The best kept secret in town!

The Bombay Community Public Trust (BCPT) and HelpYourNGO organised a talk on Community Foundations (CFs) in association with Ms Bibi Patel, Vice President of the Community Foundation of Ottawa, Canada. The talk introduced the concept of Community Foundations to an Indian audience. While CFs are not unknown abroad, we have to agree with Ms. Patel when she said they have often been called ‘the best-kept secret in town’!

Philanthropy through CFs was conceptualized in 1914 when Frederick Goff set up what is now the Cleveland Foundation in the USA. They represent an organised form of philanthropy that pools funds provided by donors and grants them to organisations working to support communities in that region. They have been growing in numbers and reach ever since, and are particularly popular in developed economies. There are over 1,700 CFs worldwide. In the United States, for example, CFs form 1% of all registered foundations and have an asset size of $64.9 billion.[1] They were estimated to give $5.5 billion in 2014. The Community Foundation of Ottawa itself manages over 700 individual funds set up by a variety of individuals, and gave out almost $66 million dollars in 2013. The Bombay Community Public Trust (BCPT) in Mumbai remains one of the few CFs in India. Set up in 1992, BCPT has assisted 342 projects run by 142 NGOs in the past 15 years.

A sustainable and democratic structure

CFs typically work within a geographically defined community, though they can support initiatives elsewhere depending on donors’ preferences.

They offer donors the option of pooling funds with other donations, thereby increasing the total value of grants being awarded. The CF route presents an ideal option for donors looking to direct funds to causes of their preference without starting an organisation of their own. Other funding agencies often may not be able to accommodate a donor’s interest, while NGOs working in a single core area may not appeal to donors who want to have a wider impact on the community. In 2013, The Community Foundation of Ottawa’s grants went out to education camps for children from low-income groups, purchasing an MRI machine for a hospital, and supporting a school in India.

On occasion CFs manage and invest donations by turning them into endowments. Interest earned on the endowment is distributed as a grant to organisations working for the benefit of the community. This route ensures that funds are available over a long period. CFs can decide what percent of the endowment fund will be spent each year, with figures ranging from 1.5 – 4%. Alternately, if donors choose to have their funds reach the community directly, CF’s will honour that request as well. CFs’ funds are professionally managed, as are the grant-making and donor advisory processes, making them an ideal option for someone who wants to organize their philanthropic activities.

The model is a donor-friendly structure, as it offers donors the flexibility of choosing a cause or sector of their choice. Donations can take the form of donor-advised funds, designated funds, scholarship funds and other options. A CF allows donors to stipulate the sector or organisation they would like to fund, or leaves it up to the discretion of the Foundation itself. Individuals looking to give smaller amounts also find place under the CF umbrella.

Drawbacks of the model

The lack of awareness about philanthropy through a CF can be said to be its Achilles Heel.

Given the large funds they marshal, CFs are ideally poised to support NGOs for several years in their lifecycle and help them sustain themselves. On occasion CFs provide gap-funding to meet small-ticket local, community-specific needs, which can be a drawback.

NGO capacity-building also emerges as another area in which CFs could do more.