What is a community foundation?
Community foundations are designed to pool donations into an investment and grant-making facility dedicated primarily to the social improvement of the communities they serve. Community foundations are a global phenomenon with 1,800 existing around the world, of which over 200 are in Canada.
With an intimate knowledge of local priorities, community foundations champion what matters most by directing grants, expertise, leadership, and other investments towards everything from shelter, education, and care for those in need, to the arts, environment, and recreation.
Here’s a great little video about how community foundations can help donors make a difference.
How do community foundations work?
Community foundations are independent registered philanthropic organizations serving their local community. The six main characteristics of community foundations are that they:
- Act as grant-making institutions – e.g. give financial support to local charities and projects
- Their missions are broadly defined – e.g. to improve quality of life in a community
- Serve geographically defined communities – a city, region, or province
- Are supported by a broad range of private as well as public donors and seek financial contributions primarily from inside their communities
- Are governed by local boards reflecting their community and
- Build capital endowments, which are important to long-term sustainability.
Families, individuals, businesses, and nonprofit groups establish funds within community foundations into which they can contribute a variety of assets to be used for charitable purposes. The people or organizations that establish the funds can then recommend that grants be distributed, in the name of the fund or anonymously, to qualified nonprofit groups and schools. In Canada, the donor receives a charitable tax deduction in the year that gifts are made into their funds.
The assets of community foundations are pooled and invested, allowing for larger returns on investments.
The funds established at community foundations can be either permanent or temporary. Permanent endowments last forever, due to the capital never being able to be spent.
Community Foundations of Canada is the national network for Canada’s 201 community foundations. With combined assets of more than $6.2 billion, Canada’s community foundations have provided hundreds of millions of dollars in financial support across every province and territory. More than 90% of Canadian communities have access to a community foundation – from our largest cities to our smallest towns.
Community Foundations are now the fastest growing source of philanthropic funds in Canada.
Investment Policy
Since most gifts to the Foundation are permanently placed in long-term investments and we now manage more than $10 Million in invested funds, we expect to operate in perpetuity. Wise stewardship of the entrusted assets is essential to the Foundation’s mission. In order to ensure accountability to donors, grant recipients, and the larger community, our financial affairs and investment management practices are governed by policies approved by the Board of Directors. Through professional portfolio management, the Foundation invests in a manner that preserves the donated capital and considers environmental, social, and governance issues, all while achieving the highest possible rates of return.