Democratizing Philanthropy Through Community Foundations – part 1

Thanks to my consulting work for the National Center for Family Philanthropy and Ekstrom Alley Clontz & Associates, I’ve been spending more time tuned into the field of community foundations.

I still hear variations on the phrase “we want to be the community’s foundation.” This core value of democratized, accessible, community-owned, philanthropy dates to the founding of the community foundation field more than a century ago.

In a recent op-ed in the Chronicle of Philanthropy, historian Benjamin Soskis listed at least three different definitions of the phrase “democratizing philanthropy.” I think the definitions are worth discussing (and prioritizing) by community foundation staff and board members, as they lead to different questions, goals, and strategies. Here’s my take on them…

  1. Expanding and connecting the base

“How can more people volunteer and give more often?” and “How can their will and actions be connected and aggregated?”

Giving Days and giving circles are common tools at community foundations for this goal. The Knight Foundation published a Giving Day Playbook to assist community foundations. The Johnson Center is conducting new research on giving circles, to be published in the fall. A preview of the data showed that around half of the 1,000+ giving circles in the U.S. are hosted at community foundations or similar organizations.

However, community foundations aren’t the only organizations answering the questions above. Crowdfunding platforms are accomplishing the same goals. All forms of crowdfunding are growing far more quickly than giving to charities in the U.S. This growth includes donation-based crowdfunding which often bypasses charities. Early answers to aggregated giving and volunteering – United Ways and other federated campaigns – are now often struggling or reinventing themselves to include other tools and tactics.

  1. Expanding access to the establishment

“How can more people use formalized philanthropic tools?”

Community foundations – especially their Donor-Advised Funds (DAFs) and scholarship funds – were early answers to this question. They also often expanded the use of gift planning techniques such as Charitable Remainder Trusts. Community foundations now see a lot of competition in this space. National providers (e.g. Fidelity and American Endowment Foundation) increased the number of people using DAFs and giving complex assets to them, often with lower fees and minimums than community foundations. Providers such as Foundation Source make it cheaper and easier to manage a private foundation. And, there is a growing number of impact investing options (mostly unused by community foundations) that are open to everyday investors.

“How can we be more inclusive and accessible?”

Some community foundations have equity and inclusion as a core strategy. They’re diversifying their staffs and boards by class, race, ethnicity, faith, and more. A few are connecting this goal with the first one by creating giving circles and other programs for non-white and/or non-wealthy donors. I haven’t heard of any, yet, that are following the Knight Foundation’s lead in purposefully adding more minority- and women-led firms to their investment portfolios.

  1. Redistributing philanthropic power and ownership

“How can more residents control the use of philanthropic resources – especially when those resources are critical to improving their lives?”

Community foundations certainly democratize philanthropic participation more than private foundations. They broaden a community’s psychological and emotional ownership of a foundation. But few, if any, are redistributing ownership and power.

Many community foundations are helping low-income people create wealth – examples are at Community Wealth, BALLE, and Aspen Institute. Those examples don’t necessarily democratize decision-making about foundation grants or investments. A few are learning with Grassroots Grantmakers to give everyday citizens grantmaking authority. That authority is limited to small set-asides in their grants budgets and the grants don’t necessarily influence the quality or types of nonprofit services citizens receive. Homeless people, for instance, aren’t deciding on funding of homeless services organizations.

A few nonprofits are advocating for democratizing ownership of valuable assets – co-ops, Employee Stock Ownership Plans, land trusts, and community investment trusts are just a few options. Those assets seem uncommon in community foundation investment portfolios and gift planning conversations.

So what?

Why doesn’t “the community’s foundation” do more to democratize philanthropy? Why should it reconsider doing so? Answers to those questions in my next blog post.

In the meantime, where are you seeing examples of community foundations democratizing philanthropy? Are they more common than I think?


Addendum 7/11/17:  Funny timing. The same say I posted this, Sheila Herrling at the Case Foundation posted “Four Trends Democratizing Philanthropy.” Her trends augment ideas in the first two goals listed above.

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