What is a community foundation?*
You may have heard the term “community foundation” before, but what does it actually mean? Simply put, a community foundation helps people give back to the place they call home. It connects generous donors with local needs, supporting nonprofit organizations, public projects, and schools. It often offers scholarships to high school graduates, as well as adult and college students.
A lasting way to give
One of the most important tools a community foundation offers is an endowed fund. An endowed fund is designed to last forever. The original gift is invested and remains in the fund, while a portion of the earnings is used each year to support grants, scholarships, or other charitable purposes. Think of it like planting an apple tree. The original gift is the roots and trunk, growing stronger over time. The yearly support is the fruit, shared season after season to benefit the community.
How the fund supports the community
Every year, the Community Foundation determines how much of each endowed fund can be used for charitable purposes. This amount is based on a spending rate approved by our Board of Trustees. Currently, up to 6% of a fund’s average market value may be used annually, which includes grants, administrative support, and investment costs.
To keep support steady over time, we look at the fund’s average value over 16 quarters, or four years. This helps smooth out market ups and downs and provides more reliable support for the community and causes donors care about.
The heart of a community foundation is helping today’s generosity grow into tomorrow’s opportunity.
*The information used to create this post was thoughtfully provided by our Senior Director of Finance, Renee Hanshue.
