A SIGNATURE PROGRAM OF INDIANA GRANTMAKERS ALLIANCE W HAT IS A C - - PowerPoint PPT Presentation

A SIGNATURE PROGRAM OF INDIANA GRANTMAKERS ALLIANCE

WHAT IS A COMMUNITY FOUNDATION?

Community Foundation Internships Indiana Philanthropy Alliance- GIFT PROGRAM 2014-2015

COMMUNITY FOUNDATION BASICS

DEFINITION OF A U.S. COMMUNITY FOUNDATION

• Nonprofit, tax exempt

under section 501(c)3

• Independent, non-sectarian

governing body

• Publicly supported by many

unrelated donors

• Goal of building permanent

endowment funds

• Focused within a defined

geographic area

• Grantmaking is not limited

by field of interest or to specific populations

COMMUNITY FOUNDATIONS – THE REALLY BIG PICTURE

GOVERNING BOARD

Sets Goals, Direction, Policy

STAFF

Implementation, Operations DONORS GIFTS come in different forms GIFTS are placed into a FUND INVESTMENTS PAYOUT/DISTRIBUTIONS

• Individuals
• Corporations
• Private foundations
• Charitable
• rganizations
• Cash
• Appreciated

Securities

• Real Estate
• Closely held

securities

• Personal property
• Life insurance
• Retirement assets
• Wills and bequests
• Unrestricted
• Donor Advised
• Field of Interest
• Designated
• Scholarship
• Agency
• Investment

Policy

• Spending Policy
• Grants for charitable

activities

• Administrative fees to

support CF operating budget These are community foundation ASSETS Funds are governed by the FUND AGREEMENT Community foundation FISCAL RESPONSIBILITY Fulfilling DONOR INTENT Through this activity, a community foundation gains connections, visibility, knowledge, creditability,

influence and resources to provide COMMUNITY LEADERSHIP

HISTORY OF COMMUNITY FOUNDATIONS

• 1914 - The first community foundation was established in

Cleveland, Ohio. Within five years, community foundations formed in places like Indianapolis, Chicago, Boston, Milwaukee, and Minneapolis.

• 1969 - Tax Reform Act
• private foundations becoming more strictly

regulated

• community foundations became a more attractive
• ption
• In the 1990s, commercial financial services firms, such as

Schwab, Fidelity and Vanguard, began to offer donor- advised funds.

• 1990s-today – increasing emphasis on CF role in

community leadership

• There are over 800 community foundations in the United

States and about 1,400 existing around the world.

GIFT HISTORY

• Philosophy of GIFT by Lilly Endowment Inc.
• Wants to serve Indiana
• Believes in local decision making – wants

philanthropic partners

• Builds civic participation
• Few community foundations in state
• Grows philanthropy

• Program Design
• Communities self-identify
• Set program of steps to qualify for LEI money
• Communities must incorporate, apply for 501, hire paid person, have
• ffice
• Initial goal of 20 foundations immediately passed
• Series of 5 phases over first several years
• Provided operating funds, re-granting funds, endowment match

funds

• Different components as foundations

GIFT HISTORY

• Additional efforts to guide growth
• Taking Stock
• CAPE
• Sustaining Resource Development
• Community Foundation Intern program
• Current status of GIFT foundations
• Two counties have two
• 75 legal entities and 28 affiliates
• Some have separated and some have joined
• All Indiana CFs - Over $2 billion in assets

GIFT HISTORY

• Unique elements of GIFT and Indiana’s community

foundations

• Commitment of the funder to “stay the course”
• Commitment of the community foundations to

collaborate

• Consistency of training as needs and times change
• Support from GIFT staff

GIFT HISTORY

NATIONAL STANDARDS FOR COMMUNITY FOUNDATIONS

The National Standards include:

• Definition of a U.S. Community Foundation

And standards in each of these categories:

• Mission, Structure and Governance
• Resource Development
• Stewardship and Accountability
• Grantmaking and Community Leadership
• Donor Relations
• Communications

WHY IS A COMMUNITY FOUNDATION DIFFERENT

FROM OTHER CHARITABLE ORGANIZATIONS?

A Community Foundation Has Three Distinct Features

PERMANENT ENDOWMENT

Donors create permanent endowment funds, giving through the community foundation to charitable

• rganization or projects they wish to support

Community Foundations:

• Develop close relationships with donors who want to

create their own legacy and support the communities which they love

• Invest and protect the principal of donor gifts
• Distribute earnings from these gifts based on

charitable intent of the donor

• Build a permanent resource of community resources

for the future

PERMANENT ENDOWMENT

• Long-term rather than immediate
• Based on donor interest rather than organization’s

program

• Few gifts, generally large, rather than numerous, small

gifts

• High use of planned and estate gifts rather than outright

cash or occasionally securities

• Often involves whole family rather than just one person
• Builds gifts into ever-growing pool of permanent funds

rather than starts over every year

ENDOWMENT BUILDING OR FUNDRAISING?

• Donors can gain maximum tax advantages using

various types of gifts:

• Donors are involved in directing how their

funds support charitable organizations by establishing one of the following fund types:

ENDOWMENT BUILDING

Unrestricted Fund Field of Interest Fund Designated Fund Donor Advised Fund Scholarship Fund Agency Fund Cash Appreciated Stock/Bonds Real Property Bequests

NFP Fundraising VS CF Asset Development

Must convince a donor to give to its specific cause Offer to assist donor with fulfilling their charitable wishes or legacy Annual appeals, continually asking Building long-term relationships Lots of events Small, intimate gatherings Relationship management Stewardship and service

ENDOWMENT BUILDING

More of an OFFER than an ASK

GRANTMAKING

The Community Foundation is knowledgeable about local community resources and needs. Areas of interest include:

• Arts and Culture
• Civic and Historical Affairs
• Community Development
• Education
• Environment
• Health and Human Services
• Recreation

BROAD, FLEXIBLE GRANTMAKING

Community Foundations:

• Monitor community needs and leverage other

resources to maximize impact of grant dollars

• Can help to strengthen existing or bring new

and innovative charitable organizations into existence

• Have the ability to re-direct charitable dollars
• ver time and as community needs change
• Proactive vs. Reactive grantmaking

BROAD, FLEXIBLE GRANTMAKING

• Community foundation “responds” to community requests
• Open process, broad criteria
• Keep foundation connected to their community
• Community foundation decides in advance the type of

grants it wishes to make; narrow criteria

• Typically uses an RFP or other invitation

BROAD, FLEXIBLE GRANTMAKING

• A group of individuals determine a solution to a community need

(grassroots project)

• The group does not have 501 (c)(3) status
• They want to use the community foundation as an umbrella for donors to

make charitable gifts

• Fund agreement required, stating charitable purpose or program
• Can be a one-time project or a new program
• Grants made to vendors for specific charitable purpose or program
• Determine liability issues
• Expenditure responsibility required
• Community foundation is operating the program directly

COMMUNITY PROJECT FUNDS

COMMUNITY LEADERSHIP

• Charitable organizations exist in every

community and each has its own mission

• Community Foundations can gather various

entities and voices to address a variety of critical issues

• These gatherings can uncover and leverage

resources, including finding individual donors who are interested in these same issues

LEADERSHIP/CATALYSTS FOR CHANGE

• 1. Community engagement
• 2. Bridge for communication
• 3. Provide a product or service
• 4. Proactive grantmaking
• 5. Community convener
• 6. Community initiative

LEVELS OF COMMUNITY LEADERSHIP

• Participating in community activities and
• rganized by other groups or institutions
• Sponsor a community event or activity
• Easy to do
• Everybody wants the CF “at the table” so

be cautious about overextending

• Good way to learn about community,

forge relationships

COMMUNITY ENGAGEMENT

• Bring together a few grantees with

similar missions to create relationships

• Fairly easy to do; not much risk
• Do a little background work to make

sure you are not walking into some bad history

BRIDGE FOR COMMUNICATION

• Provide training or other capacity-building opportunity for

not-for-profits

• Host a speaker on philanthropy or more specific topic
• Involves additional cost and staff time
• More public visibility
• Not much risk
• Speakers can be a draw for prospects and donors

PROVIDE A PRODUCT OR SERVICE

• Allocate a portion of unrestricted

grantmaking to a particular area, need or

• pportunity
• Constructing the “strategy” and defining

intended results can be positive but time- consuming

• Moves into a more political arena both

internally an externally

PROACTIVE/STRATEGIC GRANTMAKING

• Organize a community meeting to discuss an

issue or opportunity

• Much more public
• Needs considerable preparation to go well
• CF will be perceived as having some ability to

follow through on whatever happens

• Think about the end game

COMMUNITY CONVENER

• CF declares it will address a particular issue
• Enables CF to engage broadly and demonstrate a major “value

add” to the community

• Requires significant investment of time and money for which

there is likely no revenue stream

• Very public; CF reputation can suffer if problem is not “solved”
• Possible donor alienation
• Possible political controversy

COMMUNITY INITIATIVE

BOARD MEMBER AND VOLUNTEER RESPONSIBILITIES

BOARD LEADERSHIP

• A board of a nonprofit corporation

represents the stakeholders (the community) similar to how the board in a for-profit company represents the shareholders (owners).

• An effective board works in partnership

with a good CEO but should be cautious not to defer policy decisions to the CEO.

• The board must understand the

mission/purpose of the organization and decide on the best ways to fulfill this mission/purpose.

• The Board of an Indiana nonprofit

corporation typically has ultimate responsibility for all the activities of the

• rganization (IC 23-17-12-1(b).
• The Board members must act in good faith,

with the care an ordinary prudent person in a like position would exercise and in a manner which the member reasonably believes to be in the best interest of the corporation (IC 23-17-13-1(a).

INDIANA LAW FOR NONPROFIT BOARDS

BOARD ROLES & RESPONSIBILITIES

• To carry out the vision and mission of the Community

Foundation, with respect to the region it serves

• Encourage and responsibly manage charitable dollars
• Review, recommend and investigate grants and their impact
• Be guided by good faith and judgment about the best interest
• f the Community Foundation with respect to matters of:
• Decisions regarding investment of assets
• Charitable distributions
• Relationships with donors
• Tax compliance
• Solicitation of new donor funds and assets

• Board members are ideally positioned to build relationships,

visibility and creditability for the community foundation.

• Board members are agents for awareness and creators of

connections.

BOARD ROLES & RESPONSIBILITIES

It’s about the STORY!

• Learn two grant stories
• Learn two donor stories
• Learn about how the community foundation assisted a

local agency or nonprofit in a special project

BOARD ROLES & RESPONSIBILITIES

QUESTIONS?