this broad mission by building permanent endowment funds as well as non-endowed funds established by local individuals, families, businesses, or charitable institutions.
Most community foundations manage and/or administer:
- Donor advised funds, on behalf of individual donors.
- Field of interest funds to benefit a broad area of interest or programming.
- Agency funds, on behalf of smaller public charities.
- Fiscal sponsorship for fledgling nonprofits or short-term projects and programming.
- Scholarship funds, on behalf of individual donors.
- Technical assistance/training programs for nonprofits.
- Each fund managed by a community foundation may have a special purpose, but ultimately the foundation board of directors, representing the community, oversees them all.
Community Foundation Distinctions
Most public charities provide direct and specific services to the community, such as feeding the hungry, providing shelter, or developing health care education. They are what people tend to think of when they use the term “nonprofits.” When donors make gifts to these organizations, they are usually making a gift to help the organization perform a specific service.
On the other hand, a community foundation, while also a public charity, is primarily a grantmaker and not a direct service provider. Rather than focus on servicing a particular community need, a community foundation serves donors and the broad needs of the community.
Finally, like other public charities, community foundations must continue to meet IRS charitable standards to keep their status. However, community foundations generally seek support through individual gifts in the form of substantial lifetime gifts or bequests, rather than the small annual gifts from the public that most other public charities target.