2010 GSR Executive Summary

What is a community foundation?

A community foundation is a public grantmaking charity that raises funds from a variety of sources, with the aim of building an endowment as a permanent resource for a local community.

The advantage of the community foundation approach is that it taps wealth that already exists in the community and harnesses it for public benefit. This gives the community access to resources that it controls.

Achievements of community foundations

Community foundations typically focus on citizen involvement, building trust between people and directing resources to work that the community wants to see done.

Respondents to the survey were asked to rate the achievements of community foundations. The top four were:

  • Citizens more involved
  • Stronger linkages across the community
  • Greater transparency of authorities
  • More trust in the community

Such 'soft' outcomes are often seen as second class in a world where 'hard' issues of 'growth' and 'income' are seen as more important. However, there is increasing recognition that levels of trust are critical to the success of a community.

Small grants have a vital role to play. It is clear that small money can go a long way and have a big impact, especially where money is scarce. Grants, however, are are merely one strategy, and most community foundations offer technical assistance alongside money, raise money for programs that the community needs and wants, and lead initiatives on important issues such as economic development or environmental conservation.

Facts and Figures

The remarkable success of the community foundation business model continues to gain ground. The number of community foundations in the year 2000 stood at 905. Now, ten years later, the number has nearly doubled and stands at 1,680. In the past two years, a further 280 have been added to the total.

Most of the growth has come from Europe, where growth has been spectacular. At the start of the decade in 2000, there were 103 community foundations in Europe. At the end of the decade in 2010, there are 631. The remarkable story is Germany where there were 10 community foundations in the year 2000, and 240 in the year 2010.

There has also been some growth in North America, with 700 in the year 2000 and 880 in 2010. It is clear, however that the bulk of this increase occurred between 2000 and 2003, after which the trend leveled off.

In other continents, numbers have remained below 100 for the whole decade, though there are some suggestions that numbers are set to grow in Africa and Asia.

The United States is the country where community foundations have the largest assets, with seventeen times the assets of the next country on the list – Canada. In the remaining countries, community foundations tend to be small with small staffs and modest assets.

Support to the field

The growth of community foundations has been fuelled by the emerging ideas of ‘civil society’, following the opening up of East and Central Europe and South Africa, as well as the spread of ideas across borders encouraged by the Internet. The field has taken a self-conscious effort to learn from practice in different parts of the world. There have been fellowship programs, study tours, and exchange visits that have fostered a sense of collaboration across the world.

We were able to measure the effect of support organizations. The presence of support organizations, such as an association of grantmakers, is strongly correlated with a good legal and fiscal environment for community philanthropy, a higher prevalence of donors, and higher claimed impact of the work. Support organizations also help the field to grow, since the best predictor of in-country growth of community foundations across the world between 2008 and 2010 is the number of organizations offering support to community foundations in 2003.

Support services to community foundations are ‘highly available’ in North America and ‘quite available’ in Europe, though much less available, in Latin America and the Caribbean, Asia, and Africa.

The external environment

There are two big global trends affecting community foundations. The first is less international money caused by the global economic recession and reduced funding from international donors. The second is more local money as more local people are stepping forward to take responsibility for their communities and a philanthropic culture slowly takes root.

In general, the environment for community foundations is reasonably favorable in those countries where a legal and fiscal environment exists. It is clear that North America has a highly favorable environment. In Europe and Latin America and the Caribbean the picture is mixed. In Asia and Africa, the legal and fiscal environments tend to be less favorable.

Donors

Although there is increased competition for donors everywhere, in some parts of the world there are growing numbers stepping forward to donate to community foundations. Such donors are increasingly interested in the outcomes of their investments.

There is remarkable similarity in the way that community foundations engage with their donors. There is a standard package of stewardship that builds good relations, though some foundations enhance this with some innovative practice, which includes ways of communicating with donors, encouraging donors to take part in the work and new ways of influencing the culture of giving.

Donor advised funds are most common and unrestricted funds least common. Flow-through funds and designated funds are in the middle. The greatest source of funds is from companies. Companies give to community foundations in more than three-fifths of countries, and this source is nearly twice as important as the other three sources, which include individuals, charities, and government.

In this section

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