Improving Community Vitality with Foundations and Hometown Legacies

A Project of the Community Vitality CenterMark A. Edelman, Director

Reasons to Have a Foundation:

• Concern about rural population decline & out-migration of young people

• Concern about long term vitality in many non-metropolitan areas

• CVC believes Community-based Entrepreneurship and Philanthropy Initiatives represent approaches that can re-energize Iowa Communities

Who is investing in your Community to sustain future economic vitality???

• What do people with wealth do when there are no mechanisms for giving back to their Hometown???

• Greater emphasis on having the private sector do more in the future.

Reasons to Have a Foundation:

1. Annual Transfer of Wealth (Probated Estates (1998-2002)

• Iowa: $ 4.933 billion• Local County: $_____million

• Increasingly heirs live out of area/out-of state• Non metro counties will transfer more quickly

during next 20 years• Lost opportunity for Community Vitality

What if Audubon County had ?

• 5% of Wealth Transfer annually reinvested in local Hometown Legacy Projects:

$ ___________

• 10% of Wealth Transfer annually reinvested in local Hometown Legacy Projects:

$ ____________

Reasons to Have a Foundation:

2. Endow Iowa Incentives

• Tax Credits (HF683)20% on qualifying donations to permanent endowments (subject to funding limits)

• Matching Grants (HF692)$25,000 match for applications of eligiblecertified community foundations and affiliates(subject to funding limits)

http://www.iowasmartidea.com/endowiowa/

Reasons to Have a Foundation:

3. HF 2302 Gambling Bill Distributions

• 1/2 of 1% to each county without gaming

• Must be certified community foundation or affiliate with “county affiliate fund”

• 75% allocated to grants to charitable organizations for education, civic, public, charitable, patriotic, and religious uses

• 25% allocated to permanent endowments

http://www.cvcia.org/communityfoundation/

Reasons to Have a Foundation:

4. Examples of the Opportunity:

• Joe “San Diego”

• Mark Linder

• Roberta Ahmanson

• Jane “Cherokee”

• Sev “Monroe”

What is a Community Foundation?

• CFs are non-profit organizations governed by a board of directors made up of members of the local community.

• CFs primarily collect and invest endowment capital and distribute portions of the investment earnings as grants to other local, non-profit organizations--often based on the advice of donors to the endowment.

• Some earnings are reinvested allowing the endowments to grow over time.

What do Community Foundations do?

• Nationally, donors directly advise about 80 percent of CF grants.

• CFs allow local non-profits to pool their own endowments in the CF portfolio often at a higher return and to receive annual earnings of 5%

• CFs often attract donors who want to leave lasting legacies in their hometown communities by contributing to specific interests, while receiving maximum tax advantages.

Is your Community Organized?

Step 1: Identify all local foundations & Charities • Begin to communicate, collaborate, fill-in gaps,

and improve philanthropy performance

Step 2: Determine Approach • Create a Certified Community Foundation

• Affiliate with a Certified Community Foundation

• Develop an Independent Community Foundation

Considerations Regarding Iowa Philanthropy Incentives

To Be Eligible For • Endow Iowa Incentives and• HF2302 Gambling Revenue Distributions

You must have access through (1) a Certified Community Foundation or (2) an Affiliate of a Certified Community Foundation

Other nonprofits can request and indirectly receive the grants from the local CCF or Affiliate

Why Affiliate?

• Legal, Accounting, & Financial Management handled by Host Certified CF

• Frees-up local leaders to raise funds and make local project decisions.

• Provides access to expertise for fund raising, marketing, and donor communications

Considerations

• Costs associated with Certification

• Perceived ability to professionally manage funds

• Confidence that objectives will be met

• Willingness to give up some control over financial management of funds.

• Attitude over local deposits and multipliers

Evaluating Certified Community Foundation Affiliation Opportunities

• Compatibility of Mission, Culture, and Region

• Financial Returns, Reputation & Track Record

• Investment Risks, Fees and Charges• Review of Affiliation Agreement and Control

Over Local Funds• Availability of Services and Training• Access to Expertise for Fund Raising,

Marketing & Management• Procedures for Portability of Endowments

General Best Practices

• Respected board with broad representation of diverse community interests in area served

• Identification of Strategic Community Initiatives with donor appeal that can make a difference

• CVC recommends some focus on Community Entrepreneurship and Philanthropy Initiatives to help sustain community vitality long term

A Sample Community Foundation (Affiliate) Board

• Attorney

• Banker

• Accountant

• Community Economic Development

• Extension Council Member

• Community “Spark Plugs”

Organizational Fall Back Position

• In counties where no countywide Community Foundation Affiliate emerges as an eligible gambling revenue recipient, CVC will ask local County Extension to organize the suggested Affiliate Board and host a countywide affiliate fund so as to provide a distribution mechanism for all local non-profit organizations in the county.

Specific Best Practices

1. Annual Luncheon for attorneys, bankers, financial planners, & accountants to highlight local successes & provide resource notebook of all local charities

2. Use board to identify and make donor contacts

3. Provide donors with a choice of projects and information about easy ways to give

4. Newsletters, brochures, and web sites to attract potential donors and keep them in touch

5. Regular fund raising events, campaigns, phonathons, etc.

Words of Wisdom

• Move from “Squabble” to “Collaboration”

• Keep your eye on the prize: Community Vitality

• Inspire Donors to help make a difference in their Hometowns

Reasons for Action:

Do you have mechanisms of contact and attraction for your community’s:

• Joe “San Diego” • Mark Linder• Roberta Ahmanson• Jane “Cherokee”• Sev “Monroe”

Now let’s hear from you.

What are your experiences and what do you see as next steps?