Capital Region Cares Capital Region Cares 2017-2018 - Page 138

n Feature W hen an earthquake struck Napa Valley in no Community Foundation. “That’s how we stay alive for August 2014, destroying homes and busi- the most part.” A fee is processed after a donation is made; nesses, injuring 200 people and killing one, community foundations try to get over a 5 percent return residents rallied to support their neighbors, just to continue getting by. The higher the returns a community foundation gets donating almost $11 million to the Napa Valley Communi- from investments with its dollars under management, the ty Foundation. The foundation gave $5.4 million to support almost 1,400 more money it can put into local philanthropic efforts. San quake victims, $1.1 million to 23 local nonprofits providing Joaquin ranges between 6-9 percent, depending on the aid and $800,000 to community preparedness services. year. Amador reported an eight percent return in 2016. But in the last 15 years, new technology and private in- They’ve set aside $2 million for any future natural disasters vestment/financial firms are offering the same service as in the region. It was a prime example of the way in which a community community foundations’ most common source of income foundation — connected deeply to its region’s philanthro- — donor-advised funds — for a fraction of the price. A 2017 study titled pists and nonprofits — “Community Founda- will identify an urgent tion Business Model local need and rally the Disruption in the 21st community to action. Century” commis- But is it enough? sioned by the Council A growing chorus on Foundations, posits believe market disrup- that community foun- tion has left the indus- dations have histori- try’s business model cally processed their in jeopardy, and chal- clients’ funds through lenges in community local financial advisers outreach and attracting who typically charge younger philanthro- about 1 percent of the pists continue to act as managed dollars. But barriers for the modern — Veronica Blake, CEO, Placer Community Foundation the industry has seen community foundation. a mass shift of folks Do these communi- moving to online and ty-based organizations have what it takes to survive and thrive in the 21st century? automated financial services, some of which charge as lit- tle as .18 percent. Financial behemoths like Fidelity and Vanguard are engaged in a price war expected to benefit THE FUTURE OF PHILANTHROPY Community foundations often describe themselves as a re- investors. The smaller, local financial advising firms with knowl- gion’s savings account or 401(k). They take in large funds from philanthropic donors, hold onto them in perpetuity edge of the region — which community foundations are and then distribute the money accrued on the funds to used to working and building relationships with — simply nonprofits and philanthropic efforts serving the region’s cannot compete with the larger firms’ rates. “The scale that they’re operating at is massive com- greatest needs. They differ from private foundations in both organizational structure and the tax breaks donors pared to a relatively small community foundation,” says are eligible for on their gifts — with the added benefit that Daniel Kaufman, co-founder and principal of Third Plateau foundations often already know the biggest needs in the Social Impact Strategies, of Sacramento. “Their market is international, most community foundations are local.” community. “We live on the administrative fees that come from the Such economies of scale make room for lower processing funds that we hold,” says Connie Harris, CEO of the Sola- fees — often lower than any local firm could match. “We’ll never compete on price, but I think that the service that we provide to donors and the connectivity to the community is why donors do use community foundations.” 138 CAPITAL REGION CARES 2017 |