Nonprofit Spotlight: How is a Community Foundation Different from Other Foundations?
May 3, 2017
When you hear the term "foundation," what comes to mind? Maybe you think that it would be fun to be on the board and to give away charitable dollars, and you might even think that you would like to receive a grant. A perception challenge that the Community Foundation of Western Nevada faces is that as a community foundation, we are different from the private foundations in northern Nevada.
Although we have distributed more than 7,000 grants and more than 1,000 scholarships since our formation, our grants don't define us. More than anything, our grants represent the charitable passions of the people who establish a fund at Community Foundation. As the message in our mission statement outlines, we are about, "connecting people who care with causes that matter."
Because we administer philanthropy on behalf of hundreds of fundholders and donors' estate gifts, we leverage grants with knowledge and strategies for greater impact. Money alone won't generate the best outcome. For example, through the sheer volume of grants and breadth of grantee organizations, we have in-depth knowledge about the nonprofit community that helps us know where funds can make the greatest difference. Grant money must be used strategically, over a thoughtful timeframe, with measurement, and perhaps with required matching elements to achieve the best result.
If a community foundation is not defined as primarily a grantmaking organization, what is it? Again, the answer lies in the remaining words of our mission statement, which is, "to strengthen the community through philanthropy and leadership." A kind of synergy has occurred with new ideas, new collaborations, and innovative cooperative approaches to some of our community's most persistent issues because of the relationships the Community Foundation staff and Board developed within the community. The Community Foundation has been asked to underwrite classes and community education programs on estate planning, and support the nonprofit sector with workshops on capacity building, endowment development, fundraising, and more. Community leadership activities like these, are some of the ways the Community Foundation differentiates itself from private grant-making foundations and behaves in some ways like a traditional boots-on-the-ground charity.
Most of the charitable funds at the Community Foundation fall into three categories. Designated charitable funds are funds created to help specific causes and sometimes specific local organizations. The endowments that benefit specific local nonprofits are designated funds. In addition to these, the Community Foundation manages dozens of scholarship funds, each with a selection committee. Our donor advised funds are established by families or individuals and they recommend all grants from their fund to organizations that they choose. In many ways, donor advised funds are like a private foundation without the administrative costs and work. Through the administration of charitable funds, the Community Foundation receives a small fee that covers our costs. Those fees, ranging from 1.5% to less than ½ of 1%, generate income that pays for staff and operating expenses.
The Community Foundation works diligently to keep operating expenses low and is in a group of the most efficient community foundations in the country. Although fee income generated by the funds covers most of the operating expenses at the Community Foundation, as it should, it does not cover all community leadership work costs, nor should it.
Each year, we approach donors and fundholders who see the value in our community leadership work and ask that they contribute. The need to fundraise to support community leadership activity is an important difference between a private foundation and a community foundation. When we conduct a community initiative or provide an educational program, generous donors underwrite those activities. Two years ago, donors who invested in our operations made it possible to add staff for community leadership work.
When you are a community foundation and have $90 million in the bank, the need to fundraise can be a hard case to make. But, the assets we steward are not charitable dollars the Board or staff can spend. Most Community Foundation assets are invested and granted in accordance with the wishes of the fundholder. The investment income from those assets accrues to their specific funds, and that provides the funds' grantmaking fuel. We are proud we have very low fees because that means more net income to do charitable good. We have an excellent track record of net returns.
Our complete mission statement is, "The Community Foundation of Western Nevada strengthens our community through leadership and philanthropy by connecting people who care with causes that matter." A community foundation is a special structure in the charitable sector. We do make grants; in fact, we make a lot of grants, while engaging community members and working together to create a better place for us and all who follow in the future. We need both financial support and participation from community members to do so. If you'd like to think of the Community Foundation as your foundation, that is okay with me. Give us a call. We want to earn the privilege of being your charitable team. Let's get some good work done!