Capital Region Cares Capital Region Cares 2017-2018 | Page 138

n
Feature
W
hen an earthquake struck Napa Valley in no Community Foundation. “That’s how we stay alive for
August 2014, destroying homes and busi- the most part.” A fee is processed after a donation is made;
nesses, injuring 200 people and killing one, community foundations try to get over a 5 percent return
residents rallied to support their neighbors, just to continue getting by.
The higher the returns a community foundation gets
donating almost $11 million to the Napa Valley Communi-
from investments with its dollars under management, the
ty Foundation.
The foundation gave $5.4 million to support almost 1,400 more money it can put into local philanthropic efforts. San
quake victims, $1.1 million to 23 local nonprofits providing Joaquin ranges between 6-9 percent, depending on the
aid and $800,000 to community preparedness services. year. Amador reported an eight percent return in 2016.
But in the last 15 years, new technology and private in-
They’ve set aside $2 million for any future natural disasters
vestment/financial firms are offering the same service as
in the region.
It was a prime example of the way in which a community community foundations’ most common source of income
foundation — connected deeply to its region’s philanthro- — donor-advised funds — for a fraction of the price.
A 2017 study titled
pists and nonprofits —
“Community Founda-
will identify an urgent
tion Business Model
local need and rally the
Disruption in the 21st
community to action.
Century”
commis-
But is it enough?
sioned by the Council
A growing chorus
on Foundations, posits
believe market disrup-
that community foun-
tion has left the indus-
dations have histori-
try’s business model
cally processed their
in jeopardy, and chal-
clients’ funds through
lenges in community
local financial advisers
outreach and attracting
who typically charge
younger
philanthro-
about 1 percent of the
pists continue to act as
managed dollars. But
barriers for the modern
— Veronica Blake, CEO, Placer Community Foundation
the industry has seen
community foundation.
a mass shift of folks
Do these communi-
moving to online and
ty-based organizations
have what it takes to survive and thrive in the 21st century? automated financial services, some of which charge as lit-
tle as .18 percent. Financial behemoths like Fidelity and
Vanguard are engaged in a price war expected to benefit
THE FUTURE OF PHILANTHROPY
Community foundations often describe themselves as a re- investors.
The smaller, local financial advising firms with knowl-
gion’s savings account or 401(k). They take in large funds
from philanthropic donors, hold onto them in perpetuity edge of the region — which community foundations are
and then distribute the money accrued on the funds to used to working and building relationships with — simply
nonprofits and philanthropic efforts serving the region’s cannot compete with the larger firms’ rates.
“The scale that they’re operating at is massive com-
greatest needs. They differ from private foundations in
both organizational structure and the tax breaks donors pared to a relatively small community foundation,” says
are eligible for on their gifts — with the added benefit that Daniel Kaufman, co-founder and principal of Third Plateau
foundations often already know the biggest needs in the Social Impact Strategies, of Sacramento. “Their market is
international, most community foundations are local.”
community.
“We live on the administrative fees that come from the Such economies of scale make room for lower processing
funds that we hold,” says Connie Harris, CEO of the Sola- fees — often lower than any local firm could match.
“We’ll never compete on price,
but I think that the service
that we provide to donors
and the connectivity to the
community is why donors do
use community foundations.”
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