What’s a Community Foundation?

When you’re new to the world of grants, some confusion about terms is natural. The terms used to classify different types of foundations is no exception. The three most common types of foundations are private, corporate, and community. In a nutshell, private foundations get their money from private funds, corporate foundations are funded by the profits of a corporation, and community foundations are funded by public donations. Because they are funded by donations from the general public, community foundations are classified as tax-exempt public charities, not as private foundations.

Being a public charity involves more than just an IRS designation. The term recognizes that the organization has broad public support and was established for the benefit of the community. A community foundation uses donated funds to establish and build an endowment to benefit a specific geographic area. The interest earned from the endowment is used to support the foundation’s general grants program, as well as its operating expenses. And like other nonprofits, a community foundation is led by an independent board of directors that represents the community it serves.

People with significant resources and philanthropic interests, but who do not wish to operate their own grantmaking process, often establish “donor advised funds” through their area community foundations. These donors specify the types of charitable activities their funds will support, as well as how active they will be in grant award decisions. The community foundation invests and manages the donated funds, and also handles the administrative, oversight, and reporting aspects of grantmaking. Grants made from donor advised funds often represent a large portion the foundation’s overall grantmaking.

Because they are concerned about the overall well-being of the geographic area they serve, and because of the diverse donor-advised funds they manage, community foundations support many types of activities. And while the strategic plan developed by the foundation’s board of directors will set the focus of its general giving program, the donor-advised funds will be granted consistently according to the wishes of the contributors who established them.

To nurture the overall well-being of their geographic area, many community foundations provide technical assistance to nonprofits. They may provide training, research resources, needs assessments, consultation, or support for the area’s nonprofit association. Community foundations may also rely on nonprofit leaders to keep them up-to-date on local issues, challenges, and trends. Input from nonprofit leaders can inform the foundation’s discretionary grantmaking program, and in some cases, because of the concerns expressed by local nonprofits, community foundations may launch targeted grantmaking initiatives.

Learn about the community foundation that serves your area and, once you’ve done your homework, introduce yourself to appropriate foundation staff members. You’ll have a packed agenda as you begin exploring the foundation and interacting with staff members. Don’t rush. Give each step appropriate attention and care. You’re not just working to win one grant. You’re working to help your organization build an authentic, positive relationship with the foundation. Your community foundation can provide technical assistance, information, important introductions, and grant funding. It can be an invaluable partner and ally.