At first sight Central and Eastern Europe might not seem to present promising conditions for US-style community foundations, dependent as they are on the support of committed local people with money to give away. But a community foundation can offer a way of involving local people in the community and creating a culture of giving to charitable organizations.
On a visit to the United States in 1994, I accompanied a Slovak called Juraj Mesik to look at some community foundations in California. Juraj was at that time (and still is) director of the Environmental Partnership, an environmental grantmaking fund. He had heard and read about community foundations and wanted to see if they could be adapted to his own country, Slovakia.
During our visit, we learnt about the start-up of community foundations and their development. We heard about the wealth of individuals and the American culture of giving. We were also introduced to patterns of endowment-building – endowment is typically a key feature of a community foundation; it requires long-term development and a constant flow of donors. In other words, community foundations were supported by people with money, and the inclination to give it away. It was 1994, and I wasn’t quite sure that Slovakia — or indeed anywhere in Central Europe — had enough people yet with either distinction.
Rebuilding social capital
Juraj, on the other hand, saw an initially more important role for community foundations, as a means of rebuilding social capital – a term which implies the strengthening of communication and networks among a variety of diverse citizens and stimulating greater citizen participation and local problem-solving. Anything to address the communist legacy of learned passivity and dependence upon the state was going to be most successfully addressed at community level.
Juraj returned to Slovakia, talked with community leaders and found financial backing from local government. With additional support from foreign and private donors, he and others launched the Healthy City Foundation (HCF) in Banska Bystrica – the first Slovak community foundation. Under the leadership of its director, Beata Hirt, it has been able to research local issues and problems, hold a variety of fundraising drives and events, fund specific and visible projects, and thereby engage a whole variety of citizens in the life of the town who might otherwise not have been active at all. The foundation has been key in developing partnerships between non-profit, business and government sectors. True, it struggles with its long-term financial sustainability, but it has managed to lay a base for giving, even if philanthropy on a Western scale remains elusive.
Whereas a key motivation for the establishment of a community foundation in the UK, for example, is often initially to increase the pool of funds available to the non-profit sector, in Banska Bystrica’s case a strong impulse was to create an environment in which ordinary people could develop self-help and confidence and thereby stimulate citizen participation in public affairs.
Adapting a model
What does this experience of attempting to transplant the community foundation model from the US to Eastern Europe tell us about the possibilities of transplanting a tried-and-tested model to a very different environment? About finding the right balance between preserving the essential elements of the original model and allowing it to be adapted to local culture and needs?
Adaptation is not always easy – some communities in Central and Eastern Europe have been tempted to look at importing the community foundation concept but in reality simply want a local fund for local projects. Endowment-building, often viewed as a measure of a community foundation, has seemed either too difficult or inappropriate to their needs. The organizational structure and role of community foundations also vary greatly in the region. The term ‘community foundation’ has therefore tended to be applied much more loosely than it has in the West.
Building a resource base
If we take just one of these differences – the resource base – we see how difficult adaptation of a model can prove. Fundraising for community foundations in the region is a huge challenge. Corporate giving is in its infancy, government support is not always transparent or easily accessible (although improving), and until recently there was negligible personal wealth – still less the habit of giving it away through charitable institutions (though giving to family and friends has always been part of the culture). In addition, non-profit legislation has often severely curtailed the scope of foundations to manage and invest charitable assets, while the investment opportunities offered by local financial institutions have been very limited.
In taking this concept abroad the challenge is therefore to find local donors, and many different ones, with a long-term commitment to the community foundation. A broad donor base is at the heart of the community foundation concept – and all of them, small or large, are important not only for their financial contribution but also as part of the effort to increase trust and involvement in community matters.
Many community foundations in Central and Eastern Europe are beginning to build this local support base, but in the meantime nascent community foundations will continue to need non-local funding and technical support in order to survive. The reality of the region is that this is likely to mean foreign funding. Technical assistance to help develop giving and philanthropy have proved to be vital, as well as assistance to undertake a proper assessment of local conditions, national tax laws, capital investment issues and public relations.
Despite the obstacles, the Healthy City Foundation has a solid reputation and is acknowledged to be one of the most experienced community foundations in Central and Eastern Europe. Local involvement in the foundation from the start was crucial to its success, as was the ability of Juraj and Beata to communicate the realities of the local situation effectively to Western donors.
Clare Brooks is Network Development Manager at the Association of Community Trusts and Foundations, UK.
What is a community foundation?
A community foundation is an independent philanthropy organization working in a specific geographical area. Over time, it builds up a collection of endowed funds from many donors for grantmaking, and provides services to those donors (such as assistance with tax-effective giving, advice on local needs and charities, and charitable fund management). It also makes grants and undertakes community leadership and partnership activities to address a wide variety of needs in its area. Flow-through funding is also managed by community foundations.
Community foundations were first established in the USA approximately 85 years ago. There are now 500 of them managing billions of dollars of assets for charitable giving. Community foundations in the UK started to develop 12 years ago and there is currently a network of about 50 established and emerging ones. The community foundation concept is taking root in many other countries, particularly in Central and Eastern Europe and South Africa.
Community foundations go international
Why would a community foundation start international grantmaking? Isn’t this almost a contradiction in terms? This depends how you define a community foundation.
The Community Philanthropy Network Meeting in Berlin on 10 November struggled to define the term. One offering was ‘an independent local resource assessing local needs and mobilizing resources for them’. But some people felt that the idea of assessing local needs was a bit Big Brotherish. An alternative is to see community foundations as ‘encouraging local people to contribute to supporting what they think is right’. The trouble with this definition is that it seems to limit the voice of the community to those of donors; shouldn’t the whole community, even those who can’t give, be involved in assessing needs?
An aside: Mott President Bill White’s story of the 11-year-old boy who collected 1 million pennies — $100,000 — towards poverty alleviation serves as a reminder that everyone has the ability to give.
If you see a community foundation more in terms of working closely with donors, international grantmaking begins to make more sense. As people are more geographically mobile, they may want to give back to their home country not just to the community in which they actually live. People are also more global in their interests, more aware through the media of what is happening in the rest of the world. Peter Hero, director of Silicon Valley Community Foundation (SVCF), said that 40 per cent of SVCF money leaves the area.