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Minnesota Council or voundadons GIVI'NGFO-RUM October 1991, Vol.14, No. 4 Communities build new local philanthropies ADuluth teacher travels to Thailand and Laos and returns to develop a curriculum project based on her experiences. Warroad builds a new community library. Wanamingo's picturesque walking trail gets a footbridge. As varied as the examples are, they all have one thing in common: they are the projects of community -based philanthropy in Minnesota. Across the nation, as well as in Min- nesota, community -based philanthropy, particularly in small- and medium-sized cities, is booming. It is the fastest grow- ing segment of the grantmaking sector. The community foundation is the most widely used form for organizing com- munity -based philanthropy. The con- cept is not new; the first community foundation was started in Cleveland, Ohio, in 1914. Since then there has been a steady increase in the number of com- munity foundations with several grow- ing spurts. One of those spurts was in the 1980s—nearly a quarter of the country's community foundations were started during the past 10 years. Today there are close to 400 in the country. Minnesota's community foundation his- tory more than keeps pace. The Min- neapolis Foundation was founded in 1915, and The Saint Paul Foundation in 1940. The two Twin Cities foundations are among the nation's largest 15 in terms of the current market value of as- sets and the amount of grants paid. Since the 1940s, Minnesota has added 11 more community foundations, generally in Greater Minnesota; five were started during the past decade. Another vehicle for community -based philanthropy is the Minnesota Initiative Funds (MIFs). These public foundations were created by The McKnight Foun- dation in 1986 to serve local interests of six geographic regions in Minnesota. A further form for community -based philanthropy is community funds. They generally serve small towns and are af- filiated with one of the larger com- munity foundations or a MIF. More than 50 community funds have been established in Minnesota within the past five years, with more developing at a monthly rate. Why the popularity of community - based philanthropy? Fred Bartenstein, director of The Dayton (Ohio) Foundation explains the appeal of community foundations to several audiences in a paper on "What is a Community Foundation Anyway?" They serve three constituents, he said. 1) For charitable donors, community foundations are cost-effective partners Minnesota's community -based philanthropy Northwest MIF Northeastern MIF •Fargo-MoarheadZ • Duluth-SupertorArw Area Fauna 1Community Foundation West Central MIF Central MIF Central Minnesota Ca'"n'u11. Minnesota Foundation Foundation • isau_ide) The SainrPaul Foundation h e Minneapolis Foundation Richfield Community Foundation loomington Conrnmity Foundation den Prairie Community Foundation Southwest MIF • Mankato Area Foundation Owatonna Foundarton, Inc. Rochenerkea Foundation • • Greater Winona Community Southeastern MIF Fotad Lion The illustration shows the Minnesota Initiative Funds (their territories are outlined) and community foundations. The 50-plus community funds are not indicated. in philanthropy. The foundations offer structure for giving and administering gifts, and their staff knows the community's needs and its nonprofit or- ganizations. The foundations offer donor recognition (or anonymity) and technical support to donors' attomeys, accountants and other financial advisers. 2) For nonprofit organizations, com- munity foundations/funds are a source of funds for routine and emergency needs. They can take risks with a grant applicant which few other funding sources will assume. They can manage endowments, investments and projects which nonprofits may not have the man- power or expertise to handle. In addi- tion they can offer nonprofits training and technical assistance and networking opportunities. 3) For the community at large, the most important function may be form- ing and preserving charitable capital. The foundationatfunds offer a place for donors to invest in their communities' futures. They nurture the nonprofit sec- tor as a whole and help integrate it with other structures. They promote philanthropy. They recognize change and convene leadership to respond to it. Minnesota community foundation staff add to Bartenstein's observation. "We can do what no other nonprofit can d"elp a donor achieve his or her charitable wishes," said Holly Sampson, president of the Duluth -Superior Area Community Foundation. The foundation can guide the donor's gifts to a field of interest, such as the arts, to a specific agency, such as the symphony or United Way, or to the com- munity in general through unrestricted funds, said Sampson. The flexibility of a community founda- tion or community fund is a major ad- vantage, according to the Minnesota Foundation, a statewide community foundation affiliated with The Saint Paul Foundation. A community foundation can accept gifts from many different types of donors, ranging from in- dividuals to government, and can make grants for any charitable purpose benefit- ing the community. For many towns or suburbs, community funds are a way to sustain community - based philanthropy without creating a new organization. "Community funds ace really a way to bring philanthropy down to small givers," said Patrick Conroy, executive director of the West Central MIF. The Minnesota Foundation and the MIFs have been in the forefront of establishing community funds. The funds receive in- vestment management, fund accounting, legal expertise and other administrative services, but maintain local control. Fund boards or advisory committees gather contributions for local purposes and award the grants. Small community foundations and com- munity funds often begin by seeking funds for a specific project, said Linda Jacobson, executive director of the Southeastem MIF. As the funds grow, residents can point to the original project and let it speak for itself, helping build a public support base. "An advantage of the community funds is that they... establish endowment so that the community doesn't have to scramble for money if a community emergency arises. The endowment is there," said Richard Lancaster, executive director of the Minnesota Foundation. The Min- nesota Foundation, itself, provides oppor- tunities for donors throughout the state to establish community funds. There are other reasons community fiords have gained in popularity in Minnesota. Investing in hometowns. Most of the 26 community funds affiliated with the West Central Minnesota Initiative Fund are geographically restricted, said Con- roy. That indicates to him that people want to invest in their own hometowns. Keeping resources at home is a concern also heard by Jacobson, who works with - three community funds and a potential fourth --all serving towns of less than 2,500 people. The estates of small town residents often go to children who have moved away, thus resources leave the community, she said. With the com- munity funds, people can make a gift benefiting the communities into which they have invested much of their lives. It may not be a large amount, but often is a portion of the estate —perhaps several hundred or a couple thousand dollars. Developing leaders. As community (Continued on page 12)