Looking towards the next century of community foundations

Emerging models to support and invest in local economies
Posted by: 
Marjorie Kelly

Crossposted from CSR Wire

This year, community foundations turned 100.  But while the hundreds of placed-based philanthropic institutions in cities and towns across the country have much to celebrate, they also have much to worry about. 

While some people at the commanding heights of our economic system are doing quite well, for millions of people the economic crisis never ended. If traditionally, local philanthropy has been about helping the people who fall through the cracks in the system, more and more community foundations are wondering what they need to be doing when its more and more apparent that the system itself isn’t just cracked but totally broken.

And as if this wasn’t enough to worry about, community foundations are also increasingly facing more and more competition in their core business model: the management of donor-advised funds.  With national commercial foundations with ties to big banks and investment firms muscling in on their traditional territory, many community foundations are taking stock and rethinking what their value proposition really is.

What I and my Democracy Collaborative co-author Violeta Duncan found in our new report is that these two problems—a need for systemic economic solutions that build up from the local level and a need to emphasize the unique value of locally rooted philanthropic institutions—come together in what we call “a new anchor mission.”  Usually, when someone talks about anchor institutions as engines of community revitalization, they have in mind “eds” and “meds”, i.e. hospitals and universities.  But community foundations—with deep, long-term ties to communities and billions of dollars of assets dedicated to sustaining nonprofit activity for the benefit of the places they serve—are increasingly seeing themselves as part of this new conversation among anchor institutions.

With traditional, subsidy-driven economic development strategies faltering, and a financial system that seems increasingly disconnected from the needs of neighborhoods and local businesses, community foundations are beginning to take the lead in building an economy that works for everyone, creating community wealth and sustaining our planet. In our report, we highlight 30 such foundations—we call them the “Innovative 30”—where the institution has taken bold steps to use their institutional resources as a convenor and grantmaker, and/or  their financial resources as a potentially game-changing local impact investor, to take the lead in building a new economy.

Take the Cleveland Foundation, for instance.  The nation’s first and oldest community foundation has also emerged as one of its most innovative: in 2005, it launched the Greater University Circle Initiative, which brought together local stakeholders in a comprehensive placed-based strategy for revitalizing civic and economic life in the historically marginalized neighborhoods located near the city’s major anchor institutions. We here at the Democracy Collaborative have been proud to work alongside the Cleveland Foundation on a key component of this Initiative, the groundbreakingEvergreen Cooperatives network, which connects low-income neighborhood residents with green jobs in worker-owned companies providing goods and services to local anchors. 

This kind of trailblazing innovation is far from the overly cautious and purely reactive kinds of grantmaking one might have come to expect from local foundations.  Indeed, this is truly a new anchor mission, one where all the resources a community foundation can bring to bear are used proactively to jumpstart equitable and sustainable economic development and build community wealth.  As we look out over the next century for community foundations, we’re excited to be able to lift up an increasing number of foundations all across the nation that are heeding this call. A few more examples:

  • The Greater Cincinnati Foundation, which launched a minority business accelerator in the wake of the 2001 riots that erupted after 19 year old Timothy Thomas was shot by police.  To date, the accelerator has created 2,000 jobs for city residents.
  • The Denver Foundation, which is spearheading a broad and ambitious initiative to catalyze an urban food system.
  • The Maine Community Foundation, which is expanding its impact investing portfolio to support rural and urban economic development.

 Over the next few weeks, I'll explore in more depth examples like these that shine a light on key strategies in the new anchor mission for community foundations.

Marjorie Kelly is a Senior Fellow and Director of Special Projects with The Democracy Collaborativereleased in 2012 by Berrett-Koehler, has won a Nautilus Book Award. Kelly previously was a Fellow at Tellus Institute, and cofounder/President of Business Ethics magazine. For five years she was a lead consultant on the Ford Foundation’s WealthWorks initiative.