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Philanthropy Journal of North Carolina – The bottom line – Change agents

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By Todd Cohen

Community foundations are taking care of business.

Driven by competition from commercial gift funds such as Fidelity, Schwab and Vanguard, community foundations are revamping themselves as entrepreneurial organizations aiming to better serve donors.

In North Carolina, for example, the Charlotte-based Foundation For The Carolinas has retooled its technology to help donors handle and track funds they create and gifts they make.

The foundation also has restructured its fees to be more competitive with those charged by commercial gift funds.

And it has teamed up with financial-services firms, law firms and other professional advisers to better market its services.

One sign that the aggressive strategy is working: A big donor last summer moved a $3.2 million fund to the foundation from the Fidelity Charitable Gift Fund.

Community foundations also are playing a more active role in strengthening nonprofits and pushing local social agendas.

To help nonprofits thrive over the long-term by creating or boosting their endowments, for example, the North Carolina-based Community Foundation of Greater Greensboro has begun making “challenge” grants to nonprofits that they must match by raising new endowment dollars.

The foundation also is a key player in Action Greensboro, an initiative of six local foundations that aims to revive the region’s schools and economy.

Linking those two roles of community foundations – serving donors and triggering civic change – is a big challenge.

In pursuing a more entrepreneurial strategy in recent years to meet an aggressive competitive challenge from commercial gifts funds, many community foundations have focused increasingly on donors and veered from their other roles as grantmaker and community catalyst.

Sadly, just as we need it most, leadership is becoming a rare commodity in our communities.

That’s a critical gap that community foundations are positioned to plug.

A Harvard study last year that looked at the civic health of three-dozen U.S. communities – including Charlotte and Greensboro – found erosion of the social glue that connects people in communities.

The clear message to community foundations – which backed the study – is that they need to find ways to reunite their sometimes-divided roles and take the lead in working to repair their communities.

Beyond offering them easy access to data about their funds, for example, community foundations would better serve donors by educating them about the tough problems their communities face – and then steering them to local groups with promising programs and ideas for tackling those problems.

The challenge is to map local needs and engage donors in finding solutions.

A big trend among philanthropic advisers is to move beyond simply spelling out the tax advantages of making charitable gifts and instead focusing on the way in which donors can use their money and expertise to express their deepest values and connect themselves to issues they care about.

By playing the critical roles of civic leader, investment adviser and donor matchmaker, community foundations can help raise the “social capital” our communities need to thrive.

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