What is a Community Foundation

Community foundations are grantmaking organizations that help improve the lives of people in a specific geographic area. They bring together the financial resources of individuals, families, and businesses to support effective nonprofits in their communities. Community foundations vary widely in size, with assets of less than $100,000 to more than $4.2 billion.

Community foundations are nonprofit organizations established to meet the current and future needs of local communities. Community foundations are a trusted and valuable resource to individuals, families and their professional advisors, primarily serving residents in a specific geographic area.

There are over 750 community foundations operating in urban and rural areas in every state of the United States.  They are the fastest growing sector of philanthropy in the nation today, and represent 9% of all foundation giving in the U.S.  Collectively, community foundations hold almost $50 billion in assets and make local grants of over $4 billion annually. Last year they received an estimated $5.5 billion in gifts - including planned gifts, in the form of cash, real estate, closely held stock, artwork, and other material assets. 

Community foundations serve three distinct constituencies: donors, the nonprofit sector and the community as a whole. The roles of a community foundation are to:

• Professionally manage and distribute revenues, and portions of the principal when permitted, from donors' charitable contributions and bequests in a manner consistent with donors' specific and general interests;
• Maintain and enhance the educational, social, cultural, health, civic and environmental resources of the community through support of qualified nonprofit organizations; and
• Through actions of the board and staff, provide philanthropic leadership and help create and promote efforts among citizens to improve the quality of life in the community. 

Where Else Do Community Foundations Operate?

The community foundation model also has taken hold around the world. According to the 2010 Community Foundation Global Status Report, there are 1,680 community foundations in 51 countries. Forty-six percent exist outside of the United States.

What Is The Differnce Between A Private Foundation And A Community Foundation?

Community foundations qualify as public charities under IRS section 501(c)(3). This allows donors the maximum tax deduction for gifts and bequests. A single individual or family usually establishes a private foundation while community foundations are a pool of funds given by various donors for charitable purposes. A community foundation is what you would have if private foundations got together to pool their assets for investment purposes, reduce overhead, share staff, make grants, and address community needs.