Foundations focus on building community

By Todd Cohen

[Note: This was written for Blackbaud.]

Public and private foundations increasingly are working to serve as “connecting” institutions for communities defined by geography or a cause, partnering with donors to identify their communities’ needs, and developing and funding efforts to address them, said Siobhan O’Riordan, senior vice president of engagement at the Council on Foundations.

Community foundations, for example, are “partnering with community leaders to listen and identify what key needs are and then partner with donors to meet needs,” O’Riordan said.

Shifting strategies

As a result of partnerships with foundations, donors are diversifying the strategies they use to make gifts, she said.

“Perception is moving away from donor-directed funds,” she said. “Instead of donors using community foundations as a service to allocate funds, donors are understanding that the community foundation has a vital role in meeting core needs so that they can begin giving to funds that meet their interests.”

Funds of interest typically have a specific area of focus, and community foundations aggregate those funds “and steward them and deliver impact on interest areas through grantees who are doing the work in the community,” O’Riordan said.

Food in Northern Virginia

Lara Kalwinski, director of national standards and counsel at the Council on Foundations, said the Community Foundation for Northern Virginia in Arlington “sees part of its role as not just talking to donors but also to the community and nonprofits that serve community needs.”

This year, Capital Area Food Bank in Washington, D.C., which serves northern Virginia, asked the Community Foundation for support in addressing hunger in Manassas, where few philanthropic dollars are available.

The Community Foundation, in turn, talked to its donors, including one who has a donor advised fund at the Foundation. It then agreed to fund a program at the food bank for one year “because of the connections that the community foundation has, not just the connections to money but to the community, responding to its needs, and knowing how to pool resources to address those needs,” Kalwinksi said.

“When a community foundation is articulate on the needs of a community because they’ve listened to the community, they have the ability of connecting — where a donor might be interested — to what is actually happening,” she said. “Public foundations understand how to engage in that role. Any time they can have a better conversation with that donor, the likelihood of making a connection that leads to trust — and ultimately a gift — is greater.”

New tools

O’Riordan said that as community foundations increasingly play the role of connecting institutions, they are “diversifying the tools they fundraise with and the tools they partner with and they grant with.”

Foundations are moving beyond their traditional focus on philanthropy, donor advised funds, and money, she said. “There’s a more systemic understanding than the informal aspects of philanthropic success in the past: how do you build trust, sustain credibility, and embrace community leadership.”

So community foundations are working with donors to create “directed funds” and “field of interest funds” to address specific causes and issues they care about, she said. “They’re providing donors with greater opportunities to engage through community conversations. They are diversifying their strategies and their tools but they’re doing it because they really are anchoring themselves in what it means to be a community.”

Community foundations also are using “impact investing” that aims to address social and environmental problems by making alternative investments such as loans to nonprofits or allocations to socially responsible investments.

Expertise and technology

Faced with the sophisticated technology available to donors from large commercial gift funds such as Fidelity Charitable, community foundations increasingly will need to emphasize their community connections and invest in “user-friendly” technology to differentiate themselves in the marketplace, O’Riordan said.

“There are opportunities to better use technology to leverage the community knowledge and connections that community foundations bring,” she said.

Community foundations also can use technology to make it easier for donors to give, particularly to relief efforts in the wake of natural disasters or in the face of crises that require a quick response.

Diversification and data

With growing competition for donors, shrinking government funding, and rising community needs, community foundations also face the ongoing challenges of creating development plans that call for a diversified revenue mix and developing tools to evaluate and track their impact and those of their partnerships.

In addition to using the traditional strategy of donor advised funds, for example, community foundations increasingly are working with donors to create interest-area funds, endowments, and funds held by private foundations and corporate partners, O’Riordan said..

Community foundations also are creating “giving days” that invite donors to give online or through email on specific dates or to support specific causes.

And foundations are looking for ways to evaluate the effectiveness of the programs they fund and to measure the difference those programs make in the community.

Data and the stories they tell are critical for all foundations that want to move the needle on community issues, including foundations that pool resources so they can have a “collective impact” on important community issues, O’Rioridan said. And technology can help gather and make sense of that data.

“If they position themselves as a backbone organization that is able to accept funds from different community stakeholders, and deliver on that, and do the evaluation and be able to assess and speak to the impact, they play a vital role in the community,” she said.

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