What is a community foundation?

Community foundations are the fastest growing sector of philanthropy in the United States today. A community foundation is a public charity organized to channel gifts from individual and corporate donors to a variety of charitable organizations in the local community. It is a publicly supported philanthropic institution governed by a local board of private citizens.

Six important features of a community foundation:

1. It acts as a grantmaking entity, giving grants to support local charitable projects.
2. Its mission is broadly defined. (e.g. "to improve the quality of life in a community")
3. It served geographically defined urban communities. (e.g. a city, county or region)
4. It is supported by a broad range of private as well as public donors and seeks charitable contributions primarily from inside the community
5. It is governed by an independent local board of directors made up of community members.
6. It builds capital endowment, which is an important element of its sustainability.

Other important facts:

• Families, individuals, businesses, and nonprofit groups establish funds within community foundations into which they can contribute a variety of assets to be used for charitable purposes.
• If they choose, the people or organizations that establish the funds can then recommend the grants to be distributed, in the name of the fund or anonymously, to qualified nonprofit organizations
• Donations to community foundations are eligible to receive state and federal tax deductions.
• The assets of community foundations are pooled and invested.
• The funds established at community foundations can be expendable funds (i.e., grants can be made in any amount at any time), or they can be endowments, which limit distributions to the interest earned on the assets. Endowments last in perpetuity.