What is a Community Foundation?

A Community Foundation is an independent philanthropic organisation working in a specific geographic area which, over time, builds up a collection of endowed funds from many donors in the community. It provides services to the community and its donors, makes grants and undertakes community leadership and partnership activities to address a wide variety of needs in its service area.¹

A community foundation is a vehicle for local donors who wish to contribute their cash, trusts, bequests or real property to create permanent endowments that will benefit the community in perpetuity. Using the investment earnings on each endowed fund, a community foundation makes and builds capacity within the community to address local needs and opportunities. Their task is to build substantial, permanent funds from which grants are made to local charitable and community organisations. These funds function much like permanent community savings accounts, where the community - personified in the Board and its decision-making bodies - has the say over how to distribute the earned interest.

What are the Social Benefits of Community Foundations?

Community foundations are engaged in projects which contribute to the community in many ways, resulting in both financial and social benefit. In terms of social benefit, community foundation funded or managed projects often aim to:

a. Increase employment;
b. Improve the efficiency of human services delivery;
c. Strengthen communities and individuals; and
d. Build and improve community infrastructure.

Click here to download (MS Word) case studies which explain the social benefit contribution of community foundations in Australia, organised under the above points. These may provide ideas and inspirations for other community foundations.

What can a Community Foundation Achieve?

In Australia, community foundations are recognised as vehicles that can bring together a diverse range of stakeholders in rural and metropolitan communities to provide them with resources and tools to initiate key social, environmental and cultural activities.

Once established, the foundations grow in their communities and develop a character which is appropriate for the location. However, there are key characteristics common to all community foundations, such as:

• multiple sources of funding from a range of donors
• provision of a permanent and growing source of funding for charitable activities which will strengthen the local community
  a local focus on charitable giving and grant making
• initial donations become the corpus and are invested to grow, with the income being distributed as grants on an annual basis. ( Some community foundations choose to use part of their initial donations to establish their grantmaking capability.)

What are some typical Objectives for a Community Foundation?

The mission of a community foundation is to provide a cost effective mechanism to enable individuals, families, corporations and business to carry out their philanthropic aims.

A foundation will aim to:

• Expand the pool of philanthropic funds in the foundation.
• Promote effective giving by providing support, expertise, research and advice to donors.
• Promote awareness of significant community and social issues, and grant funds to worthy charitable projects.
• Work collaboratively with communities, donors and others to ensure the foundation is effective.
• Make it easier for people to give during their lifetime and see the results of their benefaction in the community.
• Manage and invest funds prudently to achieve fund growth and good returns.
• Help build the local community.
• Provide an opportunity for the community to be an active part of long term planning for its own needs and aspirations.

How is a Community Foundation structured?

A community foundation is an incorporated, not for profit company or association, which is endorsed by the Australian Tax Office as an income tax exempt charity which is also the trustee of a trust ( Public Fund ) which is endorsed as an income tax exempt charity and a deductible gift recipient.

In most cases, the Community Foundation is controlled by a public company limited by guarantee and incorporated under Corporations Law. It acts as the community foundation for public charitable purposes and has income tax exempt status. The company acts as the trustee of the Community Foundation Public Fund. This fund has to be endorsed by the Australian Tax Office as an Income Tax Exempt Charity and a Deductible Gift Recipient (DGR).

Donations to the Public Fund are fully tax deductible. Gifts such as shares or real estate are exempt from stamp duty in most states.

Who are the Key Constituencies ?

A community foundation consists of four distinct constituencies:

• The community of the region
• Donors
• Charitable organisations
• Volunteers, including the Board.