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| Path: Main Street : Resources & Library : Research Articles : Feature Article |
Fastest growing segment of philanthropy is misunderstood, underutilizedFebruary 15, 1995; Canadian FundRaiser
The first Canadian community foundation was founded in 1924, and since then the movement has become well established in over 50 cities and towns across the country. Now considered the fastest growing segment of philanthropy, community foundations play a catalytic role in bringing people together around major community issues. But, despite their good work, community foundations are misunderstood and often underutilized.
Powerful, effective and efficient tools, community foundations are independent, non-political, community-based charitable organizations that receive, manage and distribute charitable funds. Operating much like a charitable savings account, community foundations collect money from a variety of sources --- individuals, corporations, families and private foundations, then pool it to form a capital fund to benefit specific communities. Rather than immediately disbursing all monies received, community foundations invest their funds to create an everlasting endowment that grows in size and capabilities. Earnings from the endowments are then used each year in the form of grants meeting charitable objectives in the communities served.
Gifts are well within the reach of most people, and are by no means limited to individuals. Charitable organizations can benefit from setting up endowment funds through community foundations as well. Whether donating $10,000 over five years, or leaving a multimillion dollar legacy, community foundations offer a number of compelling advantages.
In contrast to the time, expense and complexity required to establish and maintain a private foundation, community foundations are inexpensive, simple to set up, easy to administer, flexible enough to permit the donor to direct their monies, and permit as little or as much donor involvement as desired.
Investment advantages are attractive as well. With pooled resources and investment expertise, tens of thousands of dollars are lumped together and leveraged into multimillion dollar sums, invested on behalf of individual funds. This level of return on investment is something that most charities cannot match.
According to Richard Burton of Rainforest Publications in Vancouver, author of Canada's Directory of Foundations, "Community foundations have a high success rate of attracting new money to the fund. More money in the pot means the investment manager has more options available. This translates into an overall reduction of the risk of any one investment going bad and having a negative impact on the fund. Secondly, good money management attracts prospective donors or funds like bees to honey. Safety and security are important elements in the equation when people are deciding where their money will go."
Giving to, or through, a community foundation is as simple as a letter of agreement. Almost any asset can be contributed to create a fund: cash, securities, real estate, personal property, trusts or life insurance, to name a few. Donors are also secure in the knowledge that their giving will enjoy ongoing, responsible stewardship. Having a named, donor-designated, unrestricted, or field-of-interest fund is as satisfying as having one's own foundation, but without the hassle.
"It's a great way to give something that will carry on in perpetuity. Funds established today will provide a critical stream of income in the decades ahead to meet future, changing community needs," says Marjorie Sharpe, president and CEO of the Community Foundation for Greater Toronto. "In addition to the opportunity for everyone to give something back to their community, in terms of income, over the years the gift will be far expanded compared to a one-time original contribution," she says.
For more information, call Community Foundations of Canada at (613) 236-1616.
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