Diversify Income

The economic decline packed a double-whammy for community foundations: Assets are down and community needs are up. But, as always, community foundations stepped up to the plate to address burgeoning needs.

Community foundations have their organizational finger on the pulse of the community. They are nimble and know what to do to respond. They embarked on new fundraising to generate resources for basic needs, collaborated with other funders, and many decided to offer operating support grants to nonprofits on the front line.

When the value of assets takes a nosedive, it highlights the challenges of being heavily dependent on asset-based fees.  To help community foundations forecast the impact over the next three-to-five years, the Community Foundations Leadership Team (CFLT) engaged FSG Social Impact Advisors and CF Insights to develop an Economic Scenario Planning Model (“stress test”) to help community foundations consider the impact of various “what ifs” (market values, donor behavior, etc.) on their income, operations, and grantmaking, to help inform their budget planning process.  

On Monday and Tuesday of the conference, there were several opportunities to learn about this new tool and to start a discussion on alternative revenue sources for community foundations. There is great interest in this area, but not a lot of historical data.

Some community foundations that have embarked in this direction are focusing on new markets that can benefit from their skills and expertise, such as private foundations and corporate giving programs. However, this is an area that requires more exploration and sharing of ideas and lessons learned.

The current economy has highlighted the great strengths of community foundations as well as vulnerabilities.

Linda Raybin is the managing director of the Community Foundation Services at the Council on Foundations.