What is a Community Foundation?

A community foundation is a nonprofit organization that exists to oversee funds set up by members of its community and to make charitable grants to local people and organizations. About 450 community foundations exist in the United States. Think of them as pools of funds invested for the futures of their communities.

Calling them "community foundations" is far from accidental since they focus on benefiting the local communities they serve and are unique products of those communities.

Donors who set up funds may be famous or obscure. They can be individuals, families and corporations - even casual groups of friends with a common charitable vision. Community foundations respond quickly and specifically to needs that develop at the local level, and they endow community priorities for decades into the future.

While each community foundation has its own distinct personality and style, all share several attributes:

•  Each exists so that individuals and corporate or nonprofit organizations can establish a charitable fund without having to cope with the complexities of setting up a special-purpose nonprofit corporation.

•  Each community foundation functions, in effect, as a philanthropic and grant-making collective. A unique characteristic is that community foundations make it possible for whomever establishes a fund to make certain the money serves specific charitable purposes. At the same time, however, a community foundation pools all of its funds for investment purposes - making it possible for individual, small funds to achieve economies of scale. For example, a community foundation might make a single grant for development of low-income housing that includes money from half a dozen different individual funds focused on the same field.

•  Each community foundation is headquartered in and serves a specific community - some as confined as a small city, others as large as entire states or regions within states. Accordingly, a community foundation is a locally managed organization with a fund base that reflects the priorities and the imperatives of the community itself.

While a community foundation is a single entity made up of many financial parts - some small, others large - it enjoys expertise in financial management found only in larger philanthropic organizations. Similarly, a community foundation possesses expertise in grant-making otherwise known to large charities, but available to benefit even the smallest funds.