The United States has more than 900 community foundations, ranging from small organizations serving rural counties to major institutions like the Silicon Valley Community Foundation, which holds assets exceeding $15 billion. Community foundations occupy a distinctive position in the philanthropic ecosystem: they aggregate charitable giving from many local donors, manage endowments, administer donor advised funds, and deploy grants toward local priorities identified through community engagement processes. Their geographic specificity is simultaneously their greatest strength and a significant constraint on their ability to address issues that cross jurisdictional boundaries or require systemic change.
What Community Foundations Do Well
Community foundations develop deep knowledge of local conditions over time in ways that national foundations operating at a distance often cannot. They maintain relationships with local nonprofits across decades, understand the organizational landscape in their communities, and can identify gaps and opportunities that are invisible from outside. They serve as conveners, bringing together nonprofits, government agencies, businesses, and community members around shared priorities in ways that individual organizations cannot replicate. And they provide a vehicle for local donors, from modest contributors to major philanthropists, to invest in their communities through tax-advantaged giving with personalized stewardship.
The donor advised fund function of community foundations has grown substantially and represents both an asset and a tension in the field. Donors contribute assets to community foundation-managed DAFs, receive immediate tax deductions, and recommend grants over time from their accounts. This creates long-term philanthropic capital in communities. It also creates tension when DAF assets accumulate faster than they are distributed, and when donor advised fund recommendations are concentrated in institutions and causes that reflect donor preferences rather than community priorities as defined by affected communities.
The Equity Challenge
Community foundations' historical relationships with local power structures have sometimes meant that their grantmaking reflected the priorities of wealthy donors and established institutions more than the needs of under-resourced communities. A comprehensive study of community foundation grantmaking found that funding disproportionately flowed to organizations with larger budgets, older histories, and predominantly white leadership, and less to community-based organizations led by and accountable to communities of color. This pattern is not unique to community foundations, but it is in tension with the community-serving mission that community foundations claim.
A growing movement within the community foundation field, often called participatory or trust-based philanthropy, seeks to address this by shifting decision-making power toward communities most affected by the issues being addressed. This means including community members, particularly from historically underserved communities, on grant review panels. It means funding organizations that lack the grant-writing sophistication and financial management systems that traditional foundation applications require, by simplifying application processes and providing capacity-building support alongside grant funding. It means measuring success by community-defined outcomes rather than donor-defined outputs. Community foundations that have made these shifts report stronger community relationships and better intelligence about local needs.
Responding to Crisis
The COVID-19 pandemic tested community foundations as institutions and, by most accounts, revealed both their strengths and their limitations. Many community foundations mobilized emergency funds rapidly, deploying millions of dollars to nonprofits providing food, housing, and health services within days of the pandemic declaration. This rapid deployment was possible because of the long-term relationships and institutional knowledge that community foundations had built over time. The limitations that also surfaced included the difficulty of reaching the smallest community-based organizations that were most embedded in vulnerable communities but least equipped to navigate even expedited grant processes. The lessons from pandemic response are shaping how community foundations approach their emergency preparedness, community engagement, and grantmaking practices in ways that will strengthen their equity practice over the long term.
