Convene, Connect, Endow: Community foundations in the 21st century

Peter Hero

As the community foundation movement grows, so its capacity to effect change increases. To do so, however, it must itself be prepared to change and be responsive to new philanthropic trends. It should not rely solely on traditional endowment-building, but should use its local influence and leverage in a three-part strategy to convene, connect and endow.

What follows falls into three parts. I’d first like to discuss several significant trends which I believe are affecting philanthropy globally, simply to set some context for where we are now, nearly 100 years after the first community foundation was created. I want then, based on 17 years growing a community foundation in Silicon Valley, to discuss some new and emerging dimensions of community foundation civic engagement. I don’t pretend that Silicon Valley is exactly like Glasgow or Aberystwyth, but I am suggesting that each community foundation’s unique capacity to convene, connect and endow – in the broadest sense of these terms – represents an opportunity for you to grow your foundation more vigorously and, far more important, to better serve your communities here.

Finally, I’d like to enumerate a short list of what I call ‘success factors’ which might accelerate your foundation’s evolution toward organizational effectiveness, community impact, and even greater assets.

Some important philanthropic trends

There are three global trends which I think are helping to shape 21st century philanthropy.

The growing number of community foundations
First, of course, is the remarkable increase in the number of community foundations. According to a Wings-CF study, there were nearly 1,200 community foundations worldwide in 2004, and there are now 42 countries with community foundations. In Silicon Valley we are seeing community foundations becoming trusted intermediary partners for diaspora giving and especially corporate giving. There are, for example, over 150,000 Indo-Americans in Silicon Valley, and some of them work with my foundation to guide funding back to community foundations in India. Meanwhile our corporations seek out trusted intermediaries globally, most recently Adobe Systems connecting through my foundation to the Thames Community Foundation in London.

In my region 40 per cent of all individual donor contributions go to charitable organizations outside the area, many of them overseas. Roughly 5 per cent of my foundation’s grants, about $3.5 million, now goes overseas, and the percentage is increasing. While acknowledging that we are on the leading edge of this trend, I believe other community foundations in developed countries will begin to follow suit, as their donors, corporate and individual, become global givers. According to the Foundation Center in New York, American community foundations quadrupled their overseas donations in the last 5 years, despite the Patriot Act.

Accelerating private wealth
A second major trend is the accelerating privatization of wealth in developed countries, which is creating vast new resources for both individuals and corporations. Fifteen years ago there were 13 billionaires in the world; today there are 300, with Bill Gates’ personal wealth exceeding the national budgets of Vietnam or Kuwait. Part of the wealth will flow into philanthropy locally and, increasingly, globally.

This aggregation of wealth represents a challenge and an opportunity for us: the opportunity for the global community foundation movement is to encourage and facilitate the wise and equitable charitable deployment of this wealth. The challenge is to collaborate and work effectively together. Outside funding sent to underdeveloped countries is increasingly private not public. In 1970, 70 per cent of all investment in developing economies came from government and 30 per cent was private, from foreign direct investment. In 2004, the corresponding figures were 20 per cent and 80 per cent.

The recent massive tsunami relief effort reflected this emerging funding pattern. The tsunami also created a burgeoning interest in Thailand, and elsewhere, in establishing new community foundations to create trusted and dependable charitable intermediaries for future needs, including disasters. The same local interest emerged in India after the Gujarat earthquake four years ago.

Rapid technological change
My final global trend is the tremendous pace of global technological change. One statistic will do. In 1991 there were roughly 16 million mobile phones in the world; 13 years later there were 1.5 billion. An estimated 23 per cent of the global population owns one, and most owners are in underdeveloped countries. We now live, or soon will, in a fully connected, interdependent  world, with ‘smart mobs’ connected by mobile phone and text messaging, which are sparking abrupt political change by ‘swarming’ around political movements, ideas and individuals. Think about recent developments in Ukraine for one example of this phenomenon. There will be more.

Philanthropy, too, is becoming more connected. International giving in  the US is rising, and it is increasingly guided through community-based intermediaries, community foundations, which can develop and guide civil society locally, while they also connect developed countries (and their philanthropists) with less developed countries and their needs.

Convene, connect, endow

In view of these trends, how might community foundations evolve in order to better serve their communities?

In 1988, I came to a virtually unknown community foundation in a region of 2 million ethnically diverse people living in 15 cities. There was very little sense of community identity. We had just three staff, barely $7 million in assets, not enough administrative fees to cover our annual overhead, not enough grant money to create a significant impact, a tired Board of Directors, and a local reputation as a fundraiser rather than a fund-giver.

I consulted with the then-sages of the field. I was told that my job was to raise the maximum amount of discretionary unrestricted permanent endowment, to create a long-term legacy fund. How, I asked? By somehow convincing donors to hand over their wealth for us to give away locally, and to put our foundation in their estate plans. Then you wait for them to die. I had few dead, and no dying, donors as far as I could tell. What donors I did have were young, smart, idealistic, very busy, and relatively new to their wealth. I also found that they often had good ideas of their own and were very hands-on. The last thing they wanted to do was to give away their wealth to some other agency to distribute on their behalf. In other words, the 75-year-old model of the original Cleveland Foundation was not entirely relevant to Silicon Valley in 1988.

So I set out to construct not a legacy endowment grantmaking organization, but, instead, one which was open-source and accessible to all living donors, NGOs, corporations, and government. We established an organizational culture based on participation and collaboration. We became, over time, a centre for philanthropy.

While we gave grants, and still do, I soon realized that the greatest assets of my foundation lay in the capability to:

  1. be an apolitical objective third party convener;
  2. be a mechanism to connect disparate parts of the community, especially donors; and
  3. endow the community, not simply with a financial endowment, but with new institutions, increased civic leadership, and stronger, self-sustaining NGOs.

In other words, at Community Foundation Silicon Valley we set out to transform our community in ways that would leave a permanent legacy, even if we suddenly went out of business. I want to explore these three themes, convening, connecting and endowing, through my own experience.

Convening

A community foundation, especially one with a good, strong, broad-based and representative Board of Directors, can often work in that space between government, the private sector and NGOs. By using relatively inexpensive research tools, the foundation can explore and reveal the most pressing local issues, create and organize collaborative solutions, and gain significant media exposure in the process.

No serious entrenched community problem can be solved by one sector alone. But the foundation can engage and draw on each. As an instance, in America, all commercial banks are required by the Federal Reserve System to loan money in blighted neighbourhoods, called ‘red-lined’ areas. Usually they lose money doing so. In  our area, we knew and worked with neighbourhood leaders, local neighbourhood associations, and good NGOs working on small business development and low-income housing and we convened the banks and helped them create ‘Lenders for Community Development’, a for-profit consortium, incubated in our offices, and now, ten years later, spun out on its own. A small initial $3 million shared loan pool has today grown to more than $30 million, and LCD now annually pumps millions in corporate loans and grants into our most impoverished areas. The banks like it; by sharing risk they actually make a modest return. The NGOs and community now have a new financial partner, and my foundation gained new donors and more resources and is  having greater impact

We later went on to convene our ten major cultural institutions and, together with local government, corporations and foundations, enabled them to create a $12 million shared endowment and working cash reserves, housed at my foundation. It was the first time that these organizations had ever formally collaborated.

Each of these endeavours also stimulated more local giving, became a platform for public (and media) discourse on important local issues, brought money into the region from outside, and advanced public policy. Each also built our endowed assets, contributed to our overhead, increased our visibility and, most importantly, demonstrated the unique role of the community foundation in the region.

Connecting

Traditionally community foundations approach the connecting role from the angle of connecting donors to the  community – taking donors on site visits, providing information about worthy local NGOs, etc. And certainly these services are important, particularly to people with newer wealth who may not yet have a well-established giving strategy.

But our donor research tells us that donors also want to be connected with each other, to leverage their giving with others, meet those with similar interests, trade ideas, and create networks. Five years ago we started a more formal mechanism to do just that. Sv2, the Silicon Valley Social Venture Fund, is like a charitable giving circle. Donors put in from $2,500 to $25,000 each year and then meet, and work with, other donors – and foundation staff – to research and award two large grants each year. Today we have nearly 200 members (we call them ‘partners’), and we’ve given away nearly $2 million. Sv2 donors meet in a peer-based environment, learn from us and each other, and in the process develop enormous generosity. Now donor circles are springing up all across America. Ten years ago there was just one, in Seattle.

There is also the opportunity to connect parts of the community to other parts.  A community foundation can show NGO leaders how to increase the size of the funding pie rather than simply seeing other NGOs as competitors for a fixed-size pie. We recently began to analyse how our donor-advised grants cluster around certain non-profit agencies in certain disciplines. We will invite the leaders of those agencies, most of whom, surprisingly, have never met each other, and the donors (who likely have never met one another either) to a breakfast meeting in which they, collectively, might conceive a much larger multi-year project which benefits each agency far more than would have been possible alone. The community foundation’s role is to facilitate, connect, and help guide the work. No other entity can do that.

Endowing

When the first community foundation started in Cleveland in 1914, the city was the Silicon Valley of the Industrial Revolution. Fifty years later, in 1964, Cleveland was a blighted, run-down city, its rust belt industries collapsed and its river so polluted that it would, on occasion, spontaneously burst into flames. But by then the community foundation had aggregated millions of endowed dollars and was able to help lead the city to better times by convening, connecting, and funding.

So, endowment is good. And in this case more is always better. But it is very difficult to obtain and it takes many years. In the meantime, if you concentrate solely on building financial endowment, you can miss other highly useful opportunities to serve your region. I suggest there are other ways to ‘endow’ a community. One is to help launch new organizations as we did with Lenders for Community Development.

Another is to target your limited grant funds on capacity-building and organizational development funding for NGOs, not just on one-time short-term projects. I would argue that if you make NGOs stronger as organizations, they will make your community stronger. Rather than trying to simply assess and screen out the least worthy grant applicants, there is an opportunity to be proactive, to find the best, to connect and nurture them, to encourage efficient collaborations and create an open-source problem-solving space for the future growth of the NGO sector.

You can also endow your community with new leadership, for example, by reaching out to youth. Show them how to be philanthropists with their time, energy, idealism and commitment. They will carry and transmit these values for years to come. Like some other American community foundations, each year we provide teams of youth-at-risk (often former gang members) with a pool of grant funds and let them experience the difficulty and satisfaction of supporting the charitable work of others, most often their youth peers. Their lives and behaviour are changed in the process. With them our foundation is convinced it has put its local footprint – and legacy – where it will last.

Strategies for success

Finally, I want to make a few very simple observations on what I call ‘success factors’ in the convene-connect-endow strategy:

  • Just start.
  • Be patient. Commit to strategies for 3-5 years. We are building our foundations to last in perpetuity and perpetuity is a very long time.
  • Build your Board of Directors. Find committed leaders with a broad view of the community and without a special agenda. Make them advocates and evangelists. If they are not, who will be? Your Board is one of your most important assets. Their enthusiasm and advocacy will bring in others. Is your foundation in the estate plans of each of your Board members? It should be. If not them, then who?
  • Don’t overlook professional advisers: accountants, attorneys and financial managers. They often know who your potential donors are and when they might be ready to give. They are collectively an enormous asset. Our largest gifts, by far, have been referred to us by advisers from people we had never met.
  • Embrace change. Remain entrepreneurial and organizationally flexible. But even as you change, never abandon your principles or your commitments. They are your compass. Stand for something and say you do.
  • Fly close to the ground. Also consider grassroots grant funding of small neighbourhood associations and informal citizen groups, as well as established NGOs. Public funding is like a huge oil tanker – massive but very hard to turn or stop. Community foundations, by contrast, need to be nimble, fast, responsive. Take risks. Be an early warning system for emerging community needs.
  • Always use good, simple, timely research. It need not be complex and expensive, but data can make your foundation the place to go when there is public interest in philanthropy and community needs. Find ways to monitor community indicators periodically and use them to hold a mirror up to your community.
  • For example, eight years ago we helped research and create a ‘Children’s Report Card’ on the health, safety, education, and economic status of our children. We found that 25 per cent of them, in one of California’s richest regions, lived below the poverty line. We convened NGO, government and private sector participants to create collaborative strategies of their own design to ‘raise the grade’ of certain agreed-upon priorities, starting with child healthcare. Out of their work has come much higher impact social programmes and a new child advocacy NGO called ‘Kids in Common’.
  • What differences are you really making and how do you know? Find new ways to assess your work. The community change you create may not be measured in simple numeric terms. Often in our work what’s easiest to measure – by quantitative means – is least important. So go beyond, for example, simply how many persons are served to more important measures like indicators of civic engagement, changed attitudes, greater consensus among diverse constituencies, and evidence of increased social justice.
  • Finally, tell stories, not statistics. With all the information technology at our disposal, in the last analysis, people still give money to people and your current donors are your best sales force. See that they know plenty of your stories. Last year two-thirds of all our charitable contributions came from current donors adding to their funds with us. Don’t waste too much time and money on expensive advertising campaigns. Your foundation will never be a household word, but if your Board and donors are raving fans and spread the word in their respective spheres of influence, then other key stakeholders will hear about you, and your foundation will inevitably become the centre for philanthropy in your region. It’s people connecting with other people.

As a footnote, you may be surprised to know that, in America at least, the two most significant reasons why people do not give to charity is because either they were never asked or they were never thanked.

The new dynamic and entrepreneurial community foundation of the 21st century, I believe, will aggregate the resources, assemble the players, gather the data, and promote the values of civil society which enable an entire community to solve its own problems. Not in a top-down manner, and not simply with a giant financial endowment or huge grants, but with these assembled resources working together.

John Gardner, founder of America’s citizen action group ‘Common Cause’, and a long-time member of the Advisory Board of my Foundation as well as my mentor, once wrote, in connection with the intricate process of community building, ‘What we have before us are breathtaking opportunities disguised as insoluble problems.’ His optimism, and those breathtaking opportunities, I believe, characterize our 21st century global community foundation movement, and they give me great optimism for the future.

Peter deCourcy Hero is President and CEO of the Silicon Valley Community Foundation. He can be contacted at hero_peter@gsb.stanford.edu

This article is based on a speech Peter deCourcy Hero made to the Community Foundation Network conference in Edinburgh, Scotland, 19-20 May 2005. The full speech is available on the CFN website at http://www.communityfoundations.org.uk


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