Community Foundations in it for the long haul
Howard Lake | 7 June 2010 | Blogs
With all the recent talk about trusts winding up and distributing their capital, it is heartening to know that there is a body of charitable institutions quietly prospering.
Based on the US model, the 57 community foundations in the UK are continuing to grow, while at the same time channelling funds into local communities.
Here’s how it works. Companies and wealthy individuals invest capital into the foundations, some of which is invested for the long term, while the rest is distributed in grants managed by the foundations, to criteria set by the donors. The donations attract tax relief and – until March 2011 – are matched 1:1 by the government.
The foundations manage the investment (which they take very seriously) and the grant making process, charging a small admin fee for their efforts.
The benefits for donors are clear – a named fund, which will continue in perpetuity, to their chosen criteria, tax efficient and professionally managed.
The benefits to community groups are also there – a dedicated local funder, seeking to channel money from the wealthy to meet local needs. Robin Hood revisited perhaps.
Community foundations have also functioned as distributors of government funds – though in the current climate, that may well reduce.
OK, so you might say, the idea is great, but the foundations’ giving is small beer compared to some of the more established trusts. True, but the answer lies in the long term.
The first community foundation, based in Ohio, was founded in 1914 and now has assets of $1.8 billion, having also distributed many millions along the way. And it is not even the biggest of its kind.
OK, so the UK has some way to go, but last year, our oldest community foundation (in Tyne and Wear) distributed £5.4 million and its endowment was worth £32.5 million.
So the answer is – watch this space. Community foundations are set to become more important as time goes by, especially as government funding declines. They have a winning formula and in time will make a real impact on local communities across the UK.
For more information, see http://www.communityfoundations.org.uk/
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.