Working With Big Endowments : Community Foundations Reaching Out

When the Ford Foundation decided to lend a helping hand to AIDS patients and their families, it found that even with its billions of dollars, it couldn’t handle the project alone.

It sought the help of much smaller community foundations, nonprofit organizations that are becoming important players in philanthropic work across the country.

“In the last five years, community foundations have come of age and are being recognized for their potential and what they’re doing,” said R. Malcolm Salter, director of the Hartford Foundation for Public Giving.

Since a group of bankers started the first community foundation in Cleveland in 1914, many of the organizations have been content to sponsor local activities such as planting flowers or supporting the symphony.

Increasingly in recent years, community foundations are being called on to tackle more serious issues, such as AIDS. Their leaders attribute this, in part, to the Reagan Administration’s promotion of volunteerism and reductions in federal spending on social services.

Community foundations now make up the smallest, but fastest-growing sector of the Council on Foundations, a Washington-based group that represents most of the foundations.

There are about 325 community foundations and another 20 are in various stages of organization, according to council officials. The combined assets of those groups are estimated at about $4 billion, and they awarded grants totaling about $300 million last year.

Ford, with assets of about $5.5 billion, made grants totaling $204 million in 1987, said Joanne B. Scanlan, who directs the council’s effort to bolster community foundations.

The Hartford Foundation is recognized as a leader among community foundations in both size and activity. Its assets of roughly $125 million make it the sixth largest in the nation. It disburses out about $6 million annually to various Hartford-area projects.

The wealthiest of the community foundations is in New York, followed by foundations in Cleveland, Chicago, Boston, San Francisco and Hartford. New York’s foundation has assets of about $500 million; Cleveland’s is worth about $450 million, Scanlan said.

Unlike the United Way, which must solicit each year for specific causes, community foundations have endowments from which they draw earnings to support their grant programs.

A donor can have a long-term impact, since it is the interest on a gift, not the donation itself, that produces income from year to year, said Tom Smith, the Council on Foundations’ public affairs director.

The Hartford Foundation is unlike most other community foundations in the value of its assets and the fact that 91% of its funds are unrestricted, meaning it can use those assets to make grants to any project, Salter said. Most other foundations are limited to supporting very specific projects, he said.

“The foundation is particularly blessed to have most of its funds unrestricted . . . which gives the distribution committees now and in the future the discretion of where the money can best go,” Salter said.

For instance, the foundation has a $3.5-million project to combat poverty in Hartford. It also grants millions of dollars more to local hospitals and civic organizations, as well as the symphony, arts groups and colleges.

The Hartford Foundation’s recent experience exemplifies what is happening to community foundations around the country, particularly in terms of demand.

Applications to the foundation were up 28% this year from last, and the amount of money requested was up 70%. In the last eight years, the foundation has given out $34 million, compared to $25 million in all of its first 40 years.