Unit 6 Grantmaking & Community Leadership

1. Community Foundation Basics For Board Members Unit 6Grantmaking&Community Leadership

2. Grantmaking • A distribution from any type of fund for a charitable purpose is a “grant” • Generally, a community foundation uses the term “grantmaking” to refer the process of deciding on distributions from the unrestricted funds and field-of-interest funds • Usually, this a fairly open, competitive process • The “5%” rule doesn’t apply to community foundations; only private foundations

3. Types of Grants • Operating-grant for general operations of a nonprofit • Program support-to fund an existing program or start a new one • Capital-structures, furnishings or equipment • Capacity-building-to improve the functioning of a nonprofit • Planning grant • Program-related investment-using investment dollars to provide value to your community

4. Grant Program Goals(You have to choose) • Be knowledgeable about community needs and opportunities • Talk about the nonprofits in your community, their role, impact and their challenges • Think about what you want to achieve with your grant dollars before the proposals come in • Are you interested in supporting: • Programs for particular populations? - youth, seniors • Particular sectors? – basic needs, education, arts • Think about how the funds you have can make the most difference

5. Grantmaking There Are Two Primary Types of Grantmaking: Responsive grantmaking • Community foundation “responds” to community requests • Open process, broad criteria • Keep foundation connected to their community Proactive/strategic grantmaking • Community foundation decides in advance the type of grants it wishes to make; narrow criteria • Typically uses an RFP or other invitation

6. Respect your Applicants and Grantees • They are partners in achieving our mission • Understand the power differential • Try to understand the reality of their world • Keep your proposal and reporting in balance with the resources you provide • Communicate in a timely fashion

7. Pension Protection Act of 2006 Why? • Senate Finance Committee concerned about abuses in the charitable sector including: • Abuse of donor advised funds • Control by donors over scholarships • Personal benefit by donors What? • Defined Donor Advised Funds (“DAFs”) for the first time • Distinguished DAFs from “single” advised funds and scholarships with donor advising • Delineated key aspects of due diligence for expenditure responsibility • Created the IRA Charitable Rollover

8. What is Expenditure Responsibility? Reasonable and prudent due diligence to confirm that a grant is used for qualified charitable organization, purposes and/or programs. Two ways of exercising expenditure responsibility are: • Documenting that you are granting to a charitable entity, that is, a 501(c)(3)/509(a) • Taking on additional documentation and reporting requirements when you grant to a non-charitable organization for charitable purposes. This is typically called “taking expenditure responsibility.”

9. Scholarship Funds • Pension Protection Act (PPA) created many new requirements for the administration of scholarship funds • Most particularly, donor may not control the distribution of scholarships • For more information, contact the GIFT office or access recorded webinar on the PPA

10. Community Project Funds • A group of individualsdetermine a solution to a community need (grassroots project) • The group does not have 501 (c)(3) status • They want to use the community foundation as an umbrella for donors to make charitable gifts • Fund agreement required, stating charitable purpose or program • Can be a one-time project or a new program • Grants made to vendors for specific charitable purpose or program • Determine liability issues • Expenditure responsibility required • Community foundation is operating the program directly

11. Fiscal Sponsorship: Acceptable • An organization determines a solution to a community need (grassroots project) • The group does not have 501 (c)(3) status, could be a mutual benefit organization, etc. • They want to use the community foundation as an umbrella for donors to make charitable gifts • Fund agreement required, stating charitable purpose or program • Can be a one-time project or a new program • Grants are to the non-charitable organization for the charitable purpose or program • Determine liability issues • Expenditure responsibility required

12. Community Leadership Community foundations have knowledge, connections, influence and resources that can be used to for positive change in a community - however Every community must assess its capacity for leadership before jumping into this role. Building Blocks of Community Leadership (from CFLeads) • Values, culture and will • Relationships • Resources • Understanding and skills

13. Levels of Community Leadership Levels of community leadership listed in order of increasing complexity/risk: • Community engagement • Bridge for communication • Provide a product or service • Proactive grantmaking • Community convener • Community initiative

14. Community Engagement Example • Participating in community activities and organized by other groups or institutions • Sponsor a community event or activity Considerations • Easy to do • Everybody wants the CF “at the table” so be cautious about overextending • Good way to learn about community, forge relationships

15. Bridge for Communication Example • Bring together a few grantees with similar missions to create relationships Considerations • Fairly easy to do; not much risk • Do a little background work to make sure you are not walking into some bad history

16. Provide a Product or Service Examples • Provide training or other capacity-building opportunity for not-for-profits • Host a speaker on philanthropy or more specific topic Considerations • Involves additional cost and staff time • More public visibility • Not much risk • Speakers can be a draw for prospects and donors

17. Proactive/Strategic Grantmaking Example • Allocate a portion of unrestricted grantmaking to a particular area, need or opportunity Considerations • Constructing the “strategy” and defining intended results can be positive but time-consuming • Moves into a more political arena both internally an externally

18. Community Convener Example • Organize a community meeting to discuss an issue or opportunity Considerations • Much more public • Needs considerable preparation to go well • CF will be perceived as having some ability to follow through on whatever happens • Think about the end game

19. Community Initiative Examples • CF declares it will address a particular issue Considerations • Enables CF to engage broadly and demonstrate a major “value add” to the community • Requires significant investment of time and money for which there is likely no revenue stream • Very public; CF reputation can suffer if problem is not “solved” • Possible donor alienation • Possible political controversy

20. 4 Important Aspects of Grantmaking • Grantmaking Guidelines: What Should They Contain?

21. How would you describe the goals of your grant program? What is your balance of responsive and proactive grantmaking? What community leadership roles feel most appropriate for your foundation at this time? Has your board discussed policies regarding expenditure responsibility or compliance with the Pension Protection Act?