“A community is the mental and spiritual condition of knowing that the place is shared, and that the people who share the place define and limit the possibilities of each other's lives. It is the knowledge that people have of each other, their concern for each other, their trust in each other, the freedom with which they come and go among themselves.”

― Wendell Berry

What is a Community Foundation?

Community foundations are non-profit, public charities that manage funds for individuals, families, corporations, and non-profit organizations that grant money back to a community or region. These funds are often endowed; this means the principal amount remains intact while income from investments are provided in some charitable effort of the donor's choice. Differing from private foundations that are often focused on a specific topic or area of interest, community foundations are often focused on a specific geographic area.

Community foundations are typically run by a volunteer board of directors from the community, who serve to provide collective oversight of the funds and grantmaking objectives. Donors can decide if they want to make a charitable contribution in the present or as a future gift and advise how donations will be spent.

Community foundations can also offer tax savings, including the Montana Charitable Endowment Tax Credit. Community foundations encourage members of a specific community (defined by a geographic area but sometimes as a community of interest or identity) or region to engage in conversations about the present and future vision of the community. This can include discussion about current and future leadership capacities, how to strengthen relationships, build trust, and work to identify, prioritize and address the needs and aspirations of the community.

Community Foundations in Montana

The state of Montana has more than 70 community foundations, many of which are affiliated with the Montana Community Foundation (MCF) that manage the community funds, leveraging them to create a larger investment pool. It is estimated by Macke, Markley, & Binerer (2012), that between 2010 and 2060, approximately $123 billion of wealth will be transferred in Montana; if just 5 percent, or $6 billion, of this wealth transfer was captured in permanently-endowed funds, a potential $307 million could be available annually through foundations for grants to support community development. With a rapidly aging population in Montana, the potential for donations and bequests to foundations is sizeable, as is the subsequent economic development and benefit of capturing this transfer of wealth. Figure 1 compares the projected transfer for wealth in Montana, its rural areas, and the United States.

The first community foundation was created in the city of Cleveland in 1914. According to the Council on Foundations, there are now over 750 community foundations in the United States that serve an estimated 81 percent of the population. These foundations have approximately $50 billion in permanently-endowed funds and provide almost $4 billion in grants to communities each year.

The information above is excerpted from Community Foundations in Montana, published by Montana State University Extension.