Community foundations are philanthropic institutions that exist to serve a specific geographic community — typically a city, region, or district. They pool charitable funds from many donors, manage them as permanent endowments, and make grants to nonprofits and community groups serving their area. In Aotearoa New Zealand, community foundations operate in Auckland (Foundation North), Wellington (Greater Wellington Community Trust), and a growing number of regional communities.
This guide explains how community foundations work and what makes them distinct in the philanthropic landscape.
Community foundations are distinguished from other philanthropic institutions by several characteristics:
Broad community mandate: Unlike private foundations (which serve a specific donor family's interests) or corporate foundations (which align with a company's brand), community foundations exist to serve the whole community. They typically have broad charitable purposes that allow them to fund across many sectors.
Endowment model: Community foundations build permanent endowments — investing donated funds and using investment returns to fund grants in perpetuity. This creates a compounding philanthropic resource that grows with each generation of donors.
Multiple donor funds: Community foundations manage funds established by many different donors — individuals, families, businesses, estates. Each fund may have its own purposes, but the foundation manages them collectively, benefiting from investment scale.
Community knowledge: Community foundations develop deep knowledge of their local charitable landscape — which organisations are effective, where gaps exist, what emerging needs look like. This positions them as informed grantmakers and philanthropic advisors.
Convening role: Community foundations often play a convening role — bringing together donors, nonprofits, government, and business to address community challenges collectively.
Endowment building is the core fundraising work of community foundations. They attract permanent gifts through several channels:
Bequests and planned giving
The largest source of community foundation endowment growth is typically bequests — gifts from estates. Community foundations actively cultivate bequest intentions from donors who want their gift to benefit the community permanently. A well-structured legacy giving programme includes:
- Donor recognition and engagement
- Simple gift vehicles (unrestricted funds, named funds, field-of-interest funds)
- Regular communication with legacy donors about the foundation's work and impact
Major gifts
Significant gifts during donors' lifetimes — often in the form of named funds or endowments for specific purposes. Community foundations work with wealth managers, lawyers, and accountants to identify donors with philanthropic capacity.
Corporate and business funds
Businesses with community relationships may establish funds at community foundations as part of their corporate giving programmes. These offer the tax and reputational benefits of structured philanthropy without the administrative overhead of a private corporate foundation.
Grassroots fundraising
Some community foundations run community fundraising campaigns to build endowments — particularly for specific purposes (a women's fund, a youth fund, a Māori scholarship fund) where pooling smaller gifts creates meaningful scale.
Community foundations manage different types of funds:
Unrestricted endowment funds: Gifts to the foundation's general endowment, available for grantmaking at the foundation's discretion. These are the most flexible and valuable — they allow the foundation to respond to emerging community needs over time.
Donor Advised Funds (DAFs): Funds where the donor makes an irrevocable contribution but retains advisory privileges over grant recommendations. The foundation must approve grants but typically follows donor advice. DAFs are popular because donors get an immediate tax deduction while retaining involvement in grantmaking.
Named funds / designated funds: Funds established in a donor's name (or in memory of a loved one) with agreed purposes. These might be designated to a specific organisation or to a field of interest (youth sport, environmental education, arts).
Field of interest funds: Funds designated to a broad field (health, arts, environment) with the foundation making specific grants within that field.
Pass-through funds: Not endowments — funds raised for specific purposes and distributed relatively quickly. Used for major community initiatives or emergency response.
Community foundations make grants from their endowments and managed funds through several mechanisms:
Open grant rounds
Competitive rounds open to eligible organisations in the community. Applications are assessed by staff and community panels against published criteria. These are the most visible grantmaking activity.
Donor-directed grants
Grants recommended by DAF holders, designated fund donors, or other donors with advisory roles. The foundation's role is ensuring the grant meets legal requirements and is consistent with the fund's purposes.
Proactive grantmaking
Some community foundations identify and invite specific organisations to apply, rather than waiting for open applications. This is particularly useful for strategic grantmaking in areas where the foundation wants to build a portfolio.
Emergency response
Community foundations are increasingly called upon to coordinate and distribute emergency funds following disasters. Their community knowledge, existing relationships with nonprofits, and existing infrastructure make them natural emergency grantmakers.
Managing a portfolio of endowments requires professional investment oversight:
Most community foundations target a sustainable spending rate of 4-5% of endowment value, adjusted for investment management costs.
Community foundations operate within a web of relationships:
Donors: The primary funder relationship — cultivating, receiving, and acknowledging gifts; managing funds; reporting on grantmaking.
Grantees: Nonprofits and community groups receiving grants — assessing, monitoring, learning from.
Community: Maintaining public trust through transparency, community presence, and genuine service to local needs.
Philanthropic intermediaries: Accountants, lawyers, and wealth managers who advise donors on philanthropic giving — important referral relationships.
Government: Local councils and central government agencies — sometimes as co-funders, sometimes as policy partners.
Other funders: National grant-makers, private foundations, corporate funders — coordination and co-funding relationships.
Community foundations are typically governed by a board of trustees reflecting the breadth of the community. Governance challenges include:
Annual reporting on endowment performance, grantmaking activity, and financial management builds public trust.
Tahua's grants management platform is built for the complexity of community foundation operations — managing multiple donor funds, supporting diverse grant programmes, and providing the reporting that keeps donors, grantees, and communities informed.