Community foundations: catalysts and conduits for local change

Tuesday, 27 August, 2002 – 23:00

South African leaders are beginning to explore, adapt and support a community building concept that draws on the strength of residents to chart their own course – for now and the future – usin

Tuesday 27 August, 2002 – 23:00

South African leaders are beginning to explore, adapt and support a community building concept that draws on the strength of residents to chart their own course – for now and the future – using their own resources.

“We see community foundations as vehicles for community development,” said Max M. Legodi, community foundations program director for the Johannesburg-based Southern African Grantmakers Association (SAGA).
“The corporates and some private foundations are beginning to look at community foundations as possible channels for local funding. Corporates are starting to see community foundations as conduits for donations with potential for marketing mileage. We are hopeful, but we’re only three years into this process, so these are still the early days.”

¹ An endowment is a long-term fund that generates grant money from interest paid on a principal sum while leaving the bulk of the funds untouched so they can grow over time.

A community foundation is a locally controlled non-governmental organization that focuses on a particular geographic area, provides a leadership and grantmaking role to help solve problems and address issues, and raises funds from local sources. Community foundations also tend to financially support their work by putting locally generated funds in permanent endowments.¹ Almost 600 community foundations have been established in the United States since the first one in 1914. Legodi says it will take time for the concept to gain widespread recognition in South Africa, noting that it is being culturally adapted as it is used around the globe.
The Uthungulu Community Foundation, located in Richards Bay in the KwaZulu-Natal province, was launched in 1999 as South Africa’s first community foundation. The second, the Greater Rustenburg Community Foundation, was established in 2000 in the North West province, and others – in Durban, Pretoria, Stutterheim and elsewhere – are under development.

Nationwide, 10 regions are working toward establishing community foundations under a multiyear pilot program sponsored by SAGA.
Several factors make community foundations different from other nonprofit organizations in South Africa and elsewhere:

They provide leadership through a broad-based, independent board that is community-controlled and reflective of the area served.
They seek to build a permanent endowment from a range of local sources, including individuals, businesses and other donors.
They provide opportunities for people to give resources back to their communities through the foundation.
They address needs in a particular geographic region.

² Copies of Community Foundations: Building a New South Africa Through Community Philanthropy and Community Development are available from SAGA. The booklet also may be viewed or ordered on the Mott Foundation’s Web site.

The Ford, W.K. Kellogg and Mott foundations are jointly funding SAGA’s community foundation pilot project. Since 1994, Mott has allocated $565,000 (R4.5 million) in total grants to SAGA. Of that amount, $250,000 (R2 million) has helped SAGA research, develop and support community foundations in South Africa.
Mott also has given direct support to two South African community foundations, published a booklet about such organizations² , provided partial funding for South African leaders to visit community foundations in the United States, and arranged for U.S. specialists in the field to meet with interested groups in South Africa. Riaan Els, chief executive officer of the Carl and Emily Fuchs Foundation, shares SAGA’s enthusiasm for the potential of community foundations but also balances it with realistic expectations.

“I firmly believe that community foundations are the way to go in South Africa,” he said. “It’s about empowerment, communities taking ownership and reversing a development mindset that perpetuates dependency.”

As one of South Africa’s oldest family foundations, the Fuchs Foundation annually distributes about R10 million ($1.25 million) in grants nationwide in the areas of health, welfare, education, religion, children, disaster, research and arts. It also provides support for the development of community foundations.
Els said that when establishing community foundations, leaders must walk a fine line between taking enough time to develop a solid infrastructure with broad-based community support and proper systems, and taking so much time to commence with grantmaking that the public questions why donations aren’t being spent to meet pressing local needs.
Many agree with Els, who says the community foundation concept needs to be adapted to the South African situation. He suggests that steering committees, boards and staff could learn from the nation’s existing grantmaking organizations, such as the Nelson Mandela Children’s Fund, Ithuba Trust and Western Cape Community Chest.

Amelia Jones, chief executive officer of the Western Cape Community Chest, says there are a myriad of social problems to be addressed in the post-apartheid era. Community foundations, which are viewed as nonprofit grantmaking organizations that meet needs and advocate positive change, have a place in South Africa.
“Success used to be measured by the money raised and the grants given,” said Jones, who is also a SAGA board member. “Today, it’s measured by the contributions made toward community-building, which is the essence of community foundations.”
With all their promise, community foundations face many challenges. For example, new laws that became effective in July 2001 provide tax incentives for donors to give to nonprofit groups, but community foundations were not included in the list of eligible organizations. SAGA is a member of a group pushing for community foundations to be included in the next round of tax reforms.

Also, it is difficult for people to understand and accept the concept of raising money for a permanent endowment for the future when there are so many urgent needs today. And it is an ongoing challenge to secure a broad base of financial support in a tough economic climate, especially when many organizations are seeking funds for worthy causes.
Still, the Greater Rustenburg Community Foundation has raised R1 million ($125,000) from local sources and the Uthungulu Community Foundation has raised R5 million ($625,000) in endowment funds from the Ford Foundation and the South African-based Billiton Corporation. Mott has provided both these South African community foundations with three-year, $250,000 (R2 million) grants to support their operating expenses and provide some funds for re-granting.

Initially, community foundations undertake projects that are seriously needed but easy to manage so they can be seen as successful while building community awareness and support. For example, one South African community foundation plans to purchase and install toilets and blackboards in schools that lack such basics. Other community foundations plan to start with similar low-cost but greatly needed and appreciated projects.
“We’re trying to build a friendly relationship with the community so that when we ask, ‘OK, will you give to the community foundation?’ they can see that we are really here for them and for the good of the community,” said Ruby Neku, an Uthungulu Community Foundation board member. She paused and then added, “Community foundations can become one of the vehicles to help revive our communities.”