What is a Community Foundation?
A community foundation is a tax-exempt public charity, commonly referred to as a 501(c)(3) – a nonprofit. Contributions to a community foundation are tax-deductible to the fullest extent of the law.
The first community foundation was founded in 1914, when Cleveland banker Frederick Goff created an organization that would manage permanent funds for charitably-minded citizens and, on their behalf, distribute grants to help local causes. Community foundations spread coast to coast as the virtues of Goff’s concept became evident to civic leaders. Today, there are nearly 700 community foundations across the U.S. with assets of approximately $50 billion under stewardship.
A community foundation is a permanent philanthropic endowment. As a grantmaking organization, it brings together the financial resources of individuals, families, and businesses to support worthy endeavors of nonprofits in a specific geographic area. In addition, a community foundation uses these financial resources to support scholarship opportunities for deserving students.
A community foundation:
- demonstrates a comprehensive understanding of local community needs,
- focuses on grantmaking to local nonprofit organizations,
- stewards permanent endowed funds that include donor-advised funds, scholarship funds, agency funds, field of interest funds, funds for geographic affiliates, and undesignated funds,
- invests permanent funds for long-term, risk-averse performance,
- ensures maximum tax benefits for charitable gifts,
- offers personalized service to donors in assisting them with charitable decisions,
- is led by community leaders with extensive knowledge of the region and experience in law, financial, institutional management, and philanthropy.
The Community Foundations National Standards Board provides oversight of community foundations, confirming operational excellence in six key areas—mission, structure, and governance; resource development; stewardship and accountability; grantmaking and community leadership; donor relations; and communications. A community foundation that complies with these standards earns the official National Standards Seal. Currently, approximately 500 community foundations have earned this seal.