Community foundations

Community foundations are charitable funds established and managed by local people to meet the needs of their communities. They bring together donors from all walks of life to support local priority needs, involving people in developing their community.

Community foundations build permanent financial assets. They are catalysts for place-based change – from rural areas to regional towns and major cities.

They offer a sustainable model for philanthropy. They raise money – some of which is invested to build a permanent endowment – and they make grants to local causes and charities. Local volunteers lead the community engagement, stewardship of funds, and operations management.

Philanthropy Australia is committed to supporting Australian community foundations to grow and develop. We have a special membership rate for community foundations in their early stages of development. Learn more about our membership.

We also recognise the key role community foundations play in our strategy to double giving – see our A Blueprint to Grow Structured Giving.

Key characteristics of community foundations

Community Foundations have the skills and structures that make it easy for anyone to donate to local causes and charities in the most effective way. For example, individuals, families, businesses or groups are often able to establish ‘sub funds’ within community foundations to organise their giving. Or contribute to a shared pool of funds set up to support a particular area.

The option of setting up a sub fund makes structured giving more accessible. This is because the entry point to set up a sub fund is between $2K and $50K. Whereas to start a private ancillary fund, it’s recommended you start with $1M.

The community foundation model adapts to local needs and circumstances. Community foundations share a number of key characteristics – they:

• are incorporated organisations
• are grant making, public charities
• operate for the benefit of specific communities, usually defined by geographic location
• are governed by a board of directors who are connected to the community and appointed in a transparent process
• raise money and make grants for a wide range of community needs, causes, and organisations
• identify local challenges and engage the community in finding solutions
• attract funds from many donors with diverse interests
• manage investments to grow a charitable fund for long term community benefit
• are independent of political parties, religious institutions, corporations, high net worth individuals or families.

Source: Community Foundations Australia

How community foundations are funded

Community foundations attract tax-deductible donations to their public fund and build a capital base – known as a corpus. A corpus is a fund of money invested in perpetuity – or forever. This fund provides a permanent and growing source of funding.

The income earned each year is returned to the community as annual grants to deductible gift recipients or other tax-deductible entities – such as those important organisations delivering services for homelessness, education or environmental causes.

Community foundations can also support wider charitable purposes through their governing charitable company or trust.

To learn more about community foundations, see Community Foundations Australia.