What is a Community Foundation?

As defined by the Council on Foundations, a community foundation is a grantmaking public charity dedicated to improving the lives of people in a specific local area.

The first community foundation was created in Cleveland, Ohio in 1914. Today, about 900 community foundations serve diverse communities across the United States, from bustling urban centers to remote rural areas like ours.

Community foundations offer the tools and expertise to help charitable individuals maximize their giving, ensuring that their resources make the greatest impact in the areas they care about.

The Role of Community Foundations

1. Local Expertise and Immediate Impact: Community foundations have deep knowledge of local challenges and opportunities, enabling them to quickly respond to urgent needs, such as those arising from public health crises, economic shifts, or natural disasters.

2. Maximizing Charitable Giving: Community foundations provide diverse and flexible ways for donors to give, from cash and real estate to stock and other assets.

3. Sustainability and Long-Term Impact: Because of endowment funds, community foundations provide sustainable, ongoing support for local initiatives. These long-term resources ensure that vital community programs continue to thrive, even in times of economic uncertainty.

4. Collaboration Across Sectors: One of the defining features of community foundations is their ability to collaborate and convene across sectors. Whether it’s working with businesses, governments, or other nonprofits, community foundations are uniquely positioned to facilitate partnerships that drive lasting positive change in their communities.

Community Foundations in Montana

Montana has more than 70 community foundations. Many of them are affiliated with the Montana Community Foundation (MCF) to manage the community funds, and leverage them to create a larger investment pool.

Macke, Markley, & Binerer (2012) estimates 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. (from MSU Extension’s Community Foundations in Montana project)

With a rapidly aging population in Montana, the potential for donations and bequests to foundations is huge. It’s a unique opportunity to capture this transfer of wealth to help Montana communities for decades to come.

Montana Endowment Tax Credit

Montana is one of only 4 states in the US that offer a state-level charitable endowment tax credit.

Created in 1997 to build permanent financial backing for local nonprofits, the Montana Charitable Endowment Tax Credit is designed to keep local generational wealth inside Montana communities.

It encourages complex planned gifts (from individuals) and cash gifts (from businesses) by offering a dollar-for-dollar reduction in state income tax, rather than a simple deduction.

Individuals: 40% tax credit on the federal charitable deduction of a planned gift (up to $15,000/year per person).

Businesses: 20% tax credit on direct cash gifts to a qualified endowment (up to $15,000/year).