Growing Local Philanthropy:
The Role and Reach of Community Foundations

About the survey

Read about the background and methodology of this survey.

Incidence and growth of
geographic component funds (GCFs)

Geographic component funds (GCFs) are a widespread phenomenon. Of the community foundations responding to the survey, almost two of every three (64%) currently have at least one geographic component fund—and this percentage is even higher among those foundations that serve rural areas.
GCFs are plentiful. Overall, the 241 responding community foundations reported having a total of 1,079 GCFs in mid-2004. Since the sample of foundations that answered the survey (36% of the field) is roughly representative of the total community foundation population, this means that the total number of GCFs affiliated with U.S. community foundations quite likely exceeds 2,000 and could be as high as 3,000.
GCFs have exploded in number over the last decade. These same 241 foundations reported having a total of 464 GCFs at the end of 1998. Thus, the total of 1,079 GCFs in mid-2004 represents an increase of 132% in the number of GCFs in less than six years.
GCFs are a recent phenomenon. Most of the community foundations in the sample (82%) report establishing their first GCF in the 1990s or later. Over half of foundations with GCFs established their first one after 1995.
The GCF growth trend is still on the rise. Two-thirds of the responding community foundations report plans to add or start new GCFs. Of those that currently have GCFs, 70% are planning to add new ones; of those that currently do not have GCFs, 59% are planning to start their first one.
The incidence of GCFs is both broad and concentrated. Eighty percent of the foundations with geographic component funds have more than one GCF. About one-third (34%) have either two or three. Almost one in every seven community foundations (14%) reports having ten or more, and six foundations report 30 or more. The 20 foundations in the sample having ten or more GCFs have a total of 649 of them, which means that 60% of all GCFs reside in roughly 14% of the foundations that have component funds.
The growth in GCFs represents significant growth in rural philanthropy. Three-quarters of all GCFs represented in the sample cover primarily rural communities or places. Moreover, community foundations that actively serve at least some rural area in their territory, compared to those that do not, are more likely to have GCFs.
GCFs loom larger in newer and/or smaller foundations. Compared to their counterparts, foundations that are older and larger are more likely to have established GCFs. However, newer and/or smaller foundations tend to hold a larger percentage of their total assets in GCFs than do larger and older community foundations.

Asset development in GCFs

GCFs hold significant assets for community-focused philanthropy. An estimated total of $1.12 billion in endowed funds is being held in geographic component funds by the 241 community foundations that answered the survey—a total that equates to about 14% of their total endowed assets. Projecting to the total community foundation population in the United States, it is likely that GCF-endowed assets currently total somewhere between $2 billion and $3 billion.
GCFs are a significant source of "unrestricted" endowment. Almost one-quarter of the community foundations with GCFs organize them as a single unrestricted area fund (with multiple donors) that covers the entire local service area—essentially an unrestricted fund, except for geography. Another quarter of the foundations hold GCFs as a family of funds or dedicated subaccounts. Most remaining community foundations organize and hold their funds both ways. This suggests that GCFs represent a larger source of unrestricted endowment than other funds typically held by community foundations.
Matches help start and grow GCFs. Half of the foundations with GCFs use or have used a financial match incentive to help establish or grow at least some of their GCFs.
Matches have many sources. The most common incentive source for matches, when used, is the lead foundation's own unrestricted funds (50%). Other sources include individual donor funds (34%); foundations outside the local area (31%); local private, family or corporate foundations (28%); and government funds (12%). (Totals add to more than 100%, since the survey asked respondents to check every source they have ever used.)
Match ratios vary. Sixty-five percent of these matching programs have provided a 1:1 match up to a certain amount; another 30% have matched at a ratio of 1:2; 7% have matched new funds at 1:3; and 30% report other (or multiple) ratios.
GCFs build more endowed than nonendowed assets. Half of the GCFs accept and utilize nonendowed dollars. More than two-thirds of the foundations (68%) say their GCFs consist of more endowed assets, 20% say they consist of more nonendowed assets, and 12% say they have about the same amount of endowed and nonendowed assets.

Organization and governance
of GCFs within lead foundations

GCFs are held in a variety of ways. Most community foundations with GCFs (71%) report holding GCFs as advised funds, with the community advisory board typically serving as "advisor." More than one-quarter (27%) hold GCFs as agency funds, 15% hold them as supporting organizations, 9% hold them as field-of-interest funds, and 5% as designated funds. (Totals add to more than 100%, since the survey asked respondents to check every form they have ever used.)
Many GCFs have nonprofit status. Of the 1,079 GCFs reported in the survey, 217 (20%) are independent 501(c)(3) organizations.
GCFs are emerging from the ground up. Lead foundations develop GCFs more often in response to an approach from local leaders than they do by beating the bushes themselves. More than half of the community foundations with GCFs (53%) say they develop their funds when communities or groups approach them. Only about one-quarter (27%) say they develop GCFs using an intentional program. One-fifth gave "other" responses, which included using both of the above-mentioned processes.
Lead foundations are developing GCF criteria and policies. Slightly more than half of the community foundations with GCFs (54%) report that they have some criteria, formal or informal, for establishing GCFs. The most important of these criteria are 1) the quality and commitment of the local leadership, mentioned by almost all the respondents; and 2) local philanthropic potential and financial commitment, mentioned by 88% of the respondents. Twenty-nine percent of the foundations with GCFs report having a formalized policy or procedure for GCFs wishing to disaffiliate.
Boards are beginning to get into the GCF act. Thirty-four percent of the lead community foundations with GCFs have a lead foundation board subcommittee or a special committee composed of selected GCF board members that advises the lead foundation on its overall GCF efforts. Over half (58%) of the lead community foundations do not have such an advisory group—but ten years ago, this was likely a much larger percentage.

Staffing of GCFs

GCFs are beginning to staff locally. Twenty-six percent of the community foundations with GCFs report that some of their component funds employ their own staff.
The lead foundation's CEO is often involved. Of the lead foundation staff members who play a role in developing and administering GCFs, the CEO is mentioned most often (72% of the responding foundations with GCFs). About one-third of the foundations (34%) mention development staff, 32% mention program staff, and 25% mention finance staff. (Totals add to more than 100%, since survey asked respondents to check every staffer who works with GCFs.)
GCFs are not a core activity for most lead foundations. Among community foundations with GCFs, 79% estimate that they spend 20% or less of their core staff time on the development or administration of those funds. Only 9% say they spend more than 40% of their core time on GCFs, while 8% admit they have no idea how much time they spend.
Asset development responsibility is shared between lead foundation and GCF. Fifty-six percent of the lead foundations say the GCF's board or staff has primary responsibility for GCF asset development. Another 29% say the primary responsibility for GCF asset development rests with the lead foundation's staff.

Building rural assets to build rural livelihoods

On this page:

See also:

Growing Local Philanthropy:
The Role and Reach of Community Foundations

Building rural assets to build rural livelihoods

On this page:

See also:

Growing Local Philanthropy: The Role and Reach of Community Foundations

Growing Local Philanthropy:
The Role and Reach of Community Foundations