The Fund For Philanthropy

To Stay Relevant, Community Funds Must Adapt

10

Jun 14

0

By Jess Ausinheiler, Gabriel Kasper, and Justin Marcoux

 

As the Cleveland Foundation, the nation’s first community foundation, celebrates its 100th anniversary this year, it’s worth asking what may be in store for the second century of community philanthropy.

 

America’s community foundations now collectively hold nearly $60-billion in assets (as much as the Gates, Ford, and Robert Wood Johnson foundations combined) and serve as important gateways to philanthropy for thousands of local donors. But a rich and storied history is not, on its own, a license to operate for the next 100 years.

 

Community foundations today operate in an environment that is very different from the one in which their current systems and approaches were developed. Their ability to adapt to a rapidly changing context will have serious implications for all of philanthropy, especially nonprofits, donors, and others who care about particular places and populations.

 

Community foundations work in the midst of a dizzying array of global, community, and philanthropic trends that are radically reshaping local landscapes. The litany of changes is familiar to many in philanthropy: new connective technologies, massive demographic shifts, economic uncertainty, growing environmental concerns, deep divisions across economic, political, and racial lines.

 

And philanthropy itself is changing, too. Community foundations are increasingly just one part of a crowded field that now includes United Ways, private foundations, charitable gift funds, volunteer organizations, online giving platforms, community-development finance institutions, and organized giving circles, among many others.

 

Many of those other forms of community giving are growing at an even faster pace than community foundations. Commercial charitable gift funds, for example, in aggregate, hold more donor-advised fund assets than community foundations do. And donor-advised fund assets at gift funds grew more than 50 percent faster than those of community foundations in 2012. Meanwhile, gifts to social causes from online crowdfunding platforms are likely to top $1-billion this year—still a relatively small number, but if these online sites continue to grow at their current pace, they could collectively give away more money than community foundations do within the decade.

 

And donors now have other new options for effecting social change as well. They can increasingly influence political and electoral outcomes through political-action committees or support socially responsible businesses and make “impact investments” in enterprises that produce both social and financial returns.

 

In the midst of all this, some community foundations are already beginning to adapt. The Humboldt Area Foundation, for example, makes developing leadership of the region’s residents a top priority. Foundation staff members work as community organizers to train and mentor residents, foster relationships, conduct research, and work with policy makers on local and regional issues.

 

The Silicon Valley Community Foundation has taken a strong stand advocating against payday lenders, supporting research, testifying at local government meetings to educate officials, meeting with legislators, and even putting a lobbyist on retainer.

 

And the Telluride Foundation in Colorado is building the local economy by managing a “venture accelerator” that helps incubate early-stage and start-up businesses. It provides entrepreneurs with their first funds and connects them with local venture capitalists and angel investors as mentors, coaches, and financiers who can help them expand.

 

This experimentation and variety is a sign of promise. But in the midst of a rapidly shifting global, community, and philanthropic context, the question is: Are community foundations changing enough?

 

For some—especially small community foundations—adaptation will be a matter of survival. Necessity will demand that they innovate and tailor their services to demonstrate value to the community and raise the resources needed to sustain their operations.

 

But even bigger and more stable institutions will probably need to adapt to keep up with the sheer pace of community change. If community foundations can’t effectively meet the shifting needs of local donors, nonprofits, and residents, they risk losing their relevance and standing in their communities.

 

Little by little, other organizations are chipping away at what was once primarily the domain of community foundations.

 

Every service can now be provided by some other player in the marketplace, often better, cheaper, or faster than they are by community foundations. Online-giving platforms like GlobalGiving and Razoo are already diminishing the need for a middleman by linking social programs around the world directly to new donors. Specialized racial and ethnic funds are tailoring their appeals and services to meet the needs of rapidly growing demographic groups. And organizations, from United Ways to community organizers to community-development corporations are building local knowledge and helping residents advocate for themselves and coordinate the services they need.

 

So it becomes important to ask: Will the systems and practices that are helping community foundations thrive right now meet the needs of their users in the future?

 

To help community philanthropy organizations answer this question, Monitor Institute has been working with these institution to develop a set of tools to help local groups think creatively and adapt to their changing context. The tools focus on four key approaches for helping organizations open up their thinking:

 

Look outward. Community philanthropy organizations will benefit from getting better at tracking emerging global and regional trends and making sense of what they might mean for local communities. At the same time, they will need to build a stronger understanding of what groups already serve their communities and what roles they play.

 

Look around. Innovation doesn’t need to be completely new and original; it just needs to be new to a particular community. By simply looking at “bright spots” already emerging at nonprofits and businesses around the world and copying or adapting those approaches, community philanthropy organizations can get a good start on introducing new approaches and roles to serve their communities.

 

Look inward. Traditional orthodoxies about “how things are done” can often get in the way of exploring productive new approaches. Community groups can focus on their own practices, break free from unproductive assumptions, and build a portfolio of roles that are right for their organizations and communities.

 

Take action. With a clearer sense of what is possible, community funds can deliberately try to generate new services and programs and then prototype those that show real promise. This might mean rethinking how they play roles that are core to the organization today, or it might instead mean taking ideas that are on the margins now but could become more important.

 

Perhaps the most important question they must ask, however, is this: If other community philanthropy organizations are beginning to step in to meet changing donor and community needs, why does it even matter whether the community-foundation model succeeds?

 

In the corporate world, companies regularly drop off the Fortune 500 list and even close their doors for good, replaced by other firms that do a better job of adapting to shifting markets and meeting emerging customer needs.

 

Though our research, we’ve come to believe that there’s actually nothing sacred about the traditional community-foundation form that was invented a century ago. What will matter more in the coming years is that community philanthropy continues to thrive—that people have access to what they need to take action and improve the places they care about.

 

And it will be up to community foundations to determine whether they maintain their position as cornerstones of community philanthropy. There are arguments on both sides of the ledger.

 

On one hand, billions of dollars and 100 years of effort have built community foundations into powerful (and often permanent) platforms for community change. And the work of community foundations is as important today as it has ever been. If we want to solve deep, systemic issues, we’ll always need organizations that are around for the long term and can represent the most vulnerable segments of the community.

 

Bridging the gap between wealthy donors and community needs will continue to be critical in a world of growing economic inequality. And even as globalization and new technologies bring the rest of the world closer at hand, the concept of “place” will continue to matter and is only likely to grow even more important in the coming years as government devolution and political gridlock at the federal level bring local problem-solving to the forefront.

 

On the other hand, the community-foundation model also carries a great deal of baggage that can hold organizations back as other approaches to community philanthropy continue to emerge. Many community foundations have been slow to adapt their business models and keep pace with changes in the world around them.

 

If community foundations hope to live up to their potential, they will need to innovate and adapt. Place by place, they will need to figure out what to hold onto, what to let go of, and what to create anew to better meet the evolving needs of their donors and constituents. And as the organizations mix and match the roles and structures that make the most sense for their communities, the lines between community foundations and other community philanthropy organizations will probably continue to blur.

 

Each organization will need to creatively reimagine how it provides value to the community—and then keep reimagining it, because the world isn’t going to stop changing. And the community philanthropy organizations that truly flourish—whatever they may look like—will be the groups that can adapt and innovate regularly.

 

Jess Ausinheiler, Gabriel Kasper, and Justin Marcoux work at Monitor Institute, a part of Deloitte Consulting that focuses on philanthropy and social change. Their new What’s Next for Community Philanthropy tool kit, is available at monitorinstitute.com/communityphilanthropy.