34289 Community Development Foundations Emerging Partnerships Joyce Malombe Community Development Foundations Emerging Partnerships This study has been funded by The Ford Foundation Joyce Malombe NGO and Civil Society Unit The World Bank Washington, D.C. Copyright © 2000 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing November 2000 A free publication. This document was prepared by the NGO and Civil Society Unit of the World Bank's Social Development Department. It is not a formal publication of the World Bank. It is being published informally and circulated to encourage discussion and comment within the development community. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Copies of this paper are available from: NGO and Civil Society Unit Social Development Department The World Bank 1818 H Street, N.W. Washington, D.C. 20433 USA Fax: (202) 522-1669 E-mail: ngo@worldbank.org Internet: http://www.worldbank.org/ngos Cover designed by Melody Warford, Stone Soup, Inc. Photo credits: top photo, Gloria Davis; middle photo, Melody Warford, Stone Soup, Inc.; bottom photo, Curt Carnemark. The text and cover are printed on recycled paper. Contents Acknowledgments vii Executive Summary ix PART I 1. Introduction 3 Background to Community Development Foundations 3 Methodology 4 Defining Community Development Foundations 5 2. General Characteristics of Community Development Foundations 6 Formation and Development 6 Governance Structures 10 Program Activities 12 Financing and Resource Generation 15 PART II 3. Partnerships and Community Development Foundations 23 Partnerships at the Development Stage 23 Bringing in the Private Sector 23 Partnership with the Public Sector 25 Partnership with Civil Society Organizations and Individuals 26 Partnerships with and among Donor Agencies 27 4. Comparative Advantages and Challenges of Community Development Foundations 29 Advantages of Community Development Foundations 29 Common Challenges to Community Development Foundations 30 5. Recommendations and Possible Next Steps 33 PART III. PROFILES OF COMMUNITY DEVELOPMENT FOUNDATIONS 6. Africa Case Studies 37 Foundation for Community Development, Mozambique 38 Context and History 38 Governance Structure 40 Program Development and Activities 40 Resource Mobilization and Building Endowment 42 The Unique Role of FDC 44 iii iv Community Development Foundations: Emerging Partnerships Key Issues and Challenges 45 Kenya Community Development Foundation 47 Context and History 47 Governance Structure 49 Program Development and Activities 49 Resource Mobilization and Building Endowment 50 Key Issues and Challenges 51 Uthungulu Community Foundation 53 Community Foundation Development in South Africa 53 History and Development of Uthungulu Community Foundation 54 Opportunities for Community Foundation Development in South Africa 56 Key Issues and Challenges 57 West African Rural Foundation 58 Historical Development and Governance Structure 58 Program Development and Activities 59 Resource Mobilization and Building Endowment 61 Opportunities and Challenges 62 7. Eastern Europe Case Studies 65 Healthy City Community Foundation, Banska Bystrica and Zvolen 65 Foundation Development in the Slovak Republic 65 Historical Development of the Community Foundation of Banska Bystrica (CFBB) 65 Program Development and Activities 66 Grant-Making Process 67 Resource Mobilization and Building Endowment 68 Key Issues and Challenges 69 Usti nad Labem Community Foundation 70 Development of Foundations in Czech Republic 70 Historical Development of Usti nad Labem Foundation 71 Program Development and Activities 72 Resource Mobilization and Building Endowment 72 Key Issues and Challenges 72 Carpathian Foundation 73 Historical Development and Governance Structure 73 Program Activities and Resource Mobilization 74 Opportunities and Challenges 76 8. Latin America Case Study 78 Oaxaca Community Foundation 78 Context and Historical Development 78 Governance Structure 79 Program Development and Activities 80 Resource Mobilization and Building Endowment 81 Opportunities and Challenges 82 A Brief Discussion of Other Local Private Foundations in Mexico 84 Contents v 9. United Kingdom Case Studies 86 Greater Bristol Foundation 86 History and Governance Structure 86 Program Development and Activities 87 Resource Mobilization and Building Endowment 88 Opportunities and Challenges 88 Oxfordshire Community Foundation 89 History and Governance Structure 89 Program Activities and Resource Mobilization 89 Key Issues and Challenges 90 10. United States Case Studies 92 Montana Community Foundation 92 History and Governance Structure 92 Program Development and Activities 94 Resource Mobilization and Building Endowment 96 Opportunities and Challenges 98 New Hampshire Charitable Foundation 98 History and Governance Structure 98 Program Development and Activities 99 Resource Mobilization and Building Endowment 100 Opportunities and Challenges 101 Notes 103 References 105 Annexes 107 1. Case Study Questionnaire 107 2. List of Persons Interviewed 109 Acronyms and Abbreviations 113 Boxes Box 2.1. Examples of Community Development Foundation Mission Statements 7 Box 2.2. Examples of Partnerships that Strengthen Civil Society Organizations 10 Box 2.3. Examples of the Grant-Making Process as a Tool for Capacity Building 15 Box 2.4. Examples Diversified Sources of Funding 16 Box 3.1. Examples of Partnerships 24 Box 6.1. Examples of Some of the Roles of FDC 42 Box 6.2. FDC Strengthens the Civil Society Sector 43 Box 6.3. Identifying and Choosing Partners 51 Box 6.4. Examples of KCDF Partners 52 Box 6.5. Some Examples of Activities Undertaken by WARF 62 Box 7.1. Even the Youth Matter 67 Box 7.2. Capacity Building for Romany People 75 Box 8.1. Examples of Projects Supported by the Oaxaca Community Foundation 81 Box 9.1. Examples of Activities Funded by the Greater Bristol Foundation 87 vi Community Development Foundations: Emerging Partnerships Box 10.1. The Journey from Poor to Beacon Communities 95 Box 10.2. Even Small Communities Can Build Endowments 97 Figures 2.1. Technical Assistance Provided by Community Development Foundations 14 3.1. Types of Partnerships 23 6.1. KCDF's Organizational Structure 50 6.2. Uthungulu Community Foundation Organizational Structure 55 Tables 2.1. Examples of Community Development Foundation Activities 12 2.2. Geographic Focus of Community Development Foundations 13 2.3. Diversified Funding Base 18 2.4. Endowments and Their Sources 20 3.1. Examples of Donor Partnerships 28 Acknowledgments I wish to thank the Ford Foundation for funding this ing this report. Special thanks go to Jeff Ruster, Elsie study. This study is the product of responses to a ques- Garfield, Jorge Franco, Aniceto Bila, Nyambura tionnaire, interesting discussions, and information gath- Githagui, Balde Demba, Cyprian Fisiy, Kinuthia ered from a range of publications and annual reports Macharia, Mary Mcneil, Michael Cohen, Nigel Twose, between 1998 and 2000. William Reuben, and my colleagues at the NGO Unit. I am very grateful to the staff of the twelve commu- In addition, the input of a number of people from nity development foundations featured as case studies private foundations and community foundation sup- in this report. These men and women made the time port organizations was invaluable. Special thanks go and effort to answer my questions and they provided to Elizabeth Campbell and Katharine Pearson of the me with considerable background information. Many Ford Foundation; Tom Miller (formerly of the Ford people shared experiences and lessons learned from Foundation); Christa Kuljian, Clare Brooks, and Elan their community development foundations, support Garonzik of the C.S. Mott Foundation; David Winder organizations, and NGOs. I am thankful for their insights, and Bruce Schearer of the Synergos Institute; Janet which have helped to shape my thinking. Special thanks Topolsky of the Aspen Institute; and Mokhethi go to Lewis Feldstein, Patricia Vasbinder, Sydney Moshoeshoe and Max Legodi of the Southern Africa Amstrong, Jaime Bolaños Cacho, Sandor Koles, Bearta Grantmakers Association. Hirt, Lubimor Krbec, Tomas Krejci, Monica Mutuku, A final thanks goes to the people who offered detailed Elkanah Odembo, Graca Marchel, Carlos Fumo, John comments and support throughout the process, includ- Mabuyakhulu, Louis Van Zyl, Helen Moss, Nick Horn, ing Suzzane Feurt, Gaynor Humpreys, Joy Beaton, Thomas Miller, and Fadel Diame. Amit Nigam (formerly of IFC), and Lina Abirafeh (who I would like to specifically thank my colleagues at initially edited the work). the World Bank whose input I benefited from in writ- vii Executive Summary The role of partnerships in development has become a are unique in each country because they respond to major concern among development players in the last the specific contexts in which they exist. In all cases, decade. This is primarily due to the changing roles of however, they exist to raise funds for permanent endow- different partners and their increased interdependence; ment that supports the civil society sector. the success of development efforts now depends more This report examines the emerging picture of these closely on synergies between these partners. An impor- local institutions that exist solely to support the civil tant partner in this changing scene is the civil society society sector by building their operational and finan- sector.1 The role of civil society in development has cial capacity. The report also assesses the role of these increased significantly in the last decade due, in part, institutions in community-based and community-led to the realization that meaningful, long-term, and sus- development and the possible role of partnership between tainable development requires the full engagement of donor agencies and other stakeholders working on com- this sector. munity development and poverty reduction. Another trend that reinforces the importance of part- nerships is its modest impact on poverty reduction, in spite of continued and (often) increased support. Distinctive Characteristics of Community Partnerships, however, remain a challenge for most Development Foundations donor agencies,2 which have difficulties forming part- nerships with civil society organizations. Community Emerging community development foundations are development foundations (CFs),3 the main focus of this formed by a multifaceted group of local community study, represent one of the new community develop- development leaders, and they are funded from vari- ment concepts that addresses the issue of long-term ous sources, including private foundations, private funding through both building permanent endowments4 and public sectors, local communities, and individuals. and building and strengthening partnerships. This study Most emerging CFs5 seek to address community devel- presents community development foundations in a num- opment issues--particularly those related to pover- ber of contexts to highlight their emergence and to ty--by seeking long-term funding to build permanent explore possibilities for partnerships with different stake- endowments and by building operational and finan- holders. cial capacity of local nongovernmental organizations Outside the United States, CFs have emerged main- (NGOs)6 and community-based organizations (CBOs)7 ly to address the lack of capacity and resources in the through capacity building and other types of support. civil society sector and poverty in its various contexts. Donor agencies involved in funding CFs see the role These CFs, especially in developing and transition coun- of the CF as pivotal in ensuring a greater impact on tries, have come about as a result of the realization development, particularly poverty reduction. CFs are that, for the civil society sector to rise to the challenges locally based and seek long-term solutions to locally of the day, better organization, increased capacity, and defined problems, which facilitate local ownership diversified sources of funding are required. Despite pos- and eventually lead to sustainability. Community devel- sessing characteristics similar to the community foun- opment foundations have several distinct characteris- dations movement in North America, emerging CFs tics; a list of those characteristics follows. ix x Community Development Foundations: Emerging Partnerships Capacity Building for Civil Society Development zens, and government officials. Many CFs are formed Organizations after extensive consultation with different stakeholders Community development foundations support NGOs who continue to be involved with the institution over and CBOs of various strengths and experience. These a long period of time. CFs also create space for donor include small and sometimes weak CBOs that may not agencies to forge partnerships for community devel- be registered but have the potential to make an impact opment as indicated by their diverse sources of fund- on the community. CFs provide the necessary services ing. These efforts help consolidate resources and, at or skills primarily through established NGOs. They also the same time, provide opportunities for development facilitate networking among similar CBOs. of local institutions. CFs concentrate on specific areas or groups of peo- ple and they provide the tools to closely monitor devel- Promoting and Supporting the Involvement of the opment and its impact on programs at the local level. Private Sector CFs measure impact and ensure accountability to a broader constituency. As grant makers, they serve as a Involvement of the private sector (both large and small mediating mechanism between donors and recipients businesses) in community development is probably one (connecting money with people and vice versa) and thus of the most innovative activities of emerging CFs. In bridge any existing gap between the two. each of the cases, there was either significant involve- ment of the private sector or a clear strategy to involve them. The level of involvement extends beyond finan- Assembling Assets and Resources cial resources to technical and human resources. Their CFs draw on a range of domestic and international finan- participation is crucial in governance, management, and cial sources for community development, including the the investment of funds. private and public sectors and individuals. They have been particularly creative in gathering resources from Interface for Public Policy Dialogue the private sector and from individuals of wealth (in developing countries, this source is more limited), One of the main frustrations of the civil society sector who are interested in community development. has been its fragmentation and inability to address pol- The relative advantage of CFs as local mobilizers of icy issues. Many factors have contributed to this, includ- domestic and international sources allows them to have ing the size of civil society institutions and the fact that a significant effect on both stimulating new financing they are not representative of the other institutions and and on connecting financial resources to the commu- at times only address sectorial issues. CFs create space nity level where they can have the greatest impact. for different organizations to convene discussions on CFs build endowments for long-term community policy issues. With time, CFs have the potential to orga- development. This long-term development allows for nize and allow for inputs and participation of the civil flexible funding, which is critical in addressing emerg- society sector in policy dialogue. ing and changing development needs. Flexible fund- ing is also important when addressing a problem like poverty, which has complex and multifaceted issues. Challenges One of the main challenges faced by emerging CFs is Stimulating and Promoting Partnerships that of building permanent endowments. This is pri- CFs connect people, institutions, and donor agencies. marily because most donor agencies do not provide These connections are made by placing partnership funds for endowments. Raising domestic funds presents mechanisms at all stages of development. CFs, for exam- many challenges because the concept is new, and it is ple, are formed by representatives of diverse sectors, also a departure from traditional development funding including NGOs, the private and public sectors, citi- mechanisms. This endowment challenge is compounded Overview and Summary xi by the lack of an enabling environment and an unsta- and various CFs in developing countries, who have ble investment climate. For CFs to function properly, no access to experiences beyond their own country there must be partnerships. Although the importance experience. This information would increase under- of partnerships is recognized, it is not common prac- standing of the CF concept and give different stake- tice. Partnerships take a long time to build and to take holders opportunities to decide on the suitability of hold. Further, many donor agencies do not create space the concept for their local situations. Understanding for meaningful partnerships with civil society. how CFs work would also play a significant role in fostering an enabling environment, which is lack- ing in many countries. Recommendations and Possible · To facilitate learning by creating a global learning Next Steps and support network that could be funded by inter- ested donor agencies and based at the World Bank. Developing effective partnerships is key to the World · To form a partnership fund for undertaking a few Bank's ability to deliver its development agenda, and it pilot projects. There is interest in these pilot pro- is central to the Bank's strategic compact and the jects by a few governments, and some donor agen- Comprehensive Development Framework (CDF). cies are thinking of ways to support these emerging Partnerships allow the Bank to build on the compara- institutions. Private foundations have already led the tive advantage of its partners in order to enhance devel- way by helping start a number of community devel- opment effectiveness and impact. Enhancing opment foundations but bilateral and multilateral development effectiveness and impact calls for more agencies definitely need to play some part in these deliberate efforts to reinforce existing partnerships and efforts. to forge new ones. · To facilitate and strengthen the involvement of the The current development debates include a discus- private sector in CFs. Thus far, emerging CFs have sion of the importance of community-driven develop- actively involved the private sector, but this is a ment, the importance of partnerships, and the need to process that is just beginning. The World Bank could target the poor. Such pressing issues make partnering use its influence to encourage the private sector to with CFs timely. The role CFs can play in advancing become increasingly more involved in community these agendas can be pivotal because of the mechanisms development. of community development that they instill. Within the · To facilitate an enabling environment for CFs. CFs World Bank, issues of partnerships have had a high pro- are new institutions that are usually not covered by file through initiatives like the Comprehensive existing NGO laws in some countries. The World Development Framework (CDF), the Poverty Reduction Bank could extend its support to cover both NGOs Strategy Papers (PRSP), and the emerging Community- and CFs. To date, support of NGOs by the World Driven Development (CDD) framework. Other initia- Bank has contributed to an increase in support by tives, like the Business Partners Program, Participation governments. This could have a parallel impact on Initiative, Social Capital Initiative, and Social Investment CFs. Funds could benefit from the existing CFs. While these · Finally, to allow donor agencies to play a significant initiatives support increased civil society involvement, role in providing funding for CFs, either for opera- more clear-cut support is required to partner with CFs. tions or for building endowments. While some donors This requires forging and strengthening partnerships do not fund endowments, the long-term benefits with both the public and private sectors. Some poten- of endowments make a persuasive argument for tial next steps include: their consideration. Experiences with building endowments for the environment through the · To facilitate information dissemination by sharing Global Environment Facility (GEF) provide oppor- the findings of this study with different interested tunities for consideration of community develop- groups within the World Bank, donor agencies, ment foundations by bilateral and multilateral xii Community Development Foundations: Emerging Partnerships agencies, particularly given their renewed interest in the case of Social Investment Funds--if the receiv- in poverty reduction. Some existing funding could ing governments are interested. also be used for building endowments--especially Part I 1. Introduction Background to Community Development Community development foundations simultane- Foundations ously address both funding and local implementation needs. CFs have a proven record in industrialized coun- In the last decade, many community development tries like the United States, Canada, and to some degree, approaches have emerged that address changing devel- the United Kingdom. As these institutions emerge in opment realities and the increasing poverty in many developing and transition countries, they are sufficiently countries. Addressing these issues calls for partnerships promising and merit investigation and assessment. This with the relevant stakeholders, including those in the report therefore examines the experience of CFs in civil society sector. Partnership with civil society is also nine countries to gauge their emerging roles in sus- essential in promoting sustainable development because tainable community development. This study also assess- such partnerships create space for expressing the varied es the possibility of partnerships in supporting the and complex needs of society, and for motivating indi- development of CFs at various levels. Significant atten- viduals to participate in issues that affect their lives. tion is paid here to the pivotal role of the private sec- While the importance of civil society in development tor in the development and management of these has been recognized, their meaningful involvement institutions. has been challenged by myriad factors. Some of these The background to the Community Development factors include: lack of long-term financing, no capac- Foundation Initiative dates back to Mr. James ity to carry out comprehensive development, lack of Wolfensohn's dialogue with the presidents of major structures that allow civil society organizations (CSOs) U.S. private foundations in 1996 to discuss possible to participate as partners, lack of strong local institu- collaboration in development efforts at the local level. tions, and lack of ownership, among others. Different This initiative, funded by the Ford Foundation, was a strategies have been developed to address these issues. product of that meeting and thus the main focus of While there is success in some cases, these successes this report. This report examines the emerging picture are usually on a small scale. It is in organizing and cre- of the CF concept and identifies areas of possible ating financial and human resource capacity at the collaboration within the framework of World Bank local level that concepts like community development operations. foundations seem to be playing a pioneering role. The main objectives of the CF Initiative are: Although this fledgling concept only exists in a few countries, it already faces a number of challenges · To examine the emerging roles of CFs in different that need to be addressed for CFs to live up to their contexts; full potential. These challenges are specific to each · To increase understanding of the CF institutions; country and depend largely on the understanding · To identify possibilities for partnerships and links and involvement of civil society. Much also depends between CF activities, World Bank projects, and on how long the CF has existed in a particular coun- other interested partners; and try, and its relationship with the public, private, and · To identify possibilities for pilot programs (where social sectors. applicable). 3 4 Community Development Foundations: Emerging Partnerships Methodology In the United States: · The Montana Community Foundation (MCF) Community development foundations have had a very · The New Hampshire Charitable Foundation (NHCF) short history in most countries, with the exception of the United States and Canada, where they have been The selection criteria included number of years of in operation for many years. While some data exist on operation, grant-making experience, plans to build U.S. community foundations, very little research has endowment, and support from a number of partners. been done on emerging foundations in other parts Once the cases were identified, a questionnaire was of the world. Although CFs are few, their numbers developed (see Annex 1). Interviews using this ques- are steadily increasing. For example, in the United tionnaire were carried out with the staff, board mem- Kingdom, 27 community foundations have been bers, and grantees. Discussions were also held with civil formed within the last 12 years. Numbers in Africa and society organizations to include their views on the select- in Eastern and Central Europe reflect similar ed CFs and on the general community development trends. environment. This information was supplemented by Given the limited availability of information, the annual reports, strategic plans, internal and external relatively short history of these institutions, and the evaluations, and other available documents. clear regional differences, the case study approach was The two U.S. cases were selected in order to high- chosen for this report. A total of 12 cases were investi- light the characteristics of established community foun- gated, including three from Eastern Europe, four from dations; that is, to better understand the CF concept Africa, two from the United Kingdom, two from the and assess its suitability to conditions in other contexts. United States, and one from Latin America. The study of the cases in the United States was also moti- The case studies include the following: vated by the fact that efforts to start new community development foundations, supported by international In Africa: private foundations, draws on successful experiences · Foundation for Community Development (FDC) in United States. It therefore became important to under- (Mozambique) stand the characteristics of the traditional concept to · Kenya Community Development Foundation (KCDF) better comprehend the expectations of these founda- · Uthungulu Community Foundation in South Africa tions and to assess whether this concept can be applied (launched in July 1999; eight others are in the for- in developing countries. Moreover, there are often mative stage) exchange visits made to the U.S. community founda- · The West African Rural Foundations (WARF) tions before the emerging foundations decide whether the CF concept is appropriate for their community. In Latin America: The selected U.S. community foundations have been · The Oaxaca Community Foundation, Mexico visited by the board and staff of some of the emerging CFs. The two U.S. cases also address the issue of rural In Eastern Europe: economic development, which targets poverty in the · Healthy City Community Foundation Banska Bystrica United States; this poverty focus represents a common and Zvolen, the Slovak Republic ground with some of the emerging foundations around · The Carpathian Foundation the world. The U.K. cases were selected because of their · Usti nad Labem Community Foundation (ULCF), emergent status, their focus on support for the volun- Czech Republic teer sector, and their efforts to address poverty. This document is divided into four parts: Part I (chap- In the United Kingdom: ters 1 and 2) consists of the introduction and general · The Greater Bristol Foundation (GBF) characteristics of community development foundations; · The Oxfordshire Community Foundation (OCF) Part II (chapters 3 through 5) presents a discussion on Introduction 5 partnerships and on the advantages of CFs and recom- viding technical assistance and training. These services mended next steps, which include opportunities for part- become available at various stages of development in nerships in development of CF development, especially emerging CFs, as shown in Part III, where detailed with the World Bank and other donor agencies; Part III profiles of CFs are discussed. It is also important to point (chapters 6 through 10) presents the 12 case studies. out that one of the most notable aspects of CFs is endow- ment building, which is a daunting challenge; although it is too early in the lifespan of CFs to predict whether Defining Community Development significant endowments will be raised, the progress thus Foundations far is encouraging. In places where the concept is more developed, There is no consensus on the terminology used to refer such as in the United States, Canada, and, to some extent, to community development foundations. This is par- the United Kingdom, these institutions are commonly ticularly true in developing countries, where CFs take known as community foundations and have been defined on myriad forms. Some of the commonly used termi- as "a tax-exempt, independent, publicly-supported phil- nology in developing countries includes community anthropic organization established and operated as a foundations, civil society resource organizations, local permanent collection of endowed funds for the long- foundations, Southern foundations, etc. In this report, term benefit of a defined geographic area. . . . A com- the term community development foundation is used munity foundation actively seeks new, typically large for its reference to development, which characterizes contributions, and functions primarily as a grant-mak- emerging community foundations in developing coun- ing institution supporting a broad rage of charitable tries and in Eastern European contexts. activities" (Agard, Monroe, and Sullivan 1997: 15). In these contexts, an emerging local community devel- "Generally, the governing body of a community foun- opment foundation is defined as "an independent, phil- dation broadly represents the community and serves anthropic organization (part of the nonprofit, the charitable needs of a diverse group of organizations nongovernmental sector) dedicated to addressing crit- and individuals within its designated geographic area" ical needs and improving the quality of life in a specif- (Korman and Gaske 1994: 1327). Similarly, in this con- ic geographic area" (C.S. Mott 1998a). Community text, the community foundation is defined mainly by development foundations can, however, be better iden- its services and function. In most cases, these services tified by their services, which can include combining a are well developed; functioning community founda- program of operation with grant making; mobilizing tions have proven records of assembling financial resources for both endowment and to fund civil soci- resources and building endowments to address the needs ety; providing donor services; convening civil society of particular communities. groups; bridging institutions to other sectors; and pro- 2. General Characteristics of Community Development Foundations Formation and Development are willing to play an active part in changing their environment. Most of these people are leaders from Community foundations have existed in the United the community, NGOs, or local businesses. In all cases, States since 1914 when the first community foundation extensive consultations with possible stakeholders take was started in Cleveland, Ohio. A banker, Frederick H. place to identify the existing gaps and how to fill those Goff, "developed a cooperative model of philanthropy gaps. The process is unique in each country or locali- that gathered together a mix of charitable funds under ty, and the motivating factors are well articulated in their one umbrella" (James 1989: 63, in Magat 1989). Goff mission statements. A few examples of mission state- was responding to the fact that some donors left bequests ments are listed in Box 2.1. and made designated grants for specific purposes and Mission statements are an important way for CFs to were unaware that community needs were in constant articulate their role and their commitment to achieving flux. At the same time, some donors left small, unre- their goals through creating different partnerships. stricted bequests, which were costly and time- The process of developing these mission statements consuming for bank trust departments to manage. In takes time and develops after extensive consultation this particular case, the bank continued to invest the with myriad stakeholders whose views have to be con- money from bequests, but they relegated responsibili- sidered. While the mission statements address existing ty for distributing the income to a separate entity--the problems, they are also dynamic and allow for chang- Cleveland Foundation--with a publicly appointed vol- ing realities at the local level. unteer board of leading citizens (Council on Foundations Although the process of forming community devel- 1992: 7). Since then, the number of community foun- opment foundations is different in each country, all CFs dations has increased steadily. By 1999, there were more are characterized by the involvement of local commu- than 500 community foundations in the United States. nity development leaders and other donor agencies, par- Community foundations in other parts of the world ticularly private foundations and other proponents of have a much more recent history coupled with rapid the concept (like community foundation support agen- growth. For example, in the United Kingdom, CFs cies; some examples discussed in this report include date back only twelve years. Within this same time frame, Southern Africa Grantmakers Association (SAGA), 27 community foundations have been formed in the Community Foundation Network (CFN), and United Kingdom and an additional 30 are in the earli- Community Foundations of Canada). In some cases, er stages of development. In Eastern Europe and parts large private foundations put their funds together to of Africa, CFs have an even shorter history, but their num- support local associations by providing the required bers are growing quickly. Other countries in Europe, such technical assistance to emerging foundations. This is as Germany, are reporting a rapid rate of growth as well. true of the nine emergent community foundations in In each country, community development founda- South Africa, where the Ford Foundation, the C.S. Mott tions are started by local people who are familiar with Foundation, and the Kellogg Foundation are provid- local development issues and who are committed to ing the necessary technical assistance to SAGA. In the change in their communities. These are people who United Kingdom, the Community Foundation Network 6 Genera1 Characteristics of Community Development Foundations 7 Box 2.1. Examples of Community Development Foundation Mission Statements Mozambique: "The FDC (Foundation for Community nonprofits, strengthening the fabric of our communities Development) is a private not-for-profit grant-making foun- through expanded educational opportunities with schol- dation that aims at building partnerships for strengthen- arship programs, strengthening the ability for communi- ing the capacities of disadvantaged communities with the ties and institutions to sustain themselves into the future." view of overcoming poverty and promoting social justice in Mozambique." Eastern Europe: "The Carpathian Foundation is a unique cross-border community foundation that provides grants Oaxaca: "To promote the participation of the civil society and technical assistance to grassroots NGOs and local in improving the welfare and standard of living of the vul- governments, focusing primarily on economic develop- nerable and marginalized sectors of the Oaxaca by means ment and transfrontier activities. It encourages the devel- of initiatives that generate fundamental and lasting change." opment of public/private/NGO partnerships, including cross border and inter-ethnic approaches to promote region- Uthungulu: "To harness available resources to maintain a al and community development and to help prevent con- permanent endowment fund that enhances socioecono- flicts." The mission of the Foundation is to promote "good mic development in a transparent and accountable man- neighborliness, social stability, and economic progress in ner with all relevant stakeholders." bordering regions of Hungary, Poland, Romania, the Slovak Republic, and Ukraine. The Carpathian Foundation works Montana: "The MCF and its members are dedicated to to revitalize rural areas by promoting community devel- strengthening the long-term funding capacity of Montana's opment, cross-border and inter-ethnic co-operation." (CFN; formerly the Association of Community Trusts local foundations" (Ashman, Brown, and Zwick 1997: and Foundations) is promoting the concept and pro- 7). It is important that donor agencies play the role of viding technical assistance to start-ups, while the the partner who offers expertise and avoids dictating Canadian Association of Community Foundations is the agenda of these local foundations. When donors playing a similar role in Canada. Community founda- serve on boards, they do not represent the donor per tion support organizations are defined as "member- se but bring in their expertise and link the emerging ship associations of community foundations offering foundations to other players, including their partners. expertise, visibility, and influence with donors and The final say rests with the board, not with the donor policy makers. They serve as clearinghouses for mem- agencies. This is reinforced by well-trained boards that ber interests and needs and receive funds. . . . With these do not take a back seat but fully determine the direc- funds, they provide member services such as technical tion of emerging foundations. When the skills of the assistance, consulting, and advocacy" (Tully1997: 4). different participating stakeholders are properly uti- In all cases, the CF formation is a locally driven con- lized, the local foundations benefit tremendously. The sultative process involving local people and other stake- donor agencies also benefit from this process by get- holders, such as the private and public sectors. CFs also ting closer to the people they seek to help. create opportunities for donor agencies to get more Growing global interest in the CF concept has been involved in local development by providing their exper- hastened by a number of factors that include expand- tise and other forms of support. For example, large ing the scope of successful projects, targeting disad- private foundations like Ford and the C.S. Mott vantaged and marginalized people, and stimulating and Foundation have played a significant role in the devel- strengthening partnerships. opmental stages of emerging CFs. They have gone beyond providing just funding and have contributed "ideas, Expanded Scope of Successful Projects and Facilitated time, support, and access to resource-rich networks dur- Local Ownership ing the founding of the new organization. International actors often had significant, even determining, influ- Two CFs in the Czech and Slovak Republics were an ence in shaping the subsequent development of some expansion of successful projects. The Community 8 Community Development Foundations: Emerging Partnerships Foundation of Banska Bystrica (CFBB), for example, many possibilities for sustainable community-based emerged from the Healthy Cities Project. A group of development. If successful projects are to extend beyond local leaders interested in expanding the success of the project period, genuine participation and commit- this project to include the whole Slovak city of Banska ment to build local institutions that can outlast the pro- Bystrica initiated the process. Also, some of the group ject are necessary. Local groups must also be exposed to members had been introduced to the U.S. community alternative development concepts so that they can decide foundations concept, which they believed could make in which way to expand their efforts. This not only increas- a difference in strengthening social capital and creating es the impact of the project at the local level, but it also space for local people to contribute to their own devel- brings in other partners, which leads to broad-based own- opment. To determine whether this idea was viable, ership and support, and eventually to sustainability. the group held extensive consultations with other local leaders and community groups in Banska Bystrica. The Targeting Disadvantaged and Marginalized Groups end result was the formation of a city foundation with In all the case studies, CFs were started by people who the support of the local authorities, who continue to were targeting particular issues or community groups. give support in many ways. All new CFs were dedicated to effective poverty reduc- The Usti nad Labem Community Foundation in the tion strategies and to finding existing gaps in such strate- Czech Republic emerged from a regional fund that had gies. The people involved in new CFs were not willing included different partners; this fund had been set up to just duplicate activities; instead they wanted to make to provide adequate and relevant services for mentally a lasting impact by addressing unmet needs. This issue- ill persons. The founding group had worked in this driven method continues to prove effective. The lengthy sector for years and had expressed dissatisfaction with process required to institute CFs is motivated by the the service provision. They sought alternative ways to realization that if the issue of poverty is to be addressed, integrate mentally ill persons into society instead of iso- those that are isolated and marginalized should be given lating them in institutions. The group realized at an early the highest priority. This was particularly true in the stage that this issue could be effectively addressed through case of Usti nad Labem in the Czech Republic where partnerships, and they approached representatives of the concern was with the institutionalization of men- different institutions and businesses to reach creative tally ill people. The CF was instituted to change the solutions. These representatives were invited to join a approach of local service providers. self-selected group of people who created a regional Similarly, the Kenya Community Development fund to address the problem. Once the success of this Foundation (KCDF) came about as a result of consul- approach was apparent, this group decided to expand tations with many stakeholders regarding why pover- and to be more inclusive. At the same time, the group ty reduction strategies had not made the necessary was exposed to the concept of community foundations. impact. These discussions revealed the need for local Thus the decision was made to form a CF with greater people to define the development agenda and to become sectoral coverage. engaged in the process of change. The attitude of donors In these two cases, the development process was local- also needed to change, and NGOs needed to accept their ly driven. The CF concept was adopted because it was responsibility to local groups. Strategies were developed an effective way to address their issues of concern. These to address all of these issues. two cases from Eastern Europe provide a model for mov- In the case of the Oaxaca Community Foundation, ing successful projects to a sustainable level given local its programs are tailored to micro-regions, which focused leadership, interest, and commitment to building and on isolated and marginalized areas. Children, youth, strengthening partnerships. These aspects of forming a and women were identified as the most vulnerable, successful community foundation are important because and mechanisms were put in place to reach them. local people must be committed to carrying the process The Oxfordshire Community Foundation in the to fruition. Given the many successful projects that have United Kingdom is similarly targeting the poor in Oxford not had the expected impact, the CF concept provides County. This priority exists for all CFs, but for this CF, Genera1 Characteristics of Community Development Foundations 9 additional attempts were made to include frequently necessary. It is because of these requirements that some neglected and marginalized groups. donors decided to attempt the community development Experience to date has shown that strategies not foundation process. By supporting CFs, the donors specifically targeted will only reach a few of the poor hoped to accomplish the following: people. If one is to reach the most disadvantaged, tar- geting becomes a necessity. CFs provide an opportuni- · To provide assistance that builds the capacity of local ty to target several groups simultaneously and to follow organizations to develop and implement long-term up and monitor the process. CFs also have a built-in solutions to locally defined problems. Many of the learning agenda that is flexible and can change the donor agencies supporting CFs have worked in devel- strategy if it is not working. The willingness to involve opment for many years and have established pro- different partners in addressing issues broadens their grams in many countries. It became clear to them economic base to do so. CFs also utilize the expertise of that long-term and sustainable change will happen local NGOs, which have a long history of work with the only if it is initiated by local people who under- poor; this cuts some of the costs of starting the process stand their environment. These are the people who all over again and taps existing expertise and local knowl- can follow up after grants are made and build capac- edge. Given the current focus on poverty reduction, ity for the poor people usually left out of the devel- strengthening or creating similar institutions would go opment process. The need to broaden the base of a long way in supporting sustainable poverty reduc- partnership with local institutions also exists; tion efforts and thereby reduce duplication of efforts. however, many local groups lack the capacity to participate. Stimulating and Strengthen Partnerships · To encourage comprehensive community development The last few years have been characterized by discus- through shared resources and partnerships. In most sions on the importance of partnerships. Initiating and cases, donors have worked independently but expe- maintaining partnerships, however, has been a chal- rience suggests that working in partnerships pro- lenge. This challenge has been greatest at the local vides opportunities to address effectively and level where donors have had little experience working efficiently the different issues affecting communi- together in partnerships among themselves or with com- ties. Historically, the project-based approach leads munities. In many cases, certain partners, such as the to problems of continuity after completion, which private sector, have been left out. It has become clear leads to donor dependency and a negative impact that to address the pertinent issues, CFs need partner- on local communities. ships at all levels. For example, partnerships with local · To enhance poverty reduction efforts through partner- institutions are necessary to adequately implement their ships. Effective poverty reduction strategies require programs. To finance and manage CFs, the public, pri- different types of resources and partnerships. Most vate, and social sectors should be engaged. CFs have of the available resources leave little room for local mechanisms for participation in place; their success institutions to address emerging and long-term devel- depends largely on how well partnerships are managed. opment issues, including poverty reduction. Flexible For donors, the attraction to CFs includes the fac- funding is necessary to enable grantees to strength- tors listed in the section below. en their own institutions and to facilitate long-term investment in projects. Accelerating and Strengthening Poverty Reduction · To broaden the financial base and increase resources8 Efforts for development by encouraging a culture of vol- Historically, the modest impact of poverty reduction untarism and philanthropy. Support for CFs has strategies and the lack of meaningful participation by proved to be an effective mode for partnership civil society organizations caused many donors to ques- between a number of foundations and other agen- tion their participation. To involve these organizations, cies. These efforts help to consolidate the resources partnerships and coordinated capacity building are of foundations and other interested donors while 10 Community Development Foundations: Emerging Partnerships providing opportunities for the development of local and to mobilize short and long-term funds from a vari- institutions. The need to raise domestic funds has ety of sources. also received significant attention in most new CFs in developing countries and in Eastern Europe. · To strengthen civil society. In Eastern and Central Governance Structures Europe, some CFs were created to strengthen the weak civil society sector and to address specific The structure and composition of the Board of Trustees issues of certain groups. Such was the case with and Directors is central to CFs because the board plays the Carpathian Foundation, which addresses the a pivotal role in shaping community development, rais- development issues affecting people in the Carpa- ing funds, and making grants. The board is the voice thian mountain region. Similarly, the West African of the CF and gives it credibility, which is critical for Rural Foundation targets poor rural farmers in five fund-raising and for building the legitimacy of the foun- countries. Both of these regional foundations dation. Further, board members are expected to use were heavily funded by large private inter- their social capital to attract money and supporters for national foundations and other partners; how- their foundations. They also articulate the mission and ever, they also involved local leaders who were vision of the foundation, and they play a significant role concerned about development in these areas. In in program development. both cases, the CF founders were very involved with local development issues and worked in partnership with donors. Composition The composition of the board is also important for CFs The discussion in Box 2.2 clearly shows that while because the board represents the interests of the foun- the formation of CFs may have been motivated by dif- dation. In all case studies, board composition is diverse ferent factors, all CFs are characterized by a locally dri- and represents social, private, and public sectors. This ven process that seeks to address gaps in community diversity broadens the base of participation in com- development. Multiple groups were involved in this munity development and facilitates comprehensive process, which identifies the engagement of public, pri- community development strategies; it also serves as a vate, and social sectors as key. In all cases, the groups conduit of expertise from different sectors and creates were motivated by the desire to solve local problems an innovative organization that fills existing gaps in Box 2.2. Examples of Partnerships that Strengthen Civil Society Organizations To facilitate some of these partnerships, the large founda- funded the process of identifying effective ways of address- tions have had to go beyond the usual activity of funding ing poverty in Kenya by supporting a local consultation development to creating a forum whereby local groups and process and planning by key local community development other donors identify issues and initiate partnerships. The experts. The Ford Foundation funded the planning meet- large foundations provide expertise and exposure for emerg- ings and the exposure to different modes of development ing CFs to different types of development, and they link for a two-year period and invited other donors to join the local groups with other large foundations. Then the local local Kenyan Advisory Group in forming the Kenya Com- groups decide what type of institution would best suit their munity Development Foundation (KCDF). These donors local conditions. This was the case with the C.S. Mott were not just providing funding; they also got involved in Foundation, which funded different studies in a number helping identify alternatives and linking groups both local- of Central and Eastern European countries to identify ly and internationally. This process also utilized the local local resources and mechanisms for community develop- expertise of those who had been involved for many years ment in those countries. Similarly, the Ford Foundation in the NGO movement and the struggle to reduce poverty. Genera1 Characteristics of Community Development Foundations 11 the development process. Representation by different isters; however, it is important to note that these mem- sectors also facilitates ownership of the process by a bers were elected to the board before their appointment wider constituency, which should eventually address to public office. While their current positions could ben- issues of accountability. efit the foundation, they do not represent the govern- To represent the social sector, CFs have a number of ment in the foundation. Like many emerging CFs, NGO and other social sector leaders on the board. This individuals do not represent their organizations in these is unique because most nonprofit sector boards do not governing boards. usually involve other NGO leaders in the management While many CFs recognize the importance of pub- of their organizations. This is particularly evident in lic sector support, there is some reticence in involving developing countries where NGO leaders are usually this sector for fear of losing control and of being iden- busy strengthening their own institutions. CFs need tified with the government's past failures to address the NGO expertise to strengthen their programs. In the needs of local people. In addition, public sector officials United Kingdom, the selected members on CF boards have limited experience working with people-driven have served as trustees of other charitable organizations. processes and are likely to affect participation. In some In well-developed foundations in the United States, countries, the image of local government authorities is the board members are usually experienced in sup- not positive, which would therefore negatively impact porting local foundations and are conversant with local the image of CFs. This is compounded by conflicts development issues. that may exist between the NGO sector and the gov- Participation of the private sector on the CF boards ernment. Such issues are paramount in Africa and the is crucial, and all CFs have made determined efforts to Czech Republic. With time, however, the foundations have private sector representation. While the financial are realizing that the success of CFs will be greatly influ- support of the private sector is welcome, most CFs also enced by public sector involvement because of its key need the expertise of this sector to help manage their role in the development process. investment and to create professional institutions. This Given the required diversity on these CF boards, is a real shift from the traditional nonprofit sector board, the process of selection is lengthy and follows different particularly in developing countries where boards are procedures in each country as will be evident in the case characterized by minimal active participation of the pri- studies. However, in all cases, the process includes efforts vate sector. for representation and a willingness to participate fully Involvement of the public sector in CF boards was in the affairs of the CF. The board composition is also limited to a few CFs but was expected to increase after influenced by prevailing circumstances in each coun- the institutions were fully formed. The three CFs with try but is broadly governed by inclusion as a means of board participation of public sector individuals include tapping into often-neglected key resources. CFBB, OCF, and FDC Mozambique. For CFBB, the community foundation originated from a local author- Board Structures ity project and exists to serve the city. The foundation has two board members that represent the city. Similarly, Board structures range from simple groups to more com- the OCF has board members who work with the munic- plex bodies, including a variety of specialized commit- ipality because the foundation is targeting poverty in tees: executive, operational, advisory, regional, and the county, which is of great interest to the local gov- professional. In some cases, the committees include ernment. In addition, the OCF board has also sought board members and other members of the public sec- relevant stakeholders in the county, and the local gov- tor who have relevant expertise. These people only serve ernment is a key player. for the duration of the committee and, although they For FDC Mozambique, the foundation has enjoyed can serve again, theirs is a time-specific contribution. support from the public sector in a number of ways. This structure of involving people from time to time as Some of the board members are also government min- the need arises enables CFs to tap into existing talent 12 Community Development Foundations: Emerging Partnerships and expertise in communities where they operate. In Montana Community Foundation has smaller commu- some cases, like Montana, the board meetings are held nity foundations and regional boards. These have their in different parts of the state and are widely announced. own governance structures and raise their own funds. Members of the public can attend and offer ideas although These innovative governance structures are, howev- they may not vote. Their participation allows them to er, facing some problems that include the fact that get more involved in the activities of the community most organizations do not work across sectors. Some foundation, which should eventually facilitate owner- board and trustee members have little understanding ship by local people. of how a CF functions; thus they need to learn about To facilitate the participation of as many people as their role and the institution simultaneously. Moreover, possible, the board members have a limited term of the required mix of expertise of board members draws two to four years, renewable for one term. However, the upon different levels of understanding of development board ensures that all vacancies do not occur at the same and the financial issues pertaining to decisions. Some time to allow for continuity. In some of the CFs, the of these obstacles are being overcome by systematic board members who leave can join a CF assembly, which board training and the involvement of board members is a wider body that oversees the CF activities (such as in field visits. in Mozambique and Oaxaca). These mechanisms give other members of the public the opportunity to par- ticipate in the CFs. Program Activities Board sizes ranged from six to twenty members, depending on the area covered and the need. It is, The programs of CFs are influenced by their commit- however, important to point out that the actual num- ments to social and economic development and the ber of people involved in influencing the direction of need to generate resources to address these issues. the foundation is larger because each CF has mecha- In cases of emerging CFs--particularly in developing nisms that ensure that they tap into human and other countries--the programs have to demonstrate added resources available from the community or elsewhere. and clear impact on the ground. This is a process con- For example, New Hampshire Charitable Foundation ducted with many stakeholders, and it is greatly influ- (NHCF) has five regional community foundations that enced by the conditions in each country. Although the have their own directors, boards, and "incorporators." activities listed in Table 2.1 are common areas covered The five regional community foundations have auton- by NGOs, it is the way that these priorities are deter- omy (constitute their own boards, raise funds, and short- mined and implemented that defines the difference list possible grantees for the approval of the main between CFs and NGOs. executive board) and significant control over their activ- Most CFs have a specific geographic focus. CFs with ities. They also generate most of their funds locally. The large coverage include mechanisms to accommodate Table 2.1. Examples of Community Development Foundations Activities Foundation Example of Activities CFBB Women's groups, rural and environmental, youth, disability, neighborhoods, culture, social areas, schools Carpathian Foundation Capacity building, cross-border cooperation, inter-ethnic program, rural development Usti nad Labem Environment, culture, education, social services, youth KCDF Capacity building FDC Children and youth, capacity building of NGOs and CBOs, HIV/AIDs WARF Capacity building, research Oaxaca Disaster management, education, youth, microregions, women GBF Youth, disability, security, homelessness, isolation OCF Education, disability, health promotion (particularly mental health), poverty MCF Arts, culture, economic vitality, education, natural resources and conservation, basic human needs NHCF Education, human services, arts and humanities, health, student aid Genera1 Characteristics of Community Development Foundations 13 Table 2.2. Geographic Focus of Community Development Foundations City, County, District State National Regional Banska Bystrica CFBB Montana MCF FDC Mozambique West Africa Rural Foundation--five countries WARF Usti nad Labem New Hampshire NHCF Kenya KCF Carpathian Foundation--five countries Greater Bristol GBF Oxfordshire OCF Oaxaca local concerns and to make sure that unique problems munity foundations throughout the country. Creation are addressed. The four geographic categories are city, of smaller community foundations is the strategy adopt- state, nation, and region, and their respective case stud- ed by the Montana Community Foundations, which has ies are indicated in Table 2.2. 46 small community foundations. Similarly, the New Table 2.2 indicates three types of CFs: the first two Hampshire Charitable Foundation has five regional com- columns (city, county, district, state) clearly define the munity foundations. This regional compartmentaliza- geographic area; the third column consists of national tion was established to ensure that each area has an funds, and the fourth column (regional) operates in five organization that adequately addresses their needs and countries. The first two columns are fairly specific. In promotes participation and local ownership. This also Montana and New Hampshire, where the populations ensures targeting of groups and issues that may other- covered are large, mechanisms have been put in place wise be lost or ignored. to address specific geographic areas. The New Hampshire As stated in Chapter 2, the priorities of the program Charitable Foundation has five community foundations are noted in the mission statements, which were devel- while Montana Community Foundation has 46 com- oped by the founders. The focus activities are selected munity foundations. The two national CFs are strug- through a consultative process and are designed to gling with the issue of local representation and are actively achieve specific kinds of impacts. This is accomplished trying to take different regions into consideration through by conducting strategic grant making that addresses board representation and programs. For example, FDC identified gaps. This is a departure from traditional Mozambique has staff members responsible for specif- methods of identifying program priorities, which may ic provinces and has activities in most provinces. Similarly, not necessarily include local people in the decision- KCDF has tried to ensure a diverse management board making process. Even when consultations are done, the and programs in all the provinces. donors end up funding areas of their own interest. The third category of foundations is regional. These Technical assistance is an important part of the CF foundations do not regard themselves as community program. However, technical assistance requirements foundations although they have attempted to create are identified by the local groups, and then CFs either mechanisms to address specific country issues. While directly provide this or purchase it from local institu- the case for creation of these types of foundations is tions. Using multiple support strategies has enabled CFs clear, regional foundations are much more difficult to to provide what local recipient institutions need--which manage and require large funds. sometimes extends beyond financial resources, as indi- The national foundations similarly cover large areas cated in Figure 2.1. and are struggling to create representative structures. Another important program focus is capacity build- In the two countries where the national foundations ing. Many CFs use the grant-making process as a tool exist, the local situation needed development of one for capacity building. In most cases, grant making is an focal point around which the concept can be devel- open and inclusive process that uses a wide range of oped and then mechanisms for decentralizing will be organizations. devised later. After consolidation, FDC Mozambique is The selection process includes field visits by staff and talking about the possibility of creating smaller com- board members. The participation of board members 14 Community Development Foundations: Emerging Partnerships Figure 2.1. Technical Assistance Provided by Community Development Foundations Customized Assistance Strategic planning Board development Problem solving Evaluation Networking Community Training Scheduled Development Opportunistic Foundation Information General Consultations Materials for areas of need Responsive Responding to areas of need On-site Computer networks Specific Consultation Start-ups Research and dissemination Specific areas like legal Problem solving Source: Adapted from Agard, Monroe, and Sullivan. (1997: 8). has provided opportunities for some to get more in- the benefiting organizations. Other important mecha- volved with local communities. This process builds nisms include clear accountability and transparency the capacity of board members to participate in the measures by the local organization to the CF, its part- grant-making exercise in a meaningfully way. ners, and its donors. The CFs hope that these mea- Special efforts are in place to increase the transparency sures will not only ensure a lasting impact but change of the grant-making process. For example, some CFs grant-making practices, which are not always account- publicly announce grant recipients in the daily papers able and transparent. and respond to unsuccessful applicants who are free to Most foundations in this report funded a variety of inquire about their rejection. This process also helps programs according to identified local needs. However, promote accountability and transparency. all CFs funded some form of capacity building. Those Most of the cases in this report addressed the issue funding capacity building exclusively include the West of sustainability of both organizational and project results African Rural Foundation (WARF) and the Kenya with all partners. This is done in a number of ways: pro- Development Community Foundation. WARF has con- viding matching grants, providing institutional build- centrated on strengthening African local organizations ing funds, requiring a sustainability strategy, and and promoting participatory methods of research and diversifying funding sources. Others undergo an elab- development for agriculture and natural resource man- orate process of identifying local partners and the roles agement. These fields were identified as the primary each would play to ensure the program's success problems affecting regional rural resource management and continuation. In each case, there are clear guide- (covering five West African countries). The Kenya lines on how the project is to be implemented, by Development Community Foundation is addressing the whom, and by when. It was hoped that this process issue of capacity building of community-based organi- and the efforts to raise local funds would ensure sus- zations and their associations as a way to empower the tainability and reduce the level of dependence on civil society to more actively and fully participate in donor agencies. the development agenda. These were the issues identi- Issues related to sustainability include clear-cut mon- fied as the major bottlenecks to community develop- itoring and evaluation processes, as agreed upon by ment efforts. Genera1 Characteristics of Community Development Foundations 15 The nature of programs undertaken by CFs allow role in the development process. The programs of CFs them to support both program development and deliv- support organizational and management capacity of ery of their partners. This gives CFs an opportunity to NGOs and CBOs to facilitate local institution-build- be involved with the activities they fund at the local ing, which is central to poverty reduction efforts. level. Their concentrated involvement with the organi- zations they support--and ones that they do not sup- port--gives them a better understanding and familiarity Financing and Resource Generation with the sector. Such an awareness is not usually avail- able to multilateral and bilateral donors who elect to Types of Funding fund programs at the local level. The long-term rela- tionship between CFs and local organizations, even One of the most distinguishing characteristics of CFs when funding ceases, provides opportunities to strength- is their resource generation mechanism. Unlike other en the sector as a whole. civil society organizations, CFs generate three types of Although all the CFs in this study support existing funds, which include their own operating funds, funds NGOs and CBOs, CFs also go out of their way to seek for grant making, and endowments. Typically, grant groups that may not necessarily be visible. These groups making for the civil society sector has been done by comprise a sector that has not benefited significantly international organizations, not local intermediaries like from existing support, including financial support. In CFs. Even in Eastern and Central Europe, where the civil addition, CFs build their capacity and links with other society sector is emerging, most of the funding is from donors and similar groups, thus exposing themselves international donors, while country governments and to activities of other organizations. This inclusive process national foundations play a small part. Although fund- breaks barriers to small CBOs, which would not oth- raising for operating funds is common practice for the erwise get access to funding and skill development, and NGO sector, local endowment fund-raising is not. The removes a major barrier to participation by small local case is different, however, for most CFs, who regard groups. CFs offer small organizations the capacity to raising endowment funds as central to their objective relate to outside organizations and further define their of financial sustainability for themselves and for the orga- Box 2.3. Examples of the Grant-Making Process as a Tool for Capacity Building The Greater Bristol Foundation has worked with local insti- gies, the foundation provided whatever technical sup- tutions to identify groups that need support (but are not port the groups required and was careful not to foster readily visible to other donors) to help them in all stages dependency. of proposal development. This foundation visits local orga- The Kenya Community Development Foundation uses nizations to educate both their board and other interested a long process of identifying partners and went through donors. These site visits help to build significant commit- multiple stages to finally select a group of grantees to rec- ment to the foundation. Many of the board members (par- ommend to the board. The program was announced in ticularly from the private sector) get first-hand experience the local dailies and both NGOs and CBOs were asked to of some of the situations on the ground and have used recommend groups that they thought could benefit from this to recruit others to the work for the foundation. The a KCDF grant. A number of groups were short-listed and foundation also organizes other meetings of donors and the first workshop was planned. This workshop had wide grantees to further expose them and share the activities of participation, but it was clear that not all the groups in the foundation. attendance would receive grants. After this workshop, those The Oxfordshire Community Foundation, which qualifying were alerted, while groups not getting the grant targets the poor and marginalized groups in its county, were told why they did not qualify. All groups were visit- developed simple application guidelines and went out of ed and a thorough assessment completed before they were its way to find these groups. Although it had exit strate- recommended to the board for consideration. 16 Community Development Foundations: Emerging Partnerships nizations they support. Availability of local flexible funds of their funding from local sources, as indicated in the would also allow CFs to fund genuine community case studies. concerns. Establishment of an organization that raises all three types of funds presents new sets of challenges, Foreign Funding as indicated later in this chapter. Except for FDC Mozambique, which had raised some seed funding, all other national CFs and regional foun- Sources of Funds dations covered in this report began with significant A number of sources of funds were identified by the international funding, mainly from large private foun- case studies. These include foreign funds, funds from dations. This is due largely to the costly scope of their the private sector (mainly businesses), funds from the activities. For example, a number of CFs began with public sector (local government), and funds from indi- international rather than domestic funding. Such is the viduals. The ability of CFs to access funding from case for the Carpathian Foundation, which obtained all these sources is innovative and has brought new its operating funds from the C.S. Mott Foundation. funding not previously available to the civil society KCDF and WARF also had funding from several donors, sector. Sources of funds have been greatly influenced including the Ford Foundation. It is important to point by the historical development of the various CFs, their out that the transition from international to domestic size, and the nature of the civil society sector in spe- funding is difficult because of the changes in attitude cific countries. For example, most CFs focusing and perceived role required of companies and individ- on city, county, or district started fairly small, using uals in community development. Foundations that oper- domestic and local funds (the exceptions are Oaxaca ate in a number of countries have an even greater and Utungulu, which began with both domestic and challenge of getting funding from the individual coun- international resources). The national and regional tries because the tradition of giving funds to be used in foundations, covering large areas, also require large a number of countries does not exist, and at times amounts of funds that they previously obtained there are existing conflicts between these countries. from international sources, although there are now efforts In the United Kingdom, only three foundations to raise local funds. Both the United States and the received some matching funds for endowment from United Kingdom community foundations receive most foreign sources. All other CFs, 24 total, obtained their Box 2.4. Examples of Diversified Sources of Funding The most common types of funding mechanisms for CFs ment project--the Healthy Cities Project). Similarly, only in Africa, Eastern Europe, and Mexico are funds from inter- KCDF had the board members contribute to starting their national philanthropic foundations. The second most com- endowment fund. Unlike all the other cases, New Hampshire mon type of funding is donations from the business received most of their funding from private citizens. It is community or private sector. This was the case for 10 of also worth noting that most CF funding in the United States the 12 case studies, but the remaining two were develop- comes from individuals, while companies and other busi- ing strategies to obtain funding from the private sector. nesses play a key role in the United Kingdom. The trend Private companies are a very important source of funding thus far seems to indicate that the role played by individ- for CFs in the United Kingdom, with some organizations uals and the private sectors will increase in importance in receiving more than 60 percent of their funding from Eastern Europe and, hopefully, in Africa. The OCF obtained local private companies. Only WARF earned some income significant funds from the business sector. Given the active from their services; they were contracted by a number of role of the private sector in Latin America, this is going to organizations including the World Bank and UNDP. Only be a significant source of funding for CFs. In fact, the pri- CFBB had significant funding from the local government vate sector is already a source of community development because of its history (it developed from a local govern- funds for other civil society organizations. Genera1 Characteristics of Community Development Foundations 17 funding for grant making and operations from local their areas of operations. In spite of this, considerable sources. The two CFs in Eastern Europe also received education is required for companies to get involved and foreign funding but raised most of their grant-making for the NGO sector to engage the private sector in a resources locally. way that mutually benefits both groups. The Montana Community Foundation has benefit- ed from funding from several companies. The MCF Private Sector Funding played a significant role in creating an enabling envi- Historically, the private sector has not been a key play- ronment for the private sector to participate by er in funding community development in most coun- sponsoring a dialogue on tax credit that was later tries. Yet all CFs have targeted funding from the private passed. The New Hampshire Charitable Foundation sector and are thus attempting to bring in new funding has worked with the private sector as well but to a not previously accessible to the civil society sector. lesser extent. Support from the private sector varies, based on a number of factors. In the United Kingdom, most CFs Public Sector Funding receive over 60 percent of their funding for operations, grant making and endowments from this source, while Another important link that is being made by CFs is the Oaxaca Community Foundation obtained approx- the involvement of local governments. This manifests imately 40 percent. In Mexico and other Latin American itself in a variety of ways. Of the CFs, only the CFBB countries, the private sector is a significant source of has received funds for endowment and operations funding for different types of foundations involved in from the Municipal Council. In two cases, the funding community development. In a number of cases, the has been given to initiatives that involved local govern- foundations are started by businesspeople seeking to ments. For example, the Carpathian Foundation fund- support local development initiatives. ed capacity-building initiatives for local authorities in There are encouraging trends in this sector in Eastern five countries where they work. While these efforts have Europe as well, where the two community foundations helped build the capacity of local authorities, they also studied raised most of their operating funds from local strengthened relationships and partnerships between businesses. Most of these businesses were not neces- local authorities and the civil society sector (examples sarily large, but each had a stake in the development of include funding or organizing meetings where the two the two cities involved. Banska Bystrica has particular- groups can better understand each other and agree on ly benefited from local businesses who have support- development priorities and training). The OCF is also ed different activities, in addition to providing funding. funding projects that strengthen alliances with local However, private sector funding in Eastern Europe faces authorities. While local authorities are important part- significant challenges due to the sector's short history ners for CFs, many CFs were hesitant to get funding in the region. In South Africa, only Mozambique and from local government for various reasons despite other Utungulu received funding from local companies. Both partnerships in program areas. KCDF and WARF have strategies to involve local and international companies, but these are time consum- Individual Contributions ing due to the private sector's historical lack of involve- ment with local community development efforts. Individual contributions to CFs are a major source of Historically, community development has been the funding in the United States, where a tradition of phil- responsibility of the public sector. Many companies have anthropy exists, coupled with an enabling environment not played a significant role, except for short-term activ- and clear-cut tax benefits to supporters of CFs and other ities like sports, or natural disasters such as earthquakes. charitable organizations. Both the NHCF and the MCF However, this situation is changing due to the govern- have benefited significantly from this source, with more ments' inability to provide the necessary services, and than 90 percent of New Hampshire's funding coming to the need for companies to be socially responsible in from individuals. In Montana, a relatively poor state, 18 Community Development Foundations: Emerging Partnerships individuals of all economic strata have given to the local in Mexico, where individual businesspeople support community foundation. the creation of larger foundations covering sectors like Except for CFs in the United States and Mexico, all health or rural development. the other countries have benefited very little from indi- CFs rely on a wide range of strategies to mobilize vidual contributions for various reasons. For example, financial resources, including earned income. In gen- the individual philanthropic tradition found in the United eral, the CFs tend to use several types of funding mech- States is expressed in different forms than in other coun- anisms at the same time, as indicated in Table 2.3. The tries. Moreover, the tradition of funding the nonprofit funding mechanisms used by CFs include grants from sector by private individuals is less common in these international philanthropic foundations; donations from other countries. It is important to point out that, in the business community, local government, individu- Mexico, only rich businesspeople provide funding for als; and earned income from products and services (a the creation of foundations. This differs from the United rare source). States, where contributions come from people of wealth Except in one case, all CFs in this study were fund- who may not necessarily be in business. Further, U.S. ed by multiple partners. While most of the funding contributors support community foundations, unlike agencies traditionally supported the sector, funding by Table 2.3. Diversified Funding Base Community foundation Donor partners Source of endowment CFBB (1994) Local authority, C.S. Mott Foundation, Local authority, international foundations, Rockefeller Brothers Fund, Open Society, individuals EU, Charities Aid Foundation, private sector, individuals Carpathian (1995) C.S. Mott Foundation None Usti nad Labem (1998) C.S. Mott Foundation, private sector, Businessperson National Foundation KCDF (1997) Ford and Aga Khan Foundations, Started by management board and now has Ford Management Board Foundation Challenge Grant FDC--Mozambique MacArthur Foundation, private sector companies Uthungulu Ford Foundation, Billiton Development Trust WARF (1993) Ford Foundation, IDRC, contracts Ford Foundation Challenge Grant OCF (1995) Private sector, IYF, Ford, McArthur, and Private sector, international foundations Kellogg Foundations, CEMEFI Oxfordshire (1995) Private sector, individuals Private sector Great Bristol (1987) Private sector, individuals, C.S.Mott Private sector, individuals, C.S. Mott Foundation Foundation (one-time endowment challenge (one-time endowment challenge grant) grant) Montana Individuals, Northwest Area, Macnight, Ford, Individuals, private sector C.S. Mott, and Turner Foundations, Steele Reese, private sector New Hampshire (1962) Individuals (most of the funding), private Individuals sector (minimal) Genera1 Characteristics of Community Development Foundations 19 the private sector either does not exist or is limited. In United States that lacks a supporting tax environment. some examples, the private sector has played and con- The Foundation played a significant role in passing a tinues to play a significant role in raising local funds tax credit bill and getting both companies and indi- for operations, and to a limited extent, endowment. In viduals to give to the Foundation and other charitable the case of Usti nad Labem, its sole asset comes from organizations in the state. the private sector (in the form of a building given to Experience from developed CFs, particularly in the the Foundation by a private business person). Except United States, indicate that endowments constitute the for the United Kingdom, the funds are small but pro- heart of a community foundation. Whether they con- vide a good start, given the total lack of involvement sist of restricted or unrestricted funds, an endowment by the private sector in some countries. It is also worth offers many advantages to a community foundation. An noting that the private sector has not played a signifi- endowment attracts donors who want their gifts to oper- cant role in most U.S. community foundations. This ate in perpetuity, and it ensures a flow of money for again shows the flexibility of the model and its ability grant making, even during years when annual gifts to adjust to local realities. decrease. The predictability of endowment income enables a board to plan its grant-making program with some degree of certainty for the next few years, and Endowments thus can make long-term grants for long-range projects. Building endowments for the civil society sector in devel- Endowments give the community foundation real oping countries and other contexts where new CFs are financial stability, which can enable it to function suc- emerging is a new phenomenon. (This is, however, an cessfully during times when other local institu- established tradition in the United States and Canada, tions are experiencing stress (Council on Foundations among others, where the tradition has existed for a num- 1992: 18). ber of years.) This trend is slowly changing because the For many CFs, endowments from gifts come large- funding for the civil society sector is shifting, which ly in the form of bequests. While this remains the case requires finding more sustainable funding mechanisms. with many CFs, others have sought more aggressive This is evident from all the case studies in this report approaches. The tax law changes of 1969 stimulated where specific attention has been given to raising endow- giving by living donors offering larger tax deductions ment funds (most CFs started without any endowment for contributions to CFs. These tax laws also put addi- funds). In the United Kingdom, endowments for the tional pressure on community foundations to raise funds 22 community foundations established by March to meet the public support test. A few fortunate com- 1998 totaled 65 million pounds, from 35 million pounds munity foundations have received large endowments in 1997. of unrestricted funds but most CFs today depend on Many U.S. community foundations start with endow- an endowment income, annual campaign gifts, and ment funds, while others have to raise their endowment assorted fees for services. Many also depend on an funds locally after they are formed. There are, howev- endowment consisting of both restricted and unrestricted er, two examples of long established well-endowed com- funds (Council on Foundations 1992: 19). munity foundations in the United States that generally Except for the United Kingdom, most of the emerg- do not need to raise extra funds for both grant making ing CFs were not started with significant endow- and operations. Both cases began with minimal endow- ments. Some still struggle to get started, as indicated in ment funds. The New Hampshire Charitable Foundation, Table 2.4. in existence for over 30 years, has raised significant Although Table 2.4 does not indicate large endow- endowment funds. The interest from investment of these ment funds, the figures are significant given the recent funds is used for both operations and grant making. history of most of these foundations. This is particu- Montana, a much poorer state, has done an admirable larly true given the fact that the emerging foundations job of raising endowments. In Montana, such a con- have to raise funds for grant making at the same time. cept is new. Moreover, the state is one of the few in the Similarly, most CFs are not well known, and the impact 20 Community Development Foundations: Emerging Partnerships of their programs is just beginning to be evident. Stronger tance of endowments are bound to raise more funds in local CFs coupled with better awareness of the impor- the future. Table 2.4. Endowments and Their Sources Foundation Endowment Source HCCF (Banska Bystrica) 8 million koruna = $240,000 Local government, C.S. Mott Foundation, Rockefeller Brothers Fund, individuals Carpathian Foundation None Usti nad Labem 10 million koruna = $312,000 Private sector KCDF 3.6 Kenyan shillings ($50,000) and challenge Started by management board and challenge grant grant $650,000 from the Ford Foundation from the Ford Foundation FDC--Mozambique $5 million Debt swap, private companies, individuals Uthungulu--S. Africa 5.5 million South African rand WARF Challenge grant $2.2 million from the Ford Foundation Ford Foundation Oaxaca $100,000 International private foundations, Mexican businesspeople GBF 1 million British pounds Private sector, individuals, C.S. Mott Foundation (one-time endowment challenge grant) OCF 50,000 pounds Private sector MCF $23 million with unrestricted $3.7million Individuals, private sector NHCF $200 million Individuals , private sector (minimal) Part II 3. Partnerships and Community Development Foundations Partnerships at the Development Stage programs. Such organizations were not accountable to partners in the same way that CFs are accountable as Emerging community development foundations in their indicated by the procedures developed by CFs for their various forms are characterized by partnerships at all partners at all levels, including communities. Mechanisms levels. This is due the fact that CFs need partnerships to ensure partnerships at all levels were put in place by to facilitate the implementation of programs and to raise all CFs. The three main areas identified for partnership the necessary funds. Further, their mission to address by CFs are the public, private, and social sectors, as complex poverty issues underscores the need to find indicated in Figure 3.2. The extent to which these sec- ways to link with others. Multiorganization and multi- tors are involved varies in each country and is dictated sector alliances are necessary to significantly impact by local conditions present as the foundation comes to poverty; all stakeholders have a distinct role to play in fruition. Partnerships have also been influenced by the the process. level of development of the CF. More established CFs Local founders of CFs establish a number of rela- claim an increasing number of partners. It is, however, tionships and partnerships to get the process started, important to point out that the time commitment involved as indicated in Box 3.1. In all 12 case studies, the deci- in forging partnerships and the effort required to main- sion to start a local foundation was reached after exten- tain them is considerable. Further, working in trisec- sive discussions and, in some cases, consultations with toral partnerships is a new style of development and NGOs, CBOs, and individuals involved in community therefore faces many challenges. development. In a few cases, CFs consulted with donors in similar fields in order to seek their support and encour- age their participation in developing the foundation. Bringing in the Private Sector The importance given to partnerships in the whole process of developing and implementing the activities Partnership with the business sector in community of CFs is a departure from past efforts, when organiza- development is a new approach in most countries. Com- tions were usually formed by an individual or group munity foundations have realized the important role that that did not depend on partnerships to implement their this sector can play in their efforts to both mobilize funds Figure 3.1. Types of Partnerships Types of Partnerships Public Sector Private Sector NGOs/CBOs Individuals Donors 23 24 Community Development Foundations: Emerging Partnerships Box 3.1. Examples of Partnerships Prior to the formation of Health City Community by the advisory board, the Aga Khan Foundation felt that Foundation, Banska Bystrica (HCCF), meetings were held the proposed foundation would address some of the local with different stakeholders to agree on the necessity of form- development issues they had been struggling with. After ing new organizations, and what form these organizations lengthy discussions with the advisory board and the Ford would take. The decision to form a local foundation was Foundation, an agreement was signed between the three reached after extensive negotiations with different stake- parties, and the foundation was started. In addition to holders. contributions from the Ford and AKF Foundations, each KCDF was created because several donors felt that the board member of KCDF made a financial contribution to poverty reduction efforts in place had little impact. The the foundation. Ford Foundation, which has invested heavily in reducing The Usti nad Labem Foundation sought to involve the poverty, started a dialogue with different stakeholders on public and private sectors and community leaders in their what should be done in order to have the desired impact. project of providing services to the mentally ill. They issued Ford consulted with over 200 groups, including CBOs; the an open-ended invitation to groups involved in the ser- end result of this consultation was the decision to form a vice provision for this sector. After discussing the idea, a local donor-like organization to build the capacity of CBOs number of people found it compelling and formed a small and other intermediaries working with them. It also became group, which became the Regional Fund. The foundation clear that the current lack of a sustainable financial base only came into being after five years, when a need to expand for NGOs had a decreased impact on poverty because the activities to other sectors became clear. Meanwhile, their programs were project-based, while poverty reduc- the Regional Fund involved a large number of partners who tion requires a multifaceted approach. After many discus- together decided that they needed to expand their activi- sions and consultations, the community development ties. While they were debating the form the organization foundation model was chosen. The idea to form the Kenya should take, they were exposed to the CF model, which Community Development Foundation was also shared with seemed to address partnerships and long-term develop- different donors involved with the community develop- ment, issues central to the group. At that point, the group ment project. After looking at the documents developed decided to adopt the relevant aspects of the CF model. for community development and to provide skills need- and continues to support the sector through the ed to manage CF funds. Businesspeople are also involved Oxfordshire Community Foundation (OCF). Two CFs as CF board members, and are regarded as assets by in Eastern Europe have received private sector support the foundations for their skills (especially in fund man- in various ways. In Banska Bystrica, both small and large agement) and connections with the business sector. businesses supported local organizations with both cash Further, involvement in CF boards also exposes promi- and in-kind donations. For example, community group nent businesspeople to local community needs. While activities and meetings were funded through their sup- some CFs have received direct funding for operations, port. The Usti nad Labem Community Foundation cites a few actually obtained initial start-up funds from pri- linking the nonprofit and private sectors as one of its vate companies. For example, some of the initial fund- objectives. The private sector was involved in that CF ing for the Greater Bristol Foundation came from a local from the onset; the sole asset the foundation possesses company that had been involved in funding the vol- was contributed by a businessperson. In spite of this untary sector for a number of years. Similarly, when this support, it is worth noting that this sector's potential is same CF had to raise funds to match their endowment underutilized for various reasons, including lack of part- challenge grant from the C.S. Mott Foundation, they nership experience with community development orga- relied heavily on private sector donations, particularly nizations. In Eastern Europe, the private sector has a those of private companies. A significant amount of short history and is less developed. Yet small business- funding for the Oxfordshire Community Foundation es seem to be more supportive of community develop- came from a local brewer (Morland PLC), who had been ment, particularly in the form of CFs with small regional involved in community development for many years coverage. Partnerships and Community Development Foundations 25 In South Africa, two CFs benefited significantly from time. The CF has also received furniture and services private sector funding, while the CFs in both East and from private individuals who are committed to the West Africa are struggling to get private sector fund- mission of CFs. While the private sector plays an impor- ing. In Mozambique, for example, a few local and tant role in development, in some cases, the corporate international companies have provided funding for the sector initiatives fail to include local communities in FDC for both grant making and endowment. In South their community development efforts and only address Africa, the Zululand Chamber of Commerce has signif- issues that concern corporations. Experience has shown icantly supported the start of the Uthungulu Community that such practice could easily lead to a pursuit of cor- Foundation while the Billiton Development Trust has porate agendas at the expense of the legitimate needs pledged one million rand per year for the next five of the surrounding communities. years as endowment. Similar efforts are underway in other emerging CFs in various parts of South Africa. Both KCDF and WARF will have a harder time rais- Partnership with the Public Sector ing funds from the private sector because the tradition of giving funds to the NGO sector hardly exists, and Therearethreedistincttypesofpartnershipswiththepub- most of these companies have paid little attention to licsector. These include creating a legal framework, par- community development issues. Educating them as to ticipating in management boards, and capacity building. their role and the benefit they will gain by supporting community development is a major task for these two Providing a Legal Framework foundations. KCDF has embarked on this process by organizing meetings with the private sector with some Different levels of public sector ministries have been World Bank funds to facilitate these meetings. Both responsible for creating space for the formation of KCDF and WARF have board members from the pri- community foundations. In most developing countries vate sector and have developed strategies to involve and transitional economies, the notion of the CF does the sector. While this task may seem daunting, the poten- not exist; therefore government support in the forma- tial exists and some businesses have shown interest by tion of CFs is required. This was the case in Mozambique, supporting visible activities like sports events or nat- where, in partnership with the FDC, a bill to form the ural disaster fund drives. It is hoped that some of this CF was drafted and passed. Since then, the CF has support can be channeled into poverty reduction efforts, required other forms of support, especially in invest- which should ultimately benefit the private sector. ing their endowment outside the country and in oper- In Latin America, the situation is different because ating a foreign account. The CF has also worked with the private sector has been involved in funding the social policy makers to change the working environment of sector for many years. In fact, many private companies NGOs in the country. have formed their own foundations, which is evident In both New Hampshire and Montana, the commu- in Mexico and other Latin American countries such as nity foundations organized policy dialogues that inspired Brazil and Colombia. In Mexico, there are several large changes in the sector. For example, MCF organized a foundations that deal with health and rural develop- dialogue on a tax bill with the support of the public ment. These were formed by private businesses inter- sector. Although this bill did not get passed initially, ested in addressing these issues. While some foundations when passed, it brought in increased funding to the use their funding for development, the big national foun- nonprofit sector. dations have sought support from the government, In the Slovak Republic, where the previous govern- and a few have benefited from debt swaps. The few ment was not supportive of the civil society sector, the CFs that exist in Mexico have received financial sup- 1997 law on foundations had a negative impact. On port from the private sector. For example, the Oaxaca the surface, this may appear to be a simple issue; how- Community Foundation receives 40 percent of its fund- ever, close examination indicates that the requirements ing from this sector. This is expected to increase over restricting the activities of foundations are detrimental. 26 Community Development Foundations: Emerging Partnerships This law allows the Ministry of Interior to question the have indicated that they exist to strengthen the civil activities, policies, and budgets of foundations. The law society sector, which includes local small groups that also placed restrictions on endowments to the extent may not have received previous support. This sector that many foundations were discouraged from build- also includes stakeholders from church and youth groups. ing them. This problem is further complicated by the CFs have gone so far as to offer support to groups that fact that much of the banking system is controlled by were not registered, thus widening the parameters of the state, which impacts the effectiveness of the sector. funding and technical assistance support beneficiaries. While the new government is much more positive towards the sector, it is not clear whether positive changes Partnership with Nongovernmental Organizations to the law will be made. Partnerships with NGOs exists at various levels. For example, almost all the case studies done on emerging Participation in Management Boards or Boards of CFs in developing countries and Eastern Europe reveal Trustees that NGO leaders have founded the CFs. They used Participation in management boards or boards of trustees their skills and social capital to initiate the process local- is a common way for CFs to partner with the public sec- ly and internationally. This effort is unique because NGO tor. In Mozambique, certain members of the board serve leaders traditionally commit little energy and support in the government, but many were elected to the board to form other nonprofit institutions that may be com- first and only became public officials later. The Health pelled to compete for the same funds. Involvement with City Community Foundation of Banska Bystrica (CFBB) CFs, however, extends beyond formation to participa- has two local authority board member representatives. tion in the management boards and programs through The CF originated from a local government project serv- various committees. ing the city; thus government representatives were Weaker NGOs are the primary beneficiaries of grants present as the CF came to fruition. Another example of for institutional and financial capacity building. This a local authority participating in a CF board is the was one of the common activities of all CFs. CFs also Oxfordshire Community Foundation, which serves support the network activities of NGOs and have played the county and the city. a significant role in giving the sector a voice. Some CFs, like the Oaxaca Community Foundation, gave vis- ibility to NGO activities as part of its mandate. CFs Capacity Building or Facilitating Partnership with also utilize the expertise of NGOs extensively to deter- Local Authorities mine project priorities and to implement their programs. A third type of partnership with the public sector exists through capacity building of local authorities by the Partnership with Community-Based Organizations CFs. This was the case in both the Carpathian Foundation and the Oaxaca Community Foundation. The Carpathian Partnerships with local community-based organizations Foundation has funded capacity building for local author- existed in all the cases covered in this report. In most ities in the region, while the Oaxaca Community cases, CBOs were seen as the weakest sector of civil soci- Foundation has funded trisector alliances to encour- ety; thus extensive efforts by CFs goes into supporting age partnership between NGOs, local authorities, and the sector directly or indirectly. Some CFs actually tar- the private sector. geted this sector. The FDC Mozambique stated that CBOs are its most important partners because they furnish the CF with information and experiences that Partnership with Civil Society allow formulation of strategies. The belief that these Organizations and Individuals organizations should be instrumental in shaping the community development agenda was shared by all All CFs facilitate and encourage partnerships with NGOs, emerging CFs, and these CFs went to great lengths to CBOs, and individuals at all levels. All emerging CFs ensure that CBOs of all types and sizes participated in Partnerships and Community Development Foundations 27 their activities. CFs also provided technical assistance Other CFs that received financial support from indi- to groups and helped them to write proposals and par- viduals include both CFs in the United Kingdom, Usti ticipate in policy dialogues. For example, WARF has nad Labem, BBCF, Mozambique, Oaxaca, and KCDF concentrated on strengthening African local organiza- (board only). Funding from individuals in developing tions and promoting participatory methods of research countries and Eastern Europe is limited because indi- and development for agriculture and natural resource vidual donations are not common practice. While peo- management; this was identified as one of the main ple give funds and their time for development efforts, problems affecting regional rural resource management. they are much more hesitant to give to an organization Similarly, KCDF is building capacity for associations of to distribute. In spite of these limitations all founda- CBOs who, in turn, should strengthen their members. tions were making efforts to reach different categories KCDF is also funding a number of NGOs to build CBO of people to support community development. Some, capacity and provide whatever expertise is needed. like the Montana Community Foundation, encour- CFs are also increasingly providing organizational devel- aged both rich and poor to get involved and to con- opment and management assistance as a direct means tribute to development in any way they can. of enhancing the capacity of communities to under- An important element of partnership not reflected take their own development. in this discussion is the amount of volunteer time given to foundation activities, including time by the board members and others serving on committees that are Partnership with Individuals formed as the need arises. Many of these volunteers Partnership with individuals is another innovative way use their social capital to recruit support for the CF. This CFs are supporting community development activities can be a powerful tool in Africa, Latin America, and Asia in their countries. Partnership with individuals occurs where social networks are very important. Some indi- through contribution of funds and volunteerism. viduals and companies give noncash donations, which Individuals also use their social capital to inspire oth- include the free use of meeting halls for communities, ers to contribute to CFs in one form or another. In the the publishing of CF materials, office space, and so forth. United States, private citizens are the major source of Many projects supported by CFs are run by volunteer funding for most community foundations. For exam- staff, often with very little funding. ple, the New Hampshire Charitable Foundation and the Montana Community Foundation have benefited sig- nificantly from individuals who are concerned with local Partnerships with and among Donor conditions in these states. They provide funding and Agencies time to support the activities of the foundations. These funds come as named funds or funds for general oper- A number of large foundations form partnerships in ations. Some funds are given anonymously to help support of CFs, as indicated in Table 3.1. deal with particular societal problems (for example, an In conclusion, it is important to note that by their very anonymous donor gave $9 million to NHCF to facili- nature,CFs cannot exist without partnerships. However, tate a drug rehabilitation program). In the United States, partnerships do not come easily since most groups are individuals and companies get tax breaks for donating accustomed to working on their own. These partner- to the nonprofit sector, unlike other countries where ships are often difficult for CFs to manage because there are no incentives to make donations to the non- they are required to respond to partners with differing profit sector. expectations and reporting requirements. 28 Community Development Foundations: Emerging Partnerships Table 3.1. Examples of Donor Partnerships Community foundation Donor partners CFBB Local authority, C.S. Mott Foundation, Rockefeller Brothers Fund, Open Society, European Union, Charities Aid Foundation, private sector, individuals Usti nad Labem C.S. Mott Foundation, private sector, National Foundation KCDF Ford and Aga Khan Foundations, Management Board WARF Ford Foundation, IDRC, contracts Oaxaca Community Foundation Private sector, IYF, Ford and MacArthur Foundations, CEMEFI OCF Private sector, individuals GBF Private sector, individuals, C.S. Mott Foundation (one-time endowment challenge grant) NHCF Individuals (most of the funding), private sector (minimal) MCF Individuals, private sector, C.S. Mott, Ford, North West, Steel Reese, and Turner Foundations FDC--Mozambique Private sector, MacArthur and Ford Foundations, individuals Uthungulu--South Africa Ford and Zululand Chamber of Commerce Foundations, Billiton Development Trust 4. Comparative Advantages and Challenges of Community Development Foundations Advantages of Community Development in both stimulating new financing and in connecting Foundations financial resources to the community level where they can have the greatest impact. Established CFs have This section briefly highlights the comparative advan- also been instrumental in creating opportunities for tages of CFs, as discussed in the previous discussions. NGOs to establish their endowments with the CFs; such These attributes are obvious at various stages of devel- action will hopefully bring stability for the NGO sec- opment and many are evident in fully established com- tor in the future. This was done in the Montana munity foundations. Community Foundation, where nonprofit organizations have their endowments with the CF. The CF, in turn, invests the endowments and gives the accruing bene- Targeting and Broadening Participation by Civil fits to the nonprofit organizations. This is a service non- Society and Donors profit organizations would not be able to access due to Most emerging CFs have been effective in creating mech- their small size. Some emerging CFs plan to provide anisms that target specific groups or isolated areas. similar services to NGOs and CBOs, but this is a long CFs essentially try to fill existing gaps in community process that requires education and trust building. development by targeting these often neglected areas In particular, CFs can: and issues. · Provide seed resources for the growth of civil society CF commitment to the capacity building of NGOs, organizations (particularly small organizations). CBOs, and other weak community groups enables CFs · Leverage diverse sources of financing for the projects to broaden the base of civil society participation in com- and programs of civil society organizations and thus munity development and to strengthen networks and generate opportunities for resource growth through partnerships by utilizing existing capacity. mobilizing new, innovative, or alternative resources At the donor level, CFs include stakeholders not for community development. CFs also provide oppor- traditionally regarded as donors. These include local tunities for utilizing social capital for community communities and their organizations, the private sec- development. tor, and individuals interested in the development of · Channel foreign aid to civil society and monitor the their own communities. Involvement of all these stake- development process for long periods of time, which holders increases the sustainability of development. could lead to sustainability. · Create opportunities for donors to become locally Mobilizing Resources involved. CFs have drawn financial contributions for existing and The nature and source of funding makes CFs future community development from a range of donors, unique in that they have a long-term perspective to including the private and public sectors and individu- development, and they allow for different players als . The ability to mobilize financial capital for CFs is to be involved in an ongoing process. It is through unique, and it enables CFs to have a considerable effect viable endowments--one of the most critical issues in 29 30 Community Development Foundations: Emerging Partnerships sustainability--that the long-term availability of devel- other contexts, it is expressed in different ways, and opment funds is ensured. resources from this sector are not traditionally given to systematic long-term development. People donate for immediate needs and hardly think about the sustain- Local Grant Maker ability of their efforts. Emerging CFs can harness indige- The role of local grant maker is one where a local grant- nous and local forms of philanthropy to benefit local making institution supports a broad range of activities communities and enhance development. The legal sta- and creatively addresses emerging and changing com- tus of CFs in some countries also offers a highly flexi- munity needs. The grant maker's long-term involvement ble mechanism to accept charitable contributions from with these communities gives them the understanding public, corporate, private, or foundation sources. and knowledge to more effectively monitor and sup- Individual donors find CFs to be advantageous and port community activities. Knowledge of communities accommodating regarding their charitable interests. CFs also enables CFs to efficiently identify activities and are an untapped resource that can benefit communi- groups that merit support, and what is needed to help ties in many developing countries. these groups use that support. In addition, the CF mon- itors the risks that such groups are likely to encounter. Promoting Partnerships CFs connect people, institutions, and donors. The whole Flexible Instrument for Community Development concept is based on partnerships of all different types At the community level, CF structure allows commu- and forms. This diversity is particularly important when nities and organizations to maintain their independence addressing poverty, which is too complex and multi- by pursuing their own development agendas at their faceted to be resolved by one organization. own pace. Thus, strength and building capacity are pre- served and utilized for greater participation in devel- Acting as an Interface for Public Policy Dialogue opment. This flexibility has been one of the key attributes of the CF concept because countries are able to apply CFs play the interface role between civil society and different aspects of the concept to local development the government and business sectors. The NHCF and realities. Another important characteristic linked to flex- the MCF brought together people and provided resources ibility is avoiding the duplication of efforts by harnessing to address policy issues. WARF also mediates between existing capacity within the community in order to the government and local farmers' associations to make strengthen it. the necessary changes in agricultural development. The role of CFs as convenors is likely to play a significant role in policy dialogues as the emerging CFs mature. Involvement of the Private Sector CFs give the corporate sector a much-needed vehicle for effectively addressing their social objectives and for Common Challenges to Community providing an intermediary between the community and Development Foundations the business sector. In all 12 case studies, there were strategies to involve the business sector in the devel- CFs face a number of challenges, which are briefly high- opment and management of CFs. lighted in this section. Development of Philanthropy New Concept Advocates Mechanisms that May Be Unfamiliar to their Constituents In the United States, and Canada (where the concept is fully developed), CFs provide a central philanthrop- As clearly indicated, CFs are a new and unfamiliar mech- ic vehicle for donors of various sizes to meet their indi- anism at both local and donor levels. For example, cre- vidual charitable interests. While philanthropy exists in ating a formal legal organization that both mobilizes Comparative Advantages and Challenges of Community Development Foundations 31 funds and operates programs is unusual; traditionally, they are willing to provide funds for specific projects. mobilizing funds and making grants to the civil soci- While myriad reasons for not supporting endowments ety sector is not done by local institutions. exist, lack of trust is the fundamental obstacle. This lack of trust is due mainly to inadequate accountability and transparency, which characterizes the NGO sector. The Creation of CFs Is a Long Process sector also lacks experience in profit-making ventures As indicated previously, establishing CFs is a long process, like investment--a problem compounded by the unfa- and most donors are unwilling to wait for the process vorable investment climate in some of these countries. to take hold. The time it takes to fully establish CFs in Further, mechanisms for giving endowment funds do the United States, where an enabling environment exists, not exist in most organizations and are actually dis- is approximately 10 years. Similar time spans exist in couraged in some. emerging CFs. For example, most emerging CFs Also, it is difficult to raise endowment funds from took more than two years of negotiation and discus- local sources due to the lack of incentives for philan- sion to take shape. At the two-year point, some CFs thropic giving; unfavorable regulatory framework; unre- were started as pilots and others as projects of other big- liable investment climate; and rapid inflation. ger foundations. This concept is also new to most stakeholders, includ- Lack of Fund-Raising and Grant-Making Experience ing the government, private, and social sectors. This is compounded by a lack of information on how CFs are Fund-raising for endowment and disbursement to the formed and run, particularly in a developing country civil society sector is a new concept in most of these context. This trend is slowly changing, however, with countries. Traditionally, each civil society organiza- the creation of a number of initiatives that facilitate infor- tion will raise funds for operations and survive from mation gathering, sharing, and exchange. Some donors one grant to the next. With few exceptions, no other have also organized field visits and workshops to accel- civil society organization raises funds to make erate the agenda but these efforts are not commensu- grants to the civil society sector as a whole, and their rate with the rapid growth of CFs and do not usually grant-making capacity and experiences are limited. reach public and private sectors. Fund-raising from diverse sources, including the private sector and individuals, is a previously untapped resource in most developing countries. The local fund- Generating Multiple-Purpose Funds raising effort is also affected by the intensity of pover- One of the biggest challenges for emerging CFs is to ty, which precludes individuals having the funds to "generate sufficient resources for current . . . opera- invest in community development efforts. Further, tions and future sustainability, while maintaining insti- the sociopolitical conditions in each country are dif- tutional autonomy" (Zwick, Ashman, and Brown 1997: ferent, and those conditions also affect the ability to 21). "This calls for bridging very different environments, raise domestic funds. usually comprised of the elite who control large pools of resources and the grant-making environs populated Inexperience in Investment and Fund Management by NGOs and CBOs who possess limited resources and management skills" (Zwick, Ashman, and D. Brown Another important challenge for emerging CFs is their 1997: 6). The skills to deal with these issues are differ- lack of experience in the investment and management ent in each country and will require time to develop. of funds. This shortcoming is experienced at different levels. For example, some countries, like Mozambique, lack a vibrant investment sector for the foundation to Lack of Support for Endowment-Building Efforts invest in. Where these opportunities exist, the investors Building endowments is another critical problem fac- have no experience with foundations or NGOs, and they ing emerging CFs. This is because, traditionally, most are hesitant to give shares to a CF. In some countries, donors do not give funds to build endowments, although existing regulations make it difficult for CFs to invest. 32 Community Development Foundations: Emerging Partnerships Where opportunities for management exist, the exper- of the local currency greatly affected an emerging local tise is often too expensive for CFs to access. Moreover, CF that had been promised funding by local banks. The it is uncommon for the nonprofit sector to get involved currency crashed overnight and the banks had no funds in profitable ventures like investment. Finally, most new to give to the foundation. CFs lack the volume of funds required for the invest- ment to make a significant difference. Diversifying Funding Sources Investment policies in developing countries and emerging democracies where the case studies in this Most civil society organizations in developing countries report originated do not support emerging CFs. For do not raise funds from diverse sources to make grants example, in Eastern Europe, recent investment poli- to the same sector. Further, most donors do not coor- cies do not favor raising endowment funds. Restrictions dinate their funding efforts and are reluctant to work include limiting the amount to be invested and deny- in partnership with other donors. These factors, among ing CFs the opportunities to invest outside the coun- others, make it very difficult for CFs to diversify their try where they would get higher returns. Such factors funds. work against CFs and must be addressed if endowments are to become an attractive option for donors. Lack of an Enabling Environment and a Regulatory Another hurdle CFs face is the need for financial Framework and organizational structures able to manage funds from different sources with varied accounting procedures. Most countries lack a regulatory framework for CFs. This requires that CFs build the expertise to do so, which While NGO laws may exist, these do not usually cover may be available but very costly. It is, however, worth important issues affecting CFs. Consequently, new laws noting that private foundations that support CFs have have been created for governments who wish to accom- been willing, thus far, to provide the funding to address modate CFs. some of these issues. Also, in most cases, emerging CFs are grappling with environments that lack supportive tax laws; in par- ticular, the incentives to motivate the private sector Frequent Currency Devaluation and wealthy individuals to contribute. Furthermore, the Another particularly challenging occurrence is that of formal philanthropic infrastructure existing in the United "proactively managing funds whose currencies are sus- States and Canada does not exist in most countries. ceptible to high inflation or frequent devaluation, and Pursuing financial donations from wealthy individu- in striking the appropriate balance of low-risk and high- als, practiced by CFs in the United States, does not apply return investments" (Zwick, Ashman, and Brown 1997: in most developing countries (Zwick, Ashman, and 14). This is a very real challenge for the CF cases stud- Brown 1997:20). Although indigenous forms of giving ies in Africa, Eastern Europe, and Latin America. In exist in many countries, it is unclear as to whether emerg- some countries, the high level of inflation adversely ing CFs will benefit from this source. affected endowment funds, particularly in countries with regulations that do not allow funds to be invest- Building Partnerships ed in foreign currency. This problem is further com- pounded by the fact that the external environment in Building partnerships takes time, particularly in a con- which the local foundations operate is unpredictable text where donors work independently. Partnerships and influenced by both national and global changes. are even more difficult for CFs who are trying to per- For example, "currencies can be drastically devalued suade multiple stakeholders in the private and public overnight, which evaporates the fund balances of these sectors and civil society organizations to work togeth- institutions and the wealth of actual or potential local er. In spite of these challenges, emerging CFs have shown donors" (Zwick, Ashman and Brown 1997: 4). Such marked success in raising funds from local and inter- was the case in Russia in 1998, where the devaluation national sources. 5. Recommendations and Possible Next Steps For the World Bank, partnerships are the key to enhanc- to the private sector. The Bank could play a leading ing development effectiveness and impact. Partnerships role in providing the information to private sector groups are particularly important in the fight against poverty and interested in investing in community development. The the efforts to foster sustainable development, as revealed Bank could ensure that the information is accessible to in recent World Bank strategies like the Comprehensive all stakeholders, including CFs. The information from Development Framework (CDF) and the Poverty the case studies could also be used to create develop- Reduction Strategy Papers (PRSP), among others. ment manuals to support the creation of CFs since there Partnerships with civil society, although important, is already demonstrated interest by some social invest- continue to be a challenge to many donor agencies. ment funds, like the Romania Social Fund. To facilitate While a number of partnerships have been forged with understanding of the CF concept, it is important to NGOs, CFs present an opportunity to broaden the scope establish a learning and support network that could be of civil society participation. The CF concept also pre- funded in partnership by interested donors and foun- sents opportunities to partner with new stakeholders dations. This will ensure the dialogue on CFs contin- to attract new resources to community development. ues, which will benefit existing and emerging CFs in While no attempt is made to prescribe actual next steps, developing and transition countries. the following section will highlight a few possible areas of partnership in general, particularly as they relate to Bringing in the Private Sector World Bank operations. The World Bank has a vested interest in strengthening partnerships with the private sector. Partnership with Information Dissemination the private sector is, however, a fledgling process that The community development foundation concept is requires support. For example, the private sector should new at both the community and donor levels; it is also be aware of the advantages of investing in communi- a departure from traditional support channels to civil ties; at the same time, CFs and similar institutions society organizations, and to community development need to understand how the private sector operates. practices in particular. Very little research has been done The forum for this kind of exchange needs to be estab- on community development foundations. This collab- lished, and donors who have access to the private sec- orative research effort between the Ford Foundation tor can support initiatives to bridge the gap between and the World Bank is providing new information. The the sectors. This is already happening in some coun- first step, therefore, is to disseminate the results of the tries like Kenya where the World Bank Kenya Resident study within the Bank, to other interested donors, and Mission gave a small grant in support of meetings between to the private sector. The aim here is to foster under- the Kenya CF and the private sector to discuss possi- standing of the CF concept. bilities of partnership. These findings will also need to be shared with foun- Other similar opportunities to forge partnerships dations and emerging CFs that lack access to experi- exist among companies like Shell Oil Company, which ences in other countries. The CF concept is also new are interested in investing in community development 33 34 Community Development Foundations: Emerging Partnerships in locations where they work, but lack both the exper- ensuring transparency and accountability at the local tise and local knowledge to do so. Some companies are level and thus support efforts to combat corruption. seeking this kind of knowledge, and the World Bank can help by providing the information and the links to Enabling Environment foundations and other interested stakeholders. The Business Partners Program in the World Bank could also There is no suitable legal framework for emerging CFs go a long way to enhance partnerships between the in most developing and transition countries. Despite private sector and CFs and could support both exist- records of improvements in the legal framework of ing and emerging CFs. NGOs, other issues affecting the operation and success of CFs remain. The World Bank initiative to provide an enabling environment for NGOs could incorporate CFs Targeting the Poor and Other Marginalized Groups in these discussions and ensure a supportive framework Community development foundations have been effec- for the sector as a whole. tive in targeting specific groups like poor people and The Bank could also provide information to inter- those living in marginalized areas. CFs present a great ested governments and partner with interested foun- opportunity for the World Bank and other agencies inter- dations and donors to support these governments. Pilot ested in poverty reduction to work with local, home- projects could also be conducted in a few countries grown poverty reduction initiatives. These efforts would and the subsequent lessons learned could be used to also strengthen and build the capacity of local author- inform other governments. ities that are targeted by CFs. Such activities would pro- vide opportunities for partnerships in community-based Mobilizing Funds for Operations and Building development. Endowments Building endowments is a challenge for donor agen- Enhance Partnerships in Community Development cies that do not usually support the process. Yet build- CFs have effectively facilitated networking and created ing endowments could contribute to strengthening the alliances among different sectors. There are many Bank financial capital of the nonprofit sector. Endowments projects that could both benefit and contribute to the would also ensure long-term availability of funds nec- development of CFs. For example, new CFs could be essary for sustainable development, including poverty formed as a follow-up to social investment funds, which reduction. Such actions require the building and strength- target CBOs and community development. The CFs' ening of partnerships, which is a CF cornerstone. concentration on supporting capacity-building efforts Recent trends on endowments are encouraging. For could go a long way to sustain some social fund activ- example, partnerships with other donor agencies through ities beyond the project period. CFs' ability to forge part- global environment facility (GEF) funds have produced nerships could also bring in resources and expertise that endowments for the conservation of natural resources. could enhance the impact of social funds. Although creating this kind of fund for community Other initiatives that could benefit from CFs include development may be difficult, it is worth a try given social capital and the Community-Driven Development renewed interest in sustainable poverty reduction strate- Initiative (CDD), among others. CFs can also strength- gies. Donor agencies could come together to conduct en decentralization efforts. Three of the case study CFs pilot projects. In so doing, agencies can decide whether specifically worked with or supported partnerships with this is a strategy they want to promote. There is already local governments. Working with the local govern- interest among some donor agencies regarding CFs, but ment could go a long way in strengthening links between they lack adequate knowledge. The findings of this study the local government and the communities. This part- could be used to explore what further possibilities exist, nership could also influence service delivery. Further- especially given the interest shown by a number of foun- more, meaningful partnerships could contribute to dations and donor agencies. Part III Profiles of Community Development Foundations 6. Africa Case Studies Community development foundations have generated independent status places them in a strategic position a lot of enthusiasm in Africa despite the fact that CFs to bring people together to support local initiatives who are a new phenomenon in the region. Two of the most might not otherwise meet. These local foundations compelling reasons for this interest are that the finances also offer institutional mechanisms for the redistribu- for the NGO sector are decreasing, and that communi- tion and utilization of local resources. For this process ties need to participate in their own development and to take place, a conscious balance between pursuing particularly in poverty reduction efforts. To date, most financial resources and reducing poverty is necessary. of the funding for the civil society sector has come In spite of the many positive features, the CF con- from international donors, earmarked for specific pro- cept is new, and it challenges the traditional modes of jects; these funds are not necessarily addressing the long- development. Furthermore, the CF concept has to be felt and long-range needs of the local people. These adapted to suit the context of different societies because project-specific initiatives also seem to ignore the mul- the political, economic, and legal environment varies tifaceted nature of poverty. CFs have, therefore, sought from country to country. There have been a lot of unex- to diversify funding, to give special consideration to pected problems, and no roadmap to show the way. local sources of funding, and to seek flexible interna- Another challenge faced by emerging CFs is the build- tional funding. Most of the foundations have also con- ing of endowments. Endowments support both the long- centrated on the capacity building of local NGOs and term stability and the self-reliance of development work, CBOs. All are trying to establish transparent account- and they strengthen the civil society sector in that they able governance structures and innovative partnership- can provide sufficient income to cover the operating based funding mechanisms. Most of the local foundations costs and the organization's core costs, assuming that do not implement their own programs but are strength- the income for program implementation will come from ening or building capacity for the local institutions grants. Endowments bolster the organization's long- that they support. While they strengthen the individ- term decisions on program plans, staff, training needs, ual capacity of these institutions, they also strengthen and policy, without having to reconsider these elements their capacity to work with CBOs. at the end of every grant. For almost every foundation, As far as funding is concerned, CFs seek funding building endowments is an uphill battle. The success from traditional donors as well as donors who have of endowment-building will require education, many not traditionally funded the NGO sector. These latter changes at the individual and country levels, and a lot donors include both the private and public sectors in of time. Most countries will also need to be innovative some instances. All CFs target the private sector for both in how they invest this money given the unstable eco- financial and human resources. Other sources of fund- nomic situation in much of Africa. ing include the affluent people in local communities Community foundations worldwide take a long time who have different kinds of assets that can be used for to establish. In the United States, for example, it takes community development. CFs create an opportunity up to 10 years to get a CF fully on its feet although the to forge partnerships with local authorities, grassroots environment is supportive. Emerging CFs are bound groups, and the corporate and voluntary sectors. CFs' to take a long time to establish because of a number of 37 38 Community Development Foundations: Emerging Partnerships factors. One factor is the current forms of giving and in 1990, by a group of Mozambicans in response to the the fund-raising mechanisms; these have not necessar- challenges facing the civil society sector and communi- ily been transparent or accountable. This means that ty development in general; it was initially called the an emerging foundation needs time to build a positive Association for Community Development (ADC). reputation and credibility before it can get funding from The idea of developing a foundation came after many different sectors. This is a time-consuming process discussions among Mozambicans and other interes- that is difficult for donor agencies. Donor agencies must ted groups. remain flexible so as not to jeopardize the process that The idea of establishing a local foundation dates back is so important in building trust for the emerging foun- to meetings between Graca Machel (the current presi- dations. The changing global and local conditions give dent and one of the founders of the foundation), some opportunities for these CFs to thrive. The following sec- Mozambican leaders, Peggy Dulany of the Synergos tion looks at CFs and foundation-like institutions in Institute, and the MacArthur Foundation. After being four countries, namely FDC Mozambique, Kenya introduced to the concept of a local foundation, the Community Development Foundation, Uthungulu founding group decided to further consult with more Community Foundation in South Africa, and West Africa people in Mozambique to get their feedback on whether Rural Foundation based in Dakar, Senegal that operates this was the best way to move forward. After a number in five countries. of discussions, the MacArthur Foundation agreed to give a planning grant of $25,000 to facilitate country- wide consultation. The funding was given through Foundation for Community Development, Synergos Institute, which helped organize a planning Mozambique meeting in 1990 in Maputo. The aim of these consul- tations was to hear what others in Mozambique thought of the idea of establishing a foundation to support domes- Context and History tic NGOs in their country. Mozambique gained political independence in 1975 but To facilitate this process, the founding group made it was seriously affected by a succession of wars that contacts in all provinces and selected those who would ended in 1992. This prolonged war period adversely come to the consultation meeting. Funds were needed affected the socioeconomic development and social well- for this group to travel around the country; since they being of the majority of Mozambicans. As noted by had no funds, they approached their friends in com- Micou, the country "is suffering the combined effects panies and requested that they underwrite their airplane of backward colonialism, years of underdevelopment, tickets. Although the money raised for this purpose was and lack of qualified human resources. About two-thirds not a lot, it set the pace and created a forum for indi- of Mozambican households are absolutely poor. Owing viduals and the private sector to get involved in the to the war and migratory labor, 25 percent of house- foundation. It also demonstrated that the local found- holds are headed by women who live in almost absolute ing members were serious about raising local resources poverty. Four million Mozambicans have been displaced to address the development issues that mattered to them. within the country and in neighboring countries. Half It also demonstrated a commitment by the local com- of the population has been affected by war. The health panies to support community development efforts in network only covers about 30 percent of the popula- the country. tion" (Micou 1997: 140). This situation has hampered The consultation was held in 1990, and it included the development of the civil society sector. As a result, people from the provinces as well as the government, most of the operating NGOs today are new and were private sector, and donors. To have all of these groups established after the war to access donor funding. Donor meeting with one another was a departure from the funding was easily available at the time, while some usual noninclusive way of conducting development NGOs had to change their missions to gain access to business. This meeting broadened the decision- these resources. FDC was started against this backdrop, making base, and perhaps explains the support that Africa Case Studies 39 the foundation has gotten from different stakeholders has evolved over time; initially, the ADC experience over the years. The end result of this consultation was indicated "that external financing dependence of the decision that forming a local foundation was the Mozambican development agents, mainly NGOs right thing for Mozambique, and the process was then and CBOs, prevented Mozambicans from taking pri- started. After this meeting, the government declared for mary responsibility for the improvement of the the first time the freedom of association for NGOs. It disadvantaged people's living standard. As a result, a is important to point out that at the time, there was only desire emerged to establish a Mozambican civil one other NGO--the Christian Council--and ADC society institution to support local initiatives through became the second. There was no legislation for estab- community investment and community capacity lishing a foundation; the founding group actually ini- building and local actors who work with them" tiated the legislative process to enable a foundation to (FDC 1999). exist. "At the time, the main requirement was an endow- The overall objective of FDC is to contribute to the ment, a regulation left over from colonial days, when eradication of poverty, and to promote self-confidence, endowment was expected to come from an enterprise solidarity, and justice in the Mozambican society. The or a wealthy individual. But the Foundation was revers- strategic objectives include: ing the process by first creating the institution and · Stimulating the capacity of individuals and then raising the money" (Micou 1997: 143). ADC was Mozambican families so that they can improve their thus founded to help prepare legal framework, endow- living conditions and develop their communities; ment, and institutional capacity to create a foundation. · Promoting capacity building of NGOs and other civil Although the need to create the institution was clear at society organizations so that they can intervene effec- the time, it was still difficult to decide what kind of an tively in community development and increase peo- organization could meet the needs of the country, and ples' participation in their activities; and especially in the NGO sector. This was compounded · Encouraging synergies and mobilizing resources by the fact that the country was facing a lot of prob- from individuals, civil society, private sector, gov- lems and people had different opinions about what kind ernment, and individual donors for sustainable com- of organization would be suitable. Follow-up meetings munity development. with a number of NGOs in the region led to the deci- sion to form a civil society association. This group and FDC wants to contribute to the poverty reduction others involved at the earlier stage formed what is known efforts in the country as indicated by the focus of their today as founding members and they still play an active programs, most of which target vulnerable groups coun- role in the CF. They are very important stakeholders and trywide. They take a broad view to the causes of pover- can actively influence what happens in the CF and give ty and aim to address structural issues and other aspects the necessary support and clout needed to keep the that may have come about as a result of their history. organization accountable. After the initial founding While economic issues are important, social issues must years, the Foundation for Community Development also be dealt with so that the root causes of poverty can was constituted in 1994. The next section looks at the be adequately understood. existing structure of FDC, which has been evolving over To accomplish the mission, FDC fully acknowl- time, and how it addresses issues of program, gover- edges the importance of key stakeholders and has iden- nance, and finance. tified four. The first (principle) stakeholder is a group comprised of the CBOs, their communities, and NGOs. Mission Statement and Objectives CBOs represent one of the most important stakehold- "FDC is a private not-for-profit grant-making institu- ers because they furnish the CF with information and tion that aims at building partnerships for strengthen- experiences that allow formulation of strategies. The CF ing the capacities of disadvantaged communities also feels that the civil society organization should be with the view of overcoming poverty and promoting instrumental in shaping community development agen- social justice in Mozambique." This mission statement da, especially the NGOs. 40 Community Development Foundations: Emerging Partnerships The second stakeholder is the government, with relations; an executive director supported by a program whom FDC wants to create an enabling environment coordinator, plus five program managers; and other (both legal and political) for the civil society sector. administration staff responsible for day-to-day program The government has created space for NGOs to oper- implementation of FDC. ate and has played a significant role in the approval of a law that allows tax exemption for money given to social General Assembly and cultural programs. FDC also facilitated creation of The General Assembly is comprised of founder mem- the foundation that did not exist before. It is important bers, and institution and community representatives. to note that FDC has involved the government since the These are people with extensive experience in local de- beginning because they realize the important role that velopment issues who have been involved in looking for government can play and should play to facilitate different ways to address community development prob- operation of the foundation and the civil society sector lems and to link people to different types of resources as a whole. FDC has also educated the government on to effect the necessary changes. This founding group has the role and importance of the civil society sector and since expanded to include others who have supported the need for the government to facilitate their role in the CF in one way or another. There are 40 people in the development. General Assembly who meet once a year to look at dif- The third stakeholder is the private sector, which has ferent reports and policies, and to keep the CF on track. also been involved in the FDC since the beginning. As pointed out in the previous section, they provided some Board of Directors of the funding for the countrywide consultation held The Board of Directors, which makes fundamental deci- in 1990 and have since continued to be involved in the sions on the affairs of FDC, has 10 members. They serve foundation in various capacities. The FDC seeks fund- a maximum of two one-year terms and leave on a stag- ing support for community development from the pri- gering basis to allow continuity. Many of these board vate sector and wants them to start considering funding members have worked in development for many years social development as part of their development program. and some hold high government posts (these were The fourth stakeholder group is the donors, and these appointed as board members before their current office include bilateral and multilateral agencies and large pri- in government). The board members know each other vate foundations. For some time, the FDC has been talk- very well and have worked together at different levels. ing to bilateral agencies about increasing the flexibility The Board chair and President of FDC is Ms. Graca in funding development by allowing FDC to manage Machel. their development agendas locally. The FDC also sees The Board approves the program, and decisions are multilateral agencies like the World Bank as important usually made by consensus. To make decisionmaking stakeholders because they define the development agen- more effective, specific board members have been da in most countries; the FDC is hoping the Bank will assigned to specific areas of their expertise so that they influence policy direction in Mozambique. can give more input and direction. These include asset Given FDC's focus on poverty eradication and the development, program, and legal matters. renewed support and interest from government and donors to address poverty in a meaningful way, the foun- Program Development and Activities dation has the potential to lobby and advocate for pover- ty reduction policies that are holistic. FDC's program has evolved over time to respond to the changing needs of the civil society sector and to com- munity development on the whole. For example, "because Governance Structure of the significant need to reconstruct capacity in FDC's structure is made up of a general assembly; a Mozambican communities after the protracted war, FDC board of directors; a strong presidency in charge of focused its initial grant making in the areas of supply- providing strategic guidance, fund-raising, and public ing basic needs, helping expand opportunities for income Africa Case Studies 41 generation in communities, building human skills and intellectual contributions to shape policies and strate- capacitythrougheducation,andstrengtheninglocalNGO gies and to develop programs. management and program capacity" (Micou 1997: 40). Building on past experience, FDC has a five-year Another aspect of FDC programs is that they have strategic plan that focuses on four areas, namely, social made a concerted effort to use existing structures instead development, economic development, institutional of building new structures. The main objective here is development, and development policies and strate- to build on existing resources to ensure sustainability. gies. The specific objective for social development is to In cases where there are no local organizations, espe- improve social conditions and to disseminate experi- cially in rural areas, FDC facilitates formation of new ence on sustainable community development. The objec- CBOs. Support for new local CBOs is important in tive for economic development is to increase the income Mozambique where development of the civil society of small-scale producers, Mozambican families, and sector was hampered by war for many years. In addi- communities. The specific objective for institutional tion, FDC has tried to focus on areas without much development is to increase the organizational, techni- NGO activity. FDC has also helped facilitate the for- cal, and financial capacity of NGOs and CBOs in order mation of rural resource centers and libraries to encour- to give a greater impulse to sustainable community age information-sharing and adult literacy. development. The objective for development policies An important aspect of the programs that FDC sup- and strategies is to influence the government, private ports is the requirement that projects originate from the sector, donors, and other development agents to set communities themselves, and that the communities par- favorable policies and programs for NGOs and CBOs ticipate in every stage of the project to ensure that FDC's and for community development. grants directly meet the needs and objectives of these FDC does not usually implement these programs but communities. FDC mostly cofinances projects and main- works in partnership with NGOs and CBOs and other tains contact with the group or the NGO throughout relevant partners. It is important, however, to point the process. That way, the group or NGO can build out that initially, the CF had to implement some of the capacity that will continue after the funding cycle. projects directly because of the lack of capacity of part- The cofinancing process has four steps that include ner NGOs and CBOs. FDC also needed a track record initial contact, proposal development, execution, and in order to access funding from donors who knew evaluation. In the initial contact stage, FDC concen- very little about the CF and its activities. Further, trates on building a relationship with the community FDC has maintained a learning agenda since its incep- or the NGO and getting a clear idea of their objectives. tion and implementing some projects provided this In the proposal development stage, FDC takes a proac- opportunity. FDC partners are divided into five cate- tive role in designing and developing projects, with a gories, as follows: long-term goal of the communities themselves estab- lishing the capacity to take over the proposal develop- · Organizations who share common goals, interests, ment phrase and to raise funds independently. During and visions, namely CBOs/NGOs; the execution phase, FDC provides technical assis- · Cooperatives, cultural groups, clubs, local govern- tance and access to small inputs, advice, communica- ment structures, research institutions; tions, and suppliers. In the final stage, the project officer · International partners with whom FDC carries out conducts, with the community or NGO partners, a for- common development agendas, either in interna- mal evaluation of the progress and obstacles in meet- tional advocacy or in facilitation of strategic dia- ing the project's stated objectives. These evaluations, logues and fund-raising; together with internal evaluation, inform the cofinanc- · Donors with whom FDC maintains long-term bonds ing process and make recommendations concerning expressed through a five-year collaborative program next steps, including follow-up proposals. based on common ideas and values; and FDC cofinances development activities through grants · Associate members of FDC who provide valuable and credit. Their support aims to build capacity within 42 Community Development Foundations: Emerging Partnerships the community so that the community itself can plan external debt relief, rehabilitation, and children as indi- and carry out its own projects to improve the quality cated in Box 6.2. of life. The focus is on strengthening self-reliance and As indicated in the previous section, most of FDC's increasing the human, material, and financial resources activities have been concentrated on building the capac- at the community level. The Foundation supports pri- ity of NGOs and CBOs. FDC has been able to accom- ority projects that develop human potential, generate plish this through training on the one hand, and income, and put in place critically needed infrastruc- institutional support on the other, and through facili- ture. FDC is committed to building capacity within the tating the establishment of a National and Provincial nonprofit sector and sees itself as a resource center for Forums of Mozambican NGOs. ideas and practical action. To cover the country and to monitor its activities, the Resource Mobilization and Building Endowment FDC has program staff who manage certain sections of the country or thematic areas. They have three regions, Since its formation, FDC had an objective of raising including south, central, and northern areas, and three funds from both domestic and international sources. people are in charge of these areas and operate in eight The founding members were very committed to rais- of the ten provinces. ing domestic funds and led the way by contributing FDC has also funded capacity-building seminars and seed money to the endowment fund. They were also courses related to Mozambican NGO development; it committed to involving all sectors in this endeavor, has supported and participated in forums that pro- and they approached local companies and joint ven- mote peace, democracy, human rights, landmines ban, tures for initial seed money. They did not wait to form Box 6.1. Examples of Some of the Roles of FDC Grant maker: FDC managed to cofinance construction of civil society of Mozambique and it supports actions that 57 classrooms for roughly 5,000 pupils; three buildings for aim at influencing policy, and creating a favorable envi- extracurricular activities; and provided additional train- ronment for community development. In that regard, it ing for 92 primary school teachers. FDC has also con- cofinances, executes, lobbies, and participates in advoca- structed wells for about 5,000 people; provided capacity cy working groups, including those concerned with an building to 130 women to implement income-generating antipersonnel landmines ban, external debt and develop- activities; provided microcredit funds for about 1,000 fam- ment, land tenure, child development and protection, micro- ilies; and cofinanced several other community develop- credit, and girls' education. ment initiatives in economic and social areas. Networker: FDC promotes dialogue between national and Capacity builder: FDC cofinanced the training of NGOs in international social organizations and social networks to collaboration with specialized institutions in the areas of enhance the exchange of ideas; for example, roundtable project design and analysis, financial management and meetings to deepen the understanding of Mozambican asso- accounting, and leadership. The training sessions benefit- ciations and the role of civil society in development. ed about 135 representatives of NGOs from three provinces. FDC supports community development projects that par- Convenor: In collaboration with other institutions, FDC ticularly benefit vulnerable groups in the areas of popula- convened several events, such as seminars, debates, and tion, income generation, and social equality. Economic conferences to discuss issues related to community devel- development includes projects aimed at benefiting women; opment; for example, a seminar on decentralization in for example, vegetable farming, animal husbandry, soap Mozambique, a seminar on the role of NGOs from the imple- making, sewing, fishing, and microenterprise, as well as mentation of the National Program for Environment, and various pilot projects to try new ideas. In the social area, a seminar on institutions, systems, and credit for the poor. the programs that have been funded include: building pri- mary schools, supplying potable water, promoting girls' Advocate: FDC is committed to raising the voice of the schooling, promoting literacy, and primary health care. Africa Case Studies 43 Box 6.2. FDC Strengthens the Civil Society Sector FDC helped form the Forum of NGOs, which is a local tect the land rights of peasants. Currently, it is trying to umbrella organization for NGOs. Support for such an orga- build capacity for local associations to address these land nization was motivated by the existing weak NGO sector issues. One of its major activities included a peaceful march in the country, and the need to build capacity within the to Maputo organized to lobby government not overall sector. FDC had as one of its objectives the forma- to privatize land. This march was a great success and so tion of such a forum so that NGOs could effectively dis- far the government is listening to the pleas of the local cuss their problems and work together. FDC gave technical people. ORAM also disseminates land law and cre- and financial support to this umbrella organization to ates new CBOs where they are needed but do not exist. draft a NGO constitution and discuss it with NGOs before ORAM has activities in six provinces where it has provin- it would be submitted to the government for approval. cial offices. The process to create this umbrella organization has taken about four years; they have held 11 mini-forums in the National Organization Against Drugs (NOAD): This organi- provinces and convened a formal assembly with delegates zation was inspired by a seminar supported by FDC; it from these NGOs in October of 1999. mainly trains activists that work with other organizations. The Forum of NGOs will not have an implementing NOAD has three offices in three provinces and each office role but will help provincial offices implement their pro- has its own program. The group tries to identify interest- gram. They also want to create horizontal links between ed local groups and through seminars, debates, and some- the NGOs and to strengthen links between NGOs, CBOs, times theater; NOAD trains citizens to address drug related and other associations and groups like women's groups. issues. Currently. NOAD is affiliated with 147 NGOs in four provinces, and this number is increasing. Finan- FDC Supports Important Policy Dialogues and Debates cial support has come from Oxfam and the U.N. Center for Drug Control. The organization also maintains a tradi- ORAM (a local organization working on land issues): ORAM tional relationship with the Ministry of Health and with is one of FDC's partners whose main objective is to pro- hospitals. the organization and then let the private sector decide initial operating funds. what role they could play; instead, they involved the The transformation from ADC into FDC required private sector in the initial consultation not only as new forms of organization and financing, including participants but also to fund some of the groundwork the fundamental objective of creating an endowment to organize the consultation. For example, they under- in order to constitute its unique program basis. wrote some of the plane tickets for founding members Consequently, a wide range of fund-raising campaigns to go to the provinces and organize participation in the were launched involving its founding members and initial consultation. Others involved in this process ordinary citizens, corporations, religious institutions, included friends of the founding members, who were and donors (mainly private foundations and bilateral also invited to both participate and contribute funds to agencies). At the same time, FDC benefited from a FDC. Through this process, FDC was able to raise debt swap opportunity out of the Mozambican exter- $300,000 in seed money from local sources. As the pres- nal debt (FDC 1999: 4). FDC is also trying to generate ident of the Foundation, Graca Machel, puts it, "with their own money through investments ( mostly through this seed money we had courage and dignity to go to endowments). donors and ask for funds." An important source of funding at the beginning of Private Sector this process was the John D. and Catherine T. MacArthur FDC has received both operating and endowment funds Foundation, which gave FDC the funding to facilitate from private companies both inside and outside countrywide consultation in 1990. After the formation Mozambique. Examples of companies that have given of FDC in 1994, the MacArthur Foundation provided funds to FDC include Coca-Cola, Mozambique Beer 44 Community Development Foundations: Emerging Partnerships Brewers, Entreposto (a vehicle company), and Manica Finally, in 1996, FDC received the last payment, which Freight Services. Like many African countries, the tra- had by this time been reduced by $10 million to $6,000-- dition of private sector involvement in community devel- a result of devaluation (Micou 1997:144). opment is limited or nonexistent. FDC has succeeded in engaging some of these companies to not only pro- Investing Endowment Funds vide funds but also their expertise. Many were also Today FDC has an endowment of $6 million, which has involved in the initial national consultation and have been invested in banking, insurance, real estate, and continued to play an active role. rotary. FDC bought shares in the International Bank in Mozambique (5 percent). Currently FDC is develop- Debt Swap and Buy-Back ing an investment policy that must be ethical and not FDC and particularly the president have been very conflict with the values of FDC regarding poverty reduc- aggressive in getting funding from various sources, tion. This is a challenge given the limited opportuni- including nontraditional sources like the government ties to invest in the country, and the fact that existing and the private sector. The key to the private sector opportunities may be in conflict with FDC's poverty funding was involving them from the beginning; also reduction efforts and consequently hurt the poor. beneficial was the founding members' ability and will- ingness to use their social capital to involve their friends The Unique Role of FDC in FDC. The founding members' conviction about the role the foundation should play to reduce poverty made Promoting Philanthropy and Facilitating them passionate about soliciting both funds and other Innovative Resource Mobilization for types of resources for the CF. They also utilized what- Community Development ever information and connections they had to get oth- FDC is the first and only organization that emphasizes ers involved in FDC. philanthropy and the involvement of different stake- Succeeding with the debt swap was a clear demon- holders in the public, private, and social sectors. It has stration of how networking, social capital, and com- been a trailblazer in that it mobilized its own funds mitment to an idea can make a difference. The and successfully generated new resources to finance opportunity came about at a time when some coun- community development activities in Mozambique. tries were selling off (or writing off) Mozambique's debt. Their sources include a range of international founda- For foreign governments to write off their debt, the tions, bilateral and multilateral official donors, inter- Mozambican government had to agree to set aside a pre- national NGOs, and Mozambican and multinational determined amount in local currency for social devel- companies. FDC has been particularly innovative in opment. Getting access to this money required negotiation bringing in the private sector by encouraging national with the Mozambique government and the participat- and foreign corporations based in Mozambique to donate ing governments, which took both time and money. It part of their returns to support community develop- also required that the founding group, after convinc- ment programs. ing the government, had to convince the donor gov- ernments. The negotiation to make the case for donating Building Endowment the debt buy-back funds to FDC could not be done with Of the four case studies in Africa, FDC is the first foun- local embassies in Mozambique, and the founding mem- dation to successfully raise endowments from both local bers had to travel personally to the creditor countries and international sources. Building endowments was of Norway, Sweden, Finland, Denmark and Holland in seen as an important aspect of the local foundation the fall of 1990. The funding for this travel came from and was given serious attention from the time of the the founders and local companies. When discussing establishment of FDC. FDC felt strongly that building how the foundation did this, one of the founders had an endowment would eventually provide flexible funds this to say: "So we had historical chance and the con- for operation, and thus create a forum for FDC to address nections . . . all the parts of a bridge" (Micou 1997: 144). local community needs in sustainable ways. This is Africa Case Studies 45 important given the role that FDC is playing and hopes groups. FDC is there to create political and legal posi- to continue to play to help reduce poverty in Mozam- tion for partnerships, through a strong advocacy pro- bique. Given the magnitude of the poverty problem, gram targeting government, bilateral, and multilateral FDC realizes that it will still need donor funding but it agencies, and other relevant institutions. FDC has been would like to earmark most of this funding directly to very successful because it is involving people who are development while raising its operating and other spe- interested in raising specific issues; it then connects cial project funding from its own endowment. these people to others who can address and change the situation. FDC also has a well-connected board, which Creating Space for Civil Society has played an important role in raising the voices of FDC played and continues to play a significant role in the voiceless. creating an enabling environment for NGOs. FDC was the second NGO organization to be registered and it Key Issues and Challenges played a significant role in the creation of the law on freedom of association and was instrumental in form- While FDC has played a significant and important role ing the CF. Since then, it has continued to play a very in supporting the civil society sector, it still faces a num- significant role in building and strengthening the civil ber of challenges as outlined below. society sector, which is both new and weak. FDC has supported initiatives that facilitate networking, like Extreme Poverty the formation of the NGO forum. In addition, it has a Although most countries where local foundations are pivotal role in the capacity building of both NGOs and being established have poverty, the case of Mozambique CBOs. The idea is for these institutions to look within is different in that it is just now recovering from 16 years and establish their own identity and credibility within of civil war, which destroyed the socioeconomic fabric the country. of the community. This forced many people into extreme FDC has also increased capacity and opportunities poverty, and today it is one of the poorest countries in within the most disadvantaged communities, and it sees the world. This poverty challenges the development of itself as a resource organization for NGOs and CBOs. a local foundation, which is looking into raising both Its link is through community structures, NGOs, and domestic and international funds for development. CBOs, which are pursuing a community agenda. Further, the country lacks the financial base that would motivate wealthy individuals to contribute to commu- Promoting Partnerships nity development. Ironically, FDC led the way in rais- FDC is collaborating with and building bridges between ing the initial local funding of $300,000 and has the different organizations and communities. Although it largest endowment among all the cases studied in devel- recognizes the weaknesses of local authorities, for exam- oping countries. It also has set a record in getting funds ple, it also knows that local authorities are closest to from both the private and public sectors. But the chal- communities and have resources that can benefit com- lenges that it has to address are great and will require munities if properly utilized. FDC also acknowledges large funds, most of which are not available locally. that it can leverage government resources by working Another associated problem is the dependence of the with local authorities. Other important partners are poor on donors, which was facilitated by the relief- the private sector and local people who have been oriented support given to communities after the war. involved in the process since the beginning, with some People still do not clearly see that they have a stake and of the companies giving funds for operations and endow- a role in ending their poverty; this must be realized for ment. This is funding that was not readily available to development to take place. the NGO sector. Another important bridge instituted by FDC is between Weak Civil Society Sector the country's poor and the sources of power; this bridge Another challenge for FDC is the weak civil society was catalyzed by promoting synergies between the two sector in Mozambique. Because of the war, the civil soci- 46 Community Development Foundations: Emerging Partnerships ety sector is relatively new and, as pointed out earlier, wanting to invest in endowment, and the private sec- FDC was the second NGO-type of organization to be tor only wanting to commit funds for short periods of formed. Many NGOs were formed after the war to access time. While funds for projects may be readily avail- the then readily available funding. Others that had able, it is difficult for FDC to build its endowment. It already formed had to change their goals to facilitate is possible that it may reach a saturation point before access to this funding. So while the motive of many too long, which is a problem faced by many emerging NGOs is development, this could not be said for all of CFs. For example, private sector companies seem to them. This poses questions as to which NGOs to sup- respond to short appeals for funding but they are not port, and if rules were changed, it is not clear that all inclined to give for long-term support. of those who would benefit would be organizations set Another challenge is that of fund investment and up for the public good. This problem is not unique to management. FDC needs to devise a clear-cut policy Mozambique; most developing countries have an unde- that mandates investment in opportunities that uphold fined NGO sector. Another related problem is that the ideals and values the CF stands for. For instance, FDC is a grant-making organization, which prefers not project-based investments that make money quickly are to implement programs, a situation complicated by weak complicated and may end up hurting the very people (in some sectors, nonexistent) NGO and CBO sectors. they seek to protect. Further, the civil society sector in This lack of capacity delays the process of develop- Africa has garnered very little experience in investments, ment because FDC has to build capacity and sometimes and so FDC has to cover a lot of new ground. create new CBOs before anything can be accomplished. A related problem is getting viable investment options. Mozambique is going through a transitional time and Poor Infrastructure the lack of viable investments has been a challenge from The problem of the weak civil society sector is further the beginning; this is complicated by the fact that invest- complicated by very poor infrastructure, which has ment needs to happen immediately due to the rapid recently been worsened by the devastating floods that devaluation of the local currency. hit the country in early 2000. The poor infrastructure has made it extremely difficult for FDC to do its work Lack of an Enabling Environment in the provinces, most of which are far from Maputo. The CF concept had never been used in Mozambique In most cases, staff have to fly because of the lack of before and therefore no legal framework for a founda- roads and other related problems. This accessibility tion or foundation-like institution is in place. Further, problem is not only expensive but makes the job of the the legal framework and tax system did not provide CF difficult because it needs to be in continual contact incentives for stakeholders to contribute to local devel- with its partners. In addition, this travel requires the opment. These issues take a long time to work out, even kind of personnel that are not available to CFs, which in countries with a long history of NGO involvement; are required to spend most of their funds for actual com- in Mozambique, it will take even longer because there munity development. Not only is it very difficult to find is so much preliminary work to be done. personnel due to the local capacity, but Mozambique also faces a language barrier because it is one of very Inadequate Personnel few Portuguese speaking countries in Africa, making it It is clear that the job to be done is indeed great and difficult to take advantage of qualified personnel in the will require a significant number of personnel and capac- greater area. ity. FDC, full of capacity by Mozambique standards, still displays capacity gaps that need to be addressed. This Endowment is particularly important given long distances, poor infra- Although FDC has the largest endowment of all the case structure, and the weak civil society sector. There is also studies in developing countries, this is far from what it a need for a proper institutional mechanism to moni- needs to face their many challenges. FDC also has to tor activities on the ground and make sure those activ- grapple with the everyday problems of donors not ities are addressing poverty issues. As to how the CF Africa Case Studies 47 can meet its stated goals and objectives, cover a large by the tendency by both donors and NGOs to focus on needy country, and play its role in poverty reduction a few geographic areas and short-term development remains to be seen. And since no other organization is strategies that either do not respond to local needs, or doing what FDC is doing, it has to figure this out as it they are set up to benefit the institutional development goes along. To ensure the impact on poverty, that impact of the NGO or CBO. It is also worth noting that NGO must be evident, which is only possible through prop- agendas are mostly determined by the availability of er institutional mechanisms to monitor activities. Those funding, and they do not necessarily feel the needs of mechanisms require staff who are constantly linked to the communities they work with. The accountability is these poor communities. This is a challenge for FDC, with the donors and not the communities, which makes especially now, given the weak civil society sector. The it harder to respond to existing or emerging commu- CF must also try to break the dependency syndrome nity development problems. and ensure ownership and control by local communi- Although the government acknowledges the impor- ties. Having established FDC for community develop- tant role played by communities and their organizations ment, how does FDC go one step further and build in the development process, there is no clear-cut poli- community foundations and facilitate local asset cy or funds to strengthen local institutions. In addition development? to all these problems, two-thirds of Kenya's population today still live below the poverty line despite enor- mous investments by public and social sectors. Kenya Community Development Furthermore, the provision of services by the govern- Foundation ment has continued to decline over the years. KCDF was created against this background to try to build and strengthen capacity for communities and their Context and History organizations to effectively respond to poverty and other The community development field in Kenya is large and development problems. KCDF also must raise both growing. Although the sector has contributed signifi- domestic and international resources to be able to sup- cantly to community development and poverty reduc- port long-term responsive development. Raising funds tion efforts, it faces a number of challenges, which include locally is particularly important because it increases local lack of accountability and transparency to partners control, accountability, and responsibility for the devel- and especially communities; disempowered commu- opment processes. nities; high poverty levels; and lack of supportive pub- KCDF evolved from more than two years of discus- lic policies and practices. "Lack of accountability and sions and analysis of the poverty situation in Kenya. transparency to partners and especially communities" This process was supported by the Ford Foundation, is due to the fact that, in most cases, communities are which, at the time, was looking at alternative sustain- not considered part of the planning process and rarely able ways to address the increasing poverty in Kenya. play any important role in the design of projects. The First, research on community development problems community is generally not aware of the available was conducted, and various groups of CBOs, NGOs, resources and cannot hold NGOs or donors account- and community development practitioners were inter- able. These communities are essentially not empowered viewed. The findings of these studies confirmed the to take charge of their own development; they tend to increasing poverty despite a lot of investment by donors depend on external and donor funding with no clear and NGOs. The next set of consultations included brain- focus on their own development agenda. Further, most storming sessions with some NGO and CBO leaders citizens do not know what resources they have or can and other professionals involved in community devel- generate locally. Although Kenya has a very large num- opment. These deliberations concluded that outsiders ber of community-based organizations, these do not and not local people so far had controlled the devel- have access to information, donor funding, or capaci- opment agenda. The donors who provided the resources ty to achieve their goals. This problem is compounded had set the development agenda; most NGOs tended 48 Community Development Foundations: Emerging Partnerships to implement those agendas. The community's role Mission Statement and Objectives was reduced to that of implementing those same agen- KCDF's mission is to create a Kenyan foundation that das. Experience in recent years has taught us that com- effectively mobilizes resources from private and public munities have to play a central role in all stages of sources and builds permanent funds for grant making development if the projects are to be successful. The for the development of communities. KCDF therefore end result of these discussions was an agreement that aims to facilitate community capacity building and to a Kenyan institution was needed that could build the build and manage permanent development assets from capacity of local people to participate fully in develop- Kenyan and international sources. The challenge here ment. For this to happen, there had to be access to the will be to build a strong and permanent asset base and, funds that encourage this kind of development; hence at the same time, maintain a strong relationship with the decision to raise funds from local sources as well as and be accountable to poor communities in Kenya. international. The goals of KCDF are as follows: The consultation process described above was fol- · To increase the capacity of poor communities to take lowed by a two-year planning process by an advisory control of their development (responsibility); committee. This committee was composed of develop- · To learn about and promote effective approaches to ment experts from NGO, donors, and the private sec- building the capacity of poor communities (learn- tor to a limited extent. During the two-year period, ing); this group was exposed to a number of community · To promote Kenyan ownership by building perma- development concepts, including the U.S. community nent development funds from Kenya and her friends foundations concept. The flexibility of this concept (permanence/sustainability); and and its ability to address long-term funding issues made · To promote an enabling environment for commu- it an interesting alternative, and the committee decid- nity development in Kenya (policy). ed to try the concept in the Kenyan context. Up to this time, most of the financial support for pro- The four complementary strategies to achieve the grams in Kenya had come from the Ford Foundation, above goals include the following: although a number of meetings had taken place with · To support and strengthen intermediary communi- other interested donors. Aga Khan Foundation decid- ty development organizations; ed that it wanted to be involved in the pilot phase of · To learn, share, and promote information about effec- this evolving local foundation and attended some of the tive approaches to community development; initial meetings. After many deliberations, it was decid- · To influence the policies and practices of donors, ed that the new organization could be piloted as a pro- NGOs, and government to be supportive of com- ject of Aga Khan, and a tripartite agreement between munity activities; and the advisory committee, the Ford Foundation, and the · To promote and establish Kenyan control over, respon- Aga Khan Foundation was signed in 1997. It is at that sibility for, and management of community devel- point that the Kenya Community Development opment. Foundation was launched as a project of Aga Khan, and the process of hiring staff began. This arrangement For KCDF to successfully implement these strate- would be in place for three years, and after an evalua- gies, its organization must be strong; these three pilot tion KCDF could register as an independent organiza- years have focused on building a strong organization tion. The three-year period has now ended, and the that is based on the local reality. According to the evaluation has been completed; the process of regis- KCDF strategic plan, the organization will be an endowed, tration of KCDF as an independent organization is under- grant-making institution that will, over time, build its way. In these three pilot years, KCDF has established assets from Kenyan sources. These assets will be invest- itself: KCDF has given 13 grants to local organizations, ed to provide a permanent and dependable source of developed a diverse management board, and has been support for development. KCDF's governance, struc- trying to raise funds from diverse sources. ture, and finance base will be rooted in Kenyan society, Africa Case Studies 49 which will increase local accountability and control of ment between the advisory committee, the Ford development activities and reduce the influence and Foundation, and the Aga Khan Foundation, the advi- changing priorities of outsiders. As a local organization, sory committee was changed to a Management Com- KCDF is building a Kenyan center of learning about mittee with nine members. With time, the group realized community development work, and it is stimulating the the need to have more people from the private sector generation of locally designed activities, as opposed to and increased the number of members to thirteen. A foreign-funded solutions. As part of local fund-raising board is now fully formed, and is composed of fifteen activities, KCDF will seek the support of a wide range members. The board members do not represent their of powerful Kenyans (individuals and corporations), individual organizations but rather are serving in their thereby increasing Kenyan responsibility for develop- own capacity. The board members will each serve a ment to work. KCDF plans to break new ground by pro- three-year renewable term. moting a culture of philanthropy in Kenya that will benefit the development sector in particular and Kenya Program Development and Activities as a whole. KCDF's program strategies focus on the capacity build- KCDF's program has evolved over time, and the CF aims ing of local institutions, including NGOs, CBOs, and at using the grant-making process to build independent their associations. Empowered local institutions will organizations, communities, and individuals rather than ensure that communities take responsibility for setting keeping them dependent. The emphasis is on strength- and pursuing their own development agenda, seeking ening the people so that they can sustain whatever assistance as they see fit and appropriate. KCDF will processes and projects they put in place, whether by therefore play the role of a development facilitator by KCDF grants or through other means. The current building individual and community capacity to man- program, therefore, concentrates on community capac- age change and development, and to focus its activities ity building which has been broadened to include on strengthening organizational capacity as opposed enhancement of the communities' ability to mobilize to project funding. KCDF also has a strong focus on and organize themselves politically, economically, learning, and experimentation, research, and docu- socially, and culturally. This includes community mentation shape most of the activities. The organiza- actions to rehabilitate infrastructure, access education tion is guided by a set of explicit learning questions that and health, engage in advocacy, improve their liveli- will evolve in response to experience. This learning will hoods, and deal with other donor-advised funds. In its be documented and shared to increase effectiveness in first three years of existence, KCDF has concentrated supporting community-based development. Further, on supporting and strengthening intermediary com- KCDF plans to develop a strong advocacy role to influ- munity development organizations: small and medi- ence public and private sector policies and practices. um NGOs, CBOs, and community development associations, including associations of women's groups, youth groups, and self-help groups that focus on com- Governance Structure munity development rather than on the narrow inter- The KCDF governance structure has evolved over time. ests of members. For the most part, the founding members of KCDF were KCDF is helping build the institutional capacity of professionals put together by the Ford Foundation to these organizations through the provision of a broad think through what was needed in Kenya to address the range of development assistance, both financial and increasing poverty there. This group, called the Advisory technical, targeted to areas identified in a collaborative Committee, was composed of six people, and for over assessment exercise; this exercise used the KCDF's two years they volunteered their time to think through Capacity Assessment Tool, which was developed with the process and do the initial planning of KCDF. During partners. KCDF also provides technical, financial, and this process, the Aga Khan Foundation joined the plan- practical support in areas such as community organi- ning team and with the signing of the tripartite agree- zation, better understanding of various participatory 50 Community Development Foundations: Emerging Partnerships Figure 6.1. KCDF's Organizational Structure Management Committee (MC) Director Program Officer Program Officer Program Officer (Finance) Community Development (Administration) Research and Capacity- Building Officer Finance and Asset Program Subcommittee Development Subcommittee methodologies, and the related issues of gender partners in a search for lessons. Supported by research and reaching the most disadvantaged members of the in specific areas, the learning will be documented and community. shared through mass media and various other creative Specific interventions between KCDF and these orga- means to reach NGOs, donors, government, and CBOs. nizations and communities include: This process has already started. KCDF also has a research agenda and intends to influ- · Organizational capacity assessment; ence the policies and practices of donors, NGOs and · Direct ongoing support, and training in manage- CBOs, and government in ways to interact with com- ment, planning and program development, and finan- munities, and to create an environment supportive of cial management; community development activities. KCDF aims to pio- · Financial support for training, study tours, and acqui- neer a new approach in which participation goes beyond sition of equipment and supplies; community involvement and contributes to develop- · Support for sustainability strategies such as steer fat- ment projects. In this case, a community should take tening and grain buying and selling; and responsibility for setting and pursuing its own devel- · Support for community empowerment initiatives opment agenda, seeking assistance from NGOs, gov- through collaborative grants to organizations with ernment, and donors when it deems appropriate. expertise in participatory methodologies to work with the partners. Resource Mobilization and Building Endowment KCDF sees itself as a learning organization and has developed a strategy to study, share, and promote infor- KCDF is funded by the Ford Foundation and, to some mation about effective approaches to community devel- degree, the Aga Khan Foundation, as well as local orga- opment. KCDF plans to identify "best practices" of nizations and individuals who share KCDF's vision. The NGOs, CBOs, government, and donors, as well as sys- endowment account has $50,000 (3.6 million Kenyan tematically assess its own performance and that of its shillings). While most of this money is from interest Africa Case Studies 51 Box 6.3. Identifying and Choosing Partners The partner identification cycle is a long process that bers, reviews financial and other systems, and discusses starts with publicizing the grants. The interested institu- capacity-building needs. The field visit is followed by a tions are required to fill out a questionnaire and commit capacity-assessment workshop, and then the proposal prepa- to a partnership identification process with KCDF. KCDF ration begins. These proposals are submitted to the KCDF uses media, NGOs, government extension workers, radio, management committee for approval. Once approval is and any other forum these organizations may have access obtained, detailed implementation plans are made, after to to broaden the base of those who can participate. Those which KCDF support partner activities begin. short-listed are invited to a "get acquainted" workshop that Though this process takes time, KCDF believes that the both managers and board members attend. This is followed process itself builds capacity for both those benefiting from by field visits in which KCDF talks to community mem- the grant, and those just being introduced to KCDF. accrued by KCDF, members of the management com- viduals, corporate donors, and international sources. So mittee and staff have contributed and continue to con- far there are few permanent assets; building this cof- tribute to this account. Other activities are under way fer will take time given the fact that CF is a new to increase funds from a number of sources. The Ford concept, and the current political and economic Foundation has also given a matching endowment grant situations are not conducive. However, it is worth of $650,000 to be raised over a period of four years. A noting that the process of raising local funds has total of 25 percent of this match should be raised from been initiated by the board members opening the local sources. endowment fund, and an asset development strat- There are three other new donors for the program, egy has been developed. The CF has also done but these funds are for the program, not the endow- research on community assets and philanthropy to ment. The funds include $50,000 from Bernard van inform the new strategy. The CF must educate Leer Foundation's for capacity building for the CF's local Kenyans and donors on the value of a new local partners. IDRC has also given a research grant of $6,900 donor agency for community development. They (500,000 Kenyan shillings) while the World Bank has also must develop a reputable, accountable, and given a grant of $7,900 from the Small Grants Program transparent institution to maintain domestic funds. to cover the corporate program and a community radio Further, they must demonstrate the impact of their program. approaches and programs to the communities they The strategy of raising funds so far has been mainly are trying to help through writing concept papers, and presenting these KCDF also plans to fully engage communities papers to different donors. The CF has also had to and their organizations and the private and public organize "Open Houses" where different groups and sector. KCDF is targeting funding from wealthy indi- people have been introduced to KCDF. viduals in Kenya; they hope to mobilize communi- ty assets and resources, and to strengthen com- munities by promoting links between the poor, the Key Issues and Challenges rich, and local Kenyan constituencies to meet the Although KCDF has grown significantly in the last three development challenge. This is undeniably an uphill years, it is still in its infancy and faces a number of battle but it must be won to break the current cycle challenges. What is outlined below are some of the things of donor dependence and to get citizens involved the CF plans to do or is just beginning to do. The three in their own development. characteristics that distinguish KCDF from regular NGOs · Grant making as a principle activity. KCDF plans to in Kenya include: be a donor for the civil society sector. This is anoth- er departure from current development practices, · Mobilization of permanent assets (endowment funds) which donors and the civil society sector may resist. and other human and financial resources from local indi- But the existence of a foundation that funds NGOs 52 Community Development Foundations: Emerging Partnerships and CBOs to do development presents an opportu- reputable professionals, practitioners, and members nity for creating local institutions and funding the from the private sector. This governance structure programs that communities care about. It also pro- is very important for a country that is plagued by vides the freedom to fund community initiatives and corruption and a civil society sector that is not nec- both existing and new organizations. It presents an essarily transparent or accountable. opportunity to fund struggling CBOs or NGOs, and associations of CBOs. In spite of all this potential, KCDF faces many chal- · A system of transparent, accountable, and locally root- lenges that include legal, political, social, and economic ed governance that organizes and balances functions 1 bottlenecks. and 2 above. KCDF has gone out of its way to estab- The concept of community development foundations lish a governance structure that will facilitate account- is new. Giving is not new to the Kenyans because they ability and transparency by ensuring a balance of have always given and continue to give through the Box 6.4. Examples of KCDF Partners KCDF has given two types of grants: grants to partners mittees. The NGO works with these committees as well as and grants to other collaborators. Partners are CBOs and other community groups, such as women's groups. Major local NGOs working with KCDF or promoting communi- activities include educating the community on agriculture ty development. Grants may be used for capacity building and land management, developing water resources, improv- or community development by CBOs and NGOs; for NGOs ing livestock, and using folk knowledge. to develop capacity to work with CBOs; or for capacity The KCDF grant is used for staff training in areas relat- enhancement of CBO partners. ed to management and administration as well as more tech- To date, KCDF has given 13 grants to different kinds of nical areas (such as animal husbandry and business organizations countrywide. One of these organizations is development), board development, training of community- Welfare Advisory Committee (WAC), which operates under based organizations in leadership and areas related to their Dandora Catholic Church and seeks to alleviate poverty sectoral initiatives, basic equipment and furniture, trans- among the urban poor in Nairobi. WAC's initial focus was port, and promotion of sustainability through a major steer on those families who had been allocated plots under the fattening project. SIMOO is also funded by SNV and SIDA. World Bank­funded site-and-service scheme but had The third organization being supported by KCDF is the been unable to develop the plots. After some years, WAC Makutano Community Development Association. This is started to respond to other dimensions of urban poverty a CBO founded through an initiative of local welfare asso- reduction through the Small Business Support Program, ciation with a mission to enhance unity and empowerment Community Organization Program, Youth Development of the local community. This CBO encourages the com- Program, and Community Health Education Program. WAC munity to take collective responsibility in identifying and is also acquiring skills from KCDF on report writing and addressing specific and general development needs. bookkeeping, which will improve its performance. Makutano Community Development Association is a mem- The KCDF grant is used to enhance the knowledge and bership organization, with membership from villages. This skills of the WAC staff and board through workshops, association covers 20 villages and KCDF support has helped retreats, and educational visits; it promotes smoother oper- to recruit a community development worker; train village ations through the provision of office equipment and trans- animators (community mobilizer) to improve community port; it facilitates community education through the purchase mobilization; do project planning and management train- of communications equipment, support of the resource ing for the executive board; and train the village develop- center and newsletter production; and it promotes sus- mentcommitteetoconsidervariousaspectsofpeople-centered tainability through the provision for equipment rented development and their role in community mobilization. In out to various groups to unblock sewers. collaboration with the Kenya Rural Enterprise Program (K- The second grant is to SIMOO, which is a local NGO REP), the association has been mobilized to create a village operating in a pastoralist area in Kajiado. This NGO cov- bank, which was launched in November 1998 and had 158 ers three villages, each of which have their own village com- shareholders by the end of 1998. Africa Case Studies 53 harambee (self-help) movement. But harambee is money lack of local capacity to develop effective investment given to specific causes or people one knows, and not policies that meet the objectives of the endowment funds. for general long-term community development. Another consideration is that donors may prefer to The concept of endowment is new, hard to accept, give their money directly to NGOs instead of going and suspect because of the bad experiences that peo- through a new intermediary who is introducing new ple have had with money given during harambee meet- ways of funding community development. Also, KCDF ings. Further, keeping money and investing it for future is focused on capacity building, which is hard to sell to use when poverty is increasing so fast is something donors who most likely have other priorities. All this that people do not understand. This is compounded requires changing the way different groups do devel- by the fact that, traditionally, it has been the role of opment, and this will take time. The development of a government and other donors to fund development. well thought out and understood investment policy is Lack of an enabling legal environment and a stable a crucial element for the success of endowment fund base of wealth poses real challenges for raising the management large endowments necessary for these funds to have an In spite of all these challenges, KCDF has real poten- impact on development. This same problem is faced tial in a country where the majority of poor people do by most CFs in developing countries, not just Kenya. not participate in the development process meaning- Another very important source of funding for CFs, fully and where the lack of flexible funds forces NGOs especially in developing countries, is the private sec- to implement only the agenda of donors. There is also tor. But unlike their involvement in regions like Latin a need to address issues of accountability and trans- America, private sector involvement in community devel- parency; historically, most NGOs and other civil soci- opment in Kenya and in most African countries is min- ety organizations have not been accountable to the imal. The private sector usually gives to high-profile communities they serve. These organizations are not charitable causes like famine relief, not long-term com- empowered to address these issues; it is important that munity development. They also have very little con- they build capacity to deal with other stakeholders like nection to communities and their experience with NGOs the public, private, and social sectors. Finally, commu- has not always been positive, leaving most private sec- nities in Kenya have assets that are not being utilized tor organizations skeptical and unwilling to get involved for development purposes, and decreasing donor fund- in development issues. The possibility of raising pub- ing is forcing many NGOs to think about alternative lic funds is also minimal because these governments are and innovative funding mechanisms. also looking for funding and view NGOs as competitors. The challenge for raising domestic funds is made more complicated by the fact that, historically, funds given Uthungulu Community Foundation for public uses have not necessarily been used for that purpose; most people are skeptical of fund- Community Foundation Development in South Africa raising for local development, let alone for endowment. The CF, therefore, has to raise awareness among Kenyans Community foundations are new to South Africa, but and private companies located in these communities the concept of local foundations has existed for a long of the benefits of KCDF. The organization also needs time as indicated by studies on foundation building. time to build its own credibility before people can These local foundations had a collection of assets man- commit their resources. The experience in Mozambique, aged by administrators and created for a specific, gen- which is poorer than Kenya, proves this can be done. erally charitable, purpose. However, they "did not support When it comes to raising funds from traditional saving or investment associations among the black donors, KCDF also faces a number of problems. communities during the apartheid years, a situation Traditionally, donors do not fund endowments or local compounded by policies that restricted growth in black resource organizations. Furthermore, the concept of areas leaving local philanthropy dependent on the endowment is misunderstood locally. There is also a "white-controlled" corporate sector and international 54 Community Development Foundations: Emerging Partnerships donors" (Chetty 1995: 2). During the apartheid years, of national and international grant-makers; SAGA seeks a number of NGOs were formed to support human to promote regional and local grant making. The fund- rights and, more recently, to undertake development ing will enable SAGA to assist local leaders, business- activities. Significant financial contributions were made people, and grassroots groups from the exploration to these organizations, which were led by credible black period through the start-up phase. SAGA opted to iden- leaders. The focus of these organizations was on devel- tify "incubator" agencies and key individuals with the oping and empowering the disadvantaged communi- potential to understand the CF concept and nurture the ties politically and economically. earlier process of awareness and mobilization. (Incubator Since the democratic elections in 1994, circumstances agencies are either active or established agencies with have changed, which has resulted in less funding for long-standing development projects.) the NGO sector because new relationships could be In just over two years, SAGA has provided technical forged with the new government. For example the assistance and other forms of support to leaders of com- anti-apartheid movement was funded by bilateral agen- munities in South Africa who are interested in forming cies (Dutch, American, and European Union) through CFs in their area. This support includes: seminars, study Kagiso Trust to support NGOs and CBOs. More recent- trips, peer exchange and interaction, resource materi- ly, this support has decreased significantly, which has als, formation of a database, facilitating links, social mar- had a profound effect on NGOs. The NGOs also lost keting, conducting basic data surveys, and doing human capital when many of the NGO leaders left to situational analysis. This technical assistance program join the government or other new sectors. did not only ensure the training and skill building of The decline in international funding, changes in the the leaders, it also supported social marketing efforts nation's political climate, and a desire to democratize to raise awareness of the CF concept among the com- grant making so that the poorest people could have a munities. SAGA understands that it is in these same voice prompted leaders to explore whether the CF model communities that resources, both human and financial, could work in South Africa. Three large private foun- will eventually be mobilized. In July 1999, the first CF dations, the C.S. Mott, Ford, and Kellogg foundations, was launched; the following section provides a brief supported studies on the possible role of community overview of the CF so far. The second CF was launched foundations in South Africa. It was felt at the time that in June 2000. the CF concept is particularly appropriate to a new emerging democracy, such as South Africa, with great History and Development of Uthungulu Community disparities in wealth and relatively well-developed indus- Foundation trial and corporate sectors. In this context, CFs are perceived to be the appropriate model to (1) encour- The Uthungulu Community Foundation (UCF) was age wealthier people to give to the overall improve- launched in July 1999 and is headquartered in the for- ment of their communities; (2) build bridges between mer strife-torn region of Uthungulu that comprises previously divided communities; and (3) achieve gen- Umfolazi, Uphongolo, Nkandla, and Umlalazi subre- uine community empowerment. CFs thus offer insti- gions, and which straddles the northern coast of KwaZulu tutional mechanisms for redistribution and utilization Natal. This area covers a total population of 3.1 mil- of local resources. For these shifts to take place, a con- lion people with a growth rate of 4.2 percent per annum. scious balance must be maintained between pursuing The area is divided into 81 different tribal areas. financial resources and reducing poverty. The Uthungulu Community Foundation was incu- These studies confirmed the potential of CFs in South bated by the reputable Zululand Chamber of Business Africa, and the three foundations each made grants of Foundation (ZCBF) during its inception and launch. $250,000 over a three-year period in support of the Even today, UCF receives support from ZCBF although South African Grantmakers Association's (SAGA's) it has been registered as an association. ZCBF was effort to introduce the CF model. SAGA, established in established to respond to floods that devastated this area 1995, is a membership-based organization composed in the late 1980s. It was then called the Zululand Africa Case Studies 55 Foundation, and it became the conduit for funds pledged vant in this region to address the acute disparities between by businesses to assist the homeless and reconstruct people living there. The Steering Committee eventual- infrastructure because the corporate sector wanted the ly selected a diverse board of directors that transcends Foundation to invest in people and their communities. racial boundaries. This board has 10 members and is The primary goals of the Zululand Foundation includ- responsible for policymaking and overseeing operations. ed education, entrepreneurial development, and wel- UCF has created a mechanism to ensure broad-based fare. ZCBF was officially launched in 1994. To date, involvement of other stakeholders who are interested ZCBF has displayed effective business and community in the foundation. They are calling this the "public development partnerships. The mission statement of forum" and its main purpose is to facilitate exchange ZCBF is "to respond to the development needs of our ideas and ensure transparency in the way the CF is greater community by facilitating partnerships and joint run. The public forum meetings give the board an oppor- ventures and to build the capacity of the community to tunity to provide feedback on new developments and sustain themselves economically and to improve the forthcoming events. quality of their lives." Given its mission, ZCBF seized The vision of Uthungulu Community Foundation is the opportunity to incubate UCF and has played a sig- stated as "a community-driven organization that facil- nificant role in providing support for the UCF to estab- itates a process through which meaningful change and lish itself. sustainable socioeconomic development is realized. Its Starting UCF was a long process that involved con- mission is to harness available resources and to main- sultations by the planning committee to establish whether tain a permanent endowment fund that enhances socioe- this kind of institution was relevant for the Uthungulu conomic development in a transparent and accountable area. After much deliberation it was decided that estab- manner with all relevant stakeholders." The organiza- lishment of such an institution would indeed be rele- tional structure of UCF is shown in Figure 6.2. Figure 6.2. Uthungulu Community Foundation Organizational Structure Board of Trustees Management Committee Subcommittees Endowment Committee Financial Committee Fund-raising Committee Grant-making Committee 56 Community Development Foundations: Emerging Partnerships UCF was the first CF among all the case studies in societies or makgotlas), investment syndicates or clubs, this text to be launched with a substantial endowment buying co-operatives and communal farming associa- of 5 million South African rand. A total of $500,000 tion" (Chetty 1995: 2). The traditional concept of "ubun- came from the Ford Foundation, and Billiton tu," which suggests that every person exists because of Development Trust gave one million rand and has pledged his or her relationship with other people (or broader a similar amount over a five-year period. Given the community), can be built upon. Also, there is exten- historical involvement of the sector in community devel- sive giving to religious institutions such as churches, opment activities in Zululand, people in South Africa temples, and mosques, a concept that cuts across race, see great potential for corporate giving to community class, and culture in South Africa. These are the possi- development. ble building blocks for the community foundation. Community foundations in South Africa could become a means to achieve greater community participation at Opportunities for Community Foundation the local level by (1) promoting partnerships across sec- Development in South Africa tors; (2) establishing a mechanism that encourages A study funded by the C.S. Mott, Ford, and Kellogg giving to address overwhelming local needs; and (3) foundations, and conducted by the Foundation for connecting multiple divisions in South African society. Contemporary Research, showed that community foun- CFs can play a significant role as the bridge builders of dations in South Africa could act as a mechanism to diverse communities and the mobilizers of communi- bridge people and resources. South Africa is composed ty assets and resources for the common good of all. of fractured and divided communities characterized The NGO sector in South Africa is changing, and by extreme geographic separation and economic strat- both the study and the people who were interviewed ification. Clearly, apartheid successfully separated com- have indicated that CFs have the potential to fill the munities on the basis of race and purposely destroyed gap left by the NGOs. Since the early 1990s, the NGO integrated communities. The CF concept provides the sector in South Africa has gone through significant tran- possibility of building bridges across these divided sitions and has had to redefine its relationship with gov- communities. ernment and devise coping mechanisms to address the In spite of apartheid efforts to disrupt the sense of significant loss of NGO leadership to government and "community," the study concluded that the struggle the private sector. Coupled with these changes in gov- against apartheid also brought community members ernment relationships has been a dramatic reduction together; and this may be a force that can be tapped to of foreign funds flowing to the NGO sector due to a shift address development needs. It is possible that CFs could in funding to the national government. This shift hap- reinvigorate that sense of community and connect cit- pened too quickly and did not give the NGO sector time izens, NGOs, government, and businesses, and foster to make the necessary funding arrangements. Many public and private partnerships. Further, the concept NGOs could not cope with this shift, and either closed of trust and reciprocity is not new to South Africa as down or had to significantly scale down their activities shown by indigenous groups of people helping one or change their focus. another and cooperating together. "The system of stew- After 1994, changes in funding and development ardship of land and resource by tribal chiefs or the role patterns made the government a major player through of the elders in arbitrating disputes over the distribu- its Reconstruction and Development Program. This hap- tion of everyday resources are central to traditional pened at a time when the state was not yet in a posi- African legal systems, but suffered severe setbacks with tion to deliver vitally needed services to disadvantaged the arrival of the white settlers and the imposition of communities. It became increasingly clear that "if the Roman-Dutch law. Elements of these traditions still NGO sector were to continue to flourish and play a remain, adding depth to the social cohesion of com- meaningful role in development and civil society at large, munities and forming the basis of more modern self- alternative sources of funding would have to be found. help organizations such as stokvels (including burial Equally importantly, a shift had gradually taken place Africa Case Studies 57 in developmental philosophy, placing greater empha- Finally, it is important to point out that the exper- sis on collaborative partnerships between the private tise required to form community foundations may not sector, NGOs, and government, as well as a more holis- necessarily be available even with a supporting institu- tic approach to community empowerment. It seemed tion like SAGA. Even if the expertise exists in other that the time was ripe to explore implementation of places, like the United States, the local dynamics are so the community foundation model" (this quote was taken different and complex that there is no formula on which from an undated proposal for the development of the to rely. The situation is South Africa is unique; it is not community foundation model in South Africa from only influenced by lack of capacity, but also by social the C.S. Mott Foundation office in South Africa). and political difficulties. Difficult Political and Racial Bridges to Build Key Issues and Challenges The existing political and racial differences are clearly New Concept very difficult to negotiate. While it is difficult enough The concept of CFs is new in South Africa and is not to work across racial boundaries, the situation is made fully understood by the participating groups. For exam- worse by strong and differing political affiliations. For ple, local populations are expecting their government example, the factors in Uthungulu are complex, and the and donors to step up and help, so the expectation that ability to bring the different stakeholders to the table local people will give money and time to this process takes time and great skill. It is crucial to get the rele- seems contradictory. The new government also gave cit- vant stakeholders on board because each have resources izens false hopes that the situation was going to change and assets that will play a significant role in the success overnight, which has not happened. Some of the initial of the community foundation. Building trust across these programs facilitated dependency, which made it diffi- differences is also very difficult and yet the communi- cult for people to see their role, let alone give funds for ty foundation cannot work without that trust. Again, their own development. This dependence, coupled with the situation is so unusual that the emerging CFs have extreme poverty in the midst of plenty, does not present no experience to draw from. an environment where local people would contribute to development. And an expectation that people would Lack of Supportive Legal Environment volunteer their time for committee meetings at a time As in many countries, there are no tax laws in South when unemployment is so high seems unrealistic. Africa that provide incentives for individuals or corpo- Historically, some community development efforts rations to give to the civil society sector. Although in some of the provinces have been characterized by the there has been some preliminary discussions on these misuse of community funds. Therefore, people are laws, it is not clear how long these discussions will suspicious of anyone who talks about raising resources take and whether the new laws will provide the required locally. This idea needs to incubate, and a lot of public incentives to release funds for community development. education is required to change people's attitudes, which As it is, the existing laws are quite restrictive, which invariably takes a considerable amount of time. makes it even more difficult for CFs to select the appro- The process of developing these institutions can priate mode of registration. also create friction among the different stakeholders involved. For example, SAGA has chosen to incubate Challenges of Endowment Building CFs in existing organizations. Most of these organiza- While a few endowments exist in South Africa, the CF tions know little or nothing about CFs and naturally concept is not fully understood because it is viewed as want to influence the direction of CFs. The CF may the decision between spending for current needs ver- also be affected by the image of the incubating institu- sus saving for the future. There is little understanding tion. It is also not clear how CFs can maintain their of how an endowment might be built or what the sources own identity and be seen as a local independent orga- of funds might be. Although the Synergos Institute and nization when they are connected in this way. SAGA have carried out two workshops, it is imperative 58 Community Development Foundations: Emerging Partnerships that CFs continue educating different audiences about of partnerships between different groups working in the role of endowments. It is also critical that pilot CFs these areas had also precluded the effectiveness of pro- be transparent and accountable, otherwise community grams (that is, the proper diffusion and adoption of skepticism will interfere with their effectiveness. improved technologies in agriculture and natural resource management). These discussions led to the following Limited Tradition of Organized Philanthropy conclusions: While some forms of philanthropy exist in South Africa, · Researchers and farmers associations needed to be there is no strong history of organized philanthropy, and linked. There was, therefore, a need for a method- the culture of giving for the social good by the wealthy ology that would facilitate listening to farmers, for- is nonexistent. Encouraging giving by wealthy families mulating relevant development programs, and and individuals has great potential in South Africa and conducting research. could be a source of enormous resources for develop- · The group decided to start a pilot project called the ment and for the nonprofit sector. However, a lot of time Local Support Project with the Ford Foundation pro- and work will be needed to ensure that all the stake- viding money, International Development Research holders see the benefits of getting involved in this process. Center (IDRC) providing research and money, and It is unclear that the significant corporate giving of Development Innovation Network (IRED) provid- the 1970s and 1980s will continue, especially given ing the legal framework for the project. This pilot the fact that the government has embarked on a large project would support a program in five countries development initiative and is seen as having the prime that share similar economic, cultural, and ecologi- responsibility for providing public services like educa- cal structure: Senegal (program base), Mali, The tion, health, and housing. There is also a prevailing trend Gambia, Guinea-Bissau, and Guinea by the private corporate sector not to give as much to development in spite of the fact that they own over 80 The Local Support Project, started in 1990, had as percent of the resources. Getting corporations to change its objective to test and deploy participatory methods their attitudes and to give willingly and strategically is and institutional support mechanisms for local organi- a challenge that community foundations have to address. zations in the subregion. According to various annual reports, the purpose of this project was to design and implement participatory methods and mechanisms in West African Rural Foundation close collaboration with its partners; to promote the development of programs based on the use of partici- patory operational and research tools and techniques; Historical Development and Governance Structure and to negotiate financial grants for local organizations The idea for the West African Rural Foundation (WARF) as well as for funding expert supervision and guid- came about in 1989 at a meeting of donors, researchers, ance. During the pilot stage, local staff were identified and leaders of farmers' organizations. The main reason and trained, an administrative structure was devel- for bringing these people together was dissatisfaction oped and tested, and participatory tools for training, with outcomes of different rural development programs research, and action were also developed and tested. that had not fully addressed the problems facing rural During this pilot phase, WARF's statutes and by-laws farmers. It was also not clear what role the farmers and were crafted and a governing Board of Directors was their associations were playing in the whole develop- established. WARF took over the activities of the initial ment process. This was confirmed by a federation of pilot program in October 1993. farmers' organizations whose representatives argued that During its first years of operation, the main ele- farmers were not happy with the way support was being ments of the WARF strategy were to work with local given. It was evident at this time that there was no link organizations as key actors and to empower them with between research and the activities on the ground. Lack new skills and capacities; to support participatory action- Africa Case Studies 59 research programs; and to carry out training and diffu- work of trained resource people and qualified institu- sion of participatory methods. The means for these three tions that can provide the needed support for an ongo- strategic axes are, respectively, grants and training for ing program in each country. Meanwhile, the plan made the partners utilizing a series of learning experiences; provisions for a greater institutional presence in each grants and methodological assistance for participatory country, as Country Agreements are successfully nego- technology development; and short courses and method- tiated with each government. ological materials for diffusion. In 1998, WARF conducted a participatory strategic Governance Structure planning exercise, involving its board, staff, local part- WARF's governance structure has evolved over time as ners, and all stakeholders present in its region of oper- the needs of the CF have changed. During the pilot ation. This process allowed WARF to evaluate its strategies stage, a program committee acted as the steering mech- and activities against changes in the environment and anism; it had eight members, including farmers' asso- to define new orientations. Major outcomes of this ciation leaders, the Ford Foundations, IDRC, and IRED process included WARF 's decision to open up its part- representatives. The staff was a team of professionals nerships to a wider range of players: decentralized from Mali, Burkina Faso, and a consultant; the team state authorities, local entrepreneurs, grassroots farmer leader was Senegalese. WARF 's Board of Governors was associations, and communities. The new strategic plan formally set up in 1993, with six members from Senegal, also emphasized the importance of positioning its inter- Mali, and the Gambia. In 1995, the board added three ventions within the priority domains of democratical- more members to reflect the growing needs of the ly elected governments in the region. A new mission Foundation. Currently WARF has nine board members: statement was formulated as follows: "To help rural com- three Senegalese, including the director; two from Mali; munities find and follow a path of self-reliance. This two from the Gambia; and one citizen of each of the comes as communities better appreciate the value of other two countries. This board is still expanding to their local resources and gain the capacity to act effec- ensure that it has the necessary skills in areas like tively to realize that value." WARF, working with com- financial management, legal matters, and fund-raising. munities as partners, will bring about this transformation Board members are selected based on their profession- through these efforts: al status; location (each of the five countries must be represented); their experience; their success with good · To analyze conflicts, constraints, and needs; standing; and their interest in raising funds for WARF. · To articulate a vision of the future and participate The Foundation has four committees, namely strategic in its realization; planning, audit and finance, legal, and investment. These · To ally rural communities with others to their mutu- committees are all drawn from the board. In 1999, the al benefit; and Board created an Executive Committee to expedite deci- · To mobilize the needed resources, in both finance sion making between board meetings and to increase and knowledge. the involvement of the board on the development of Four major program domains were defined for the innovative partnerships with the private sector. The new strategic plan for 1999­2003: Executive Committee is comprised of a representative of each standing board committee and the Executive · Local governance; Director. It meets as frequently as needed. · Rural entrepreneurship; · Gender equity and development; and · Regional integration. Program Development and Activities It was decided to gradually open offices in WARF's WARF provides rural organizations with grants other four countries of operation, and to maintain the and methodology training so that they can better extensive development and use of the regional net- work with farmers and address farmer's problems. The 60 Community Development Foundations: Emerging Partnerships programs include grants for strategic planning; train- ent and accountable to members in all business ing in participatory methods supervised by WARF staff; matters; multiyear institutional support grants; follow-up mon- · To fulfill WARF's objectives to strengthen interme- itoring and advice; and linking grants to researchers and diary rural organizations so that they are gradually local organizations that conduct participatory research able to reach a wider range of communities in their to develop and test sustainable agricultural and envi- area of operation; and to expand the institution- ronmental practices. WARF's programming evolution building of rural intermediary organizations both in and the need to respond to client needs resulted in the terms of the utilization of grant funds as well as in 1997 reorganization into the following units: Partici- the use of staff time; patory Research, Organizational Development, · To partner with communities so that they can iden- Sustainable Development, Sustainable Development tify their realities and potentials and relate with Strategy Analysis, Information and Communications, others; communities must the value of what they Management, and Administration. have; During its first five years, WARF has focused on tack- · To build capacity for NGOs to work with commu- ling the development problems of rural communities nities to identify their resources; and in the subregion by: · To work with a regional network of experts to pro- vide the methodological and technical supports need- · Strengthening local organizations; ed by community programs underway in the region. · Promoting and supporting participatory technolo- gy development in agriculture and natural resource WARF offers local organizations products according management; and to their level of development. Some of the products · Training and diffusion of the participatory methods. offered are outlined below: Capacity building is basic to all projects because WARF has to address issues like how local organiza- · A participatory institutional diagnosis of the poten- tions can succeed and how to better reach the objec- tial grantee organization's strengths, weaknesses, and tives of their projects. program opportunities. After this phase, WARF Through the innovative use of grant making, tech- and the organization might decide to move on to the nical assistance, and networking, WARF intends to next phase. achieve the following results: · A one-year strategic planning, stabilization, and train- ing grant to cover certain operating costs and a series · To create a set of tools, methods, and processes for of workshops at the grantee's home base. Each work- developing innovations that can help local organi- shop has an immediate practical outcome, such as zations improve agricultural and sustainable natur- a project plan, a research program, an annual bud- al resource management; get, or the acquisition of the capacity to use a spe- · To establish a dynamic network of local organiza- cific methodology. Again, WARF and the grantee tions capable of supporting their grassroots con- might decide to go to the next phase. stituents to identify problems, develop strategies, · Planning grants to enable local organizations and build partnerships, and define and implement action grassroots groups to strengthen their institutional plans to work towards their solutions; capacities (in terms of organizational structures, · To increase the capacity of communities and com- mechanisms for intervention, and so forth) and to munity-based organizations to enable them to par- identify and arrange the modalities of implementa- ticipate more effectively and efficiently in building tion of development program phases. The major assets for better livelihoods in a sustainable manner; challenge with this type of grant is the weak capacity this includes establishing good governance and demo- of local institutions to readily qualify for more con- cratic succession procedures, and being transpar- ventional sources of funds. Therefore, development Africa Case Studies 61 for this type of institution requires an initial invest- problem is and whether it is the community's problem. ment in terms of technical assistance and funding. This process also identifies the opportunities, relevant This investment is intended to allow for sufficient players, and what needs to get done to fix the problem involvement of the targeted organization's mem- and by whom. Then a workshop is organized for nego- bership in the development of program priorities tiating, planning, and deciding the roles and responsi- and activities. Further, the technical assistance bilities of different stakeholders and the different stages, provided is tailored to the needs of the particular including implementation. groups; its form, content, and length of engage- WARF also uses Participatory Rural Appraisal (PRA) ment follow the stages defined in the partnership to do strategic planning and program proposal writ- program. ing. These activities are conducted by WARF staff and · A multiyear institutional support grant to cover the local professionals. WARF also trains participating local costs of a program developed during phase-two organizations to improve accountability and the finan- workshops. These grants might cover as many as cial management system. WARF aims to strengthen five years of the grantee's program, and contribute the capacity of different organizations so that they can to the grantee's operating costs, along with workwithcommunity-basedorganizationsandtheirasso- other donors. These grants most often include a par- ciations. For example, WARF is trying to link researchers ticipatory agricultural and technology research with farmers to generate appropriate technology. program. WARF also gives capacity to local organizations to negotiate with other actors on the ground. It facilitates Research grants finance programs of participatory the participatory process of research and diagnosis, and development through collaboration between rural pro- identifies constraints and negotiation of areas of inter- ducers, local organizations, researchers, extension agents, vention.Thisprocessleadstothedevelopmentofthepro- and WARF. The content and scope of these programs gram WARF undertakes with specific organizations. depends, to a large extent, on information regarding the For local organizations and researchers not supported constraints and opportunities emerging from the plan- in the WARF grants program, WARF offers annual short ning session. In most collaborative research action courses in PRA and participatory agricultural research programs, WARF 's objective is to leverage additional methods and procedures. Initially, a large portion of resources from other donors; an early investment in a the grant may be from WARF but those funds are usu- participatory technology development program makes ally there to leverage other resources. WARF also offers it more likely that others will join the partnership. technical services and can implement collaborative pro- jects on behalf of some development organizations. Grant-Making Process Examples include natural resource management fund- The grant-making process is fairly lengthy because it ed by IDF in Guinea and Senegal and run by WARF. requires empowering communities to identify their prob- lems and the available local resources. It is also seeks Resource Mobilization and Building Endowment to build partnerships with other institutions working at the local level, including researchers. This process WARF was initially funded by the Ford Foundation and starts once local institutions submit their proposals to IDRC. Currently, WARF is trying to diversify its fund- WARF. The process is also used as a tool to understand ing so that it is not dependent on one or two donors. the applying institution and its environment better. So They have done this by securing their own institution- the grant development procedures include feasibility al partners and diversifying their donor base, which was studies and participatory assessments of grantee orga- initially almost 100 percent from the Ford Foundation. nizations' strengths and weaknesses, and programmat- That amount has been reduced to less than 50 percent; ic opportunities. For example, WARF staff do institutional complementary institutional support is provided by diagnostics. The purpose of this is to assess what the IDRC. The remaining 50 percent comes from program 62 Community Development Foundations: Emerging Partnerships Box 6.5. Some Examples of Activities Undertaken by WARF In Senegal, WARF is the technical executive agency for the WARF's longest experiences with multiyear grants are $10 million multidonor (led by the World Bank) Program from the 7A and the GADEC programs. 7A, a local NGO to Reorganize Agricultural Departments and Producer active in Kolda (south of Senegal), involves a program of Organizations (PSAOP in French). In 1997, the National food security, and GADEC is another NGO involving a pro- Council for Consultation of Rural Actors (CNCR), the apex gram for the management of local resources by village com- organization for Senegal's farmer association, invited WARF munities in Tambacounda (Senegal). The scope of these to play a major role in assisting them in this newly creat- programs provides models of local planning correspond- ed forum for the implementation of the new agricultural ing to decentralization and regionalization processes. policy. The government of Senegal and its relevant research Although these programs are costly, WARF support has and extension structures, as well as the donor partners, enabledtheseorganizationstoleveragecomplementaryfund- are collaborating on this program. ing from the European Union. contracts (these are more restricted resources tied to a benefit in tangible ways from enhancement of WARF's specific theme or area of program development); exper- programs in West Africa. tise(feeforservices);andself-financing(evaluation,work- shop facilitation, sales of publications and training). Opportunities and Challenges While WARF has had considerable success in diver- sifying funding sources, raising endowment funds WARF is a unique regional organization that tried a new remains a challenge; however, different strategies have approach to rural development. Through the use of par- been put in place recently to facilitate local fund-raising. ticipatory methods, the organization has helped build WARF has the same problem raising domestic funds capacity of farmers to participate in development. It is that other emerging CFs have; raising funds is especially hoped that this approach will break a long.-standing difficult in Africa where the donating tradition does tradition of dependency on donor funds and models. not exist. This problem is further compounded by the WARF is clearly a regional leader on PRA, a process regional nature of WARF, meaning that it has more it has used not only to empower communities but also boundaries to cross to convince people that an institu- to build partnerships at different levels. It has, for exam- tion headquartered in Dakar can raise funds for one of ple, brought NGOs in a specific area together to dis- the other countries and effectively run local programs. It cuss how to best leverage each other's resources to is also important to point out that establishing an insti- maximize the impact of development at the local level. tution like WARF has taken a long time, which is why it Through its grant, WARF has influenced relationships was important to move to the next stage of fund-raising. between NGOs and CBOs. In the second phase, WARF plans to establish an WARF has played a significant role in building and endowment to provide secure annual income for financ- strengthening capacities of rural farmer's associations ing a significant portion of its activities. This process and CBOs in general. Its rural focus enables WARF to has been facilitated by the Ford Foundation's commit- fully concentrate on issues that matter to a population ment of a $2 million endowment-matching grant. The often neglected. WARF has also helped link these insti- Ford Foundation has also supported a study on raising tutions with donors and other interested stakeholders. endowments and has facilitated the development of a WARF plays a significant role in making the voice of fund-raising strategy. The strategic plan for raising funds rural farmers heard by facilitating their influence in proposes two parallel programs of identifying donors. government policy. At the invitation of the main farmer's The first is aimed at traditional donors, and the second federation, WARF is helping farmers' associations to is aimed at partnerships with the private sector, gov- devise a strategy to reinforce local institutions and build ernment agencies, investors, and others who stand to capacity for them to negotiate with different partners, Africa Case Studies 63 including the government. WARF is also helping build ple and there is no better way to assure this than hav- the capacity of the National Forum for Consultation of ing an accountable, transparent local institution that Rural Actors (CNCR) to negotiate with the govern- they can easily access and identify with. ment on issues that affect them. This group represents Local institution-building also takes time, and this nine federations with about three million members. is difficult to do in one country, let alone five countries. WARF has played a significant role in linking The challenge, in this case, is to build the institution researchers and rural communities by supporting action and at the same time reinforce the value of raising domes- research and research on innovative agricultural tech- tic funds. Another difficulty is the poverty and isola- nologies. WARF utilizes the existing capacity in the tion in these countries. Poverty is rampant in most region to serve local organizations. Utilizing networks countries in Africa and raising funds requires creativi- of professionals, WARF is able to provide technical assis- ty, which needs to be based on local realities. Some form tance to the region more effectively. Further, the CF of local ownership by communities is crucial. enables people to deal with common issues along their To date, WARF has played a significant role in build- boarders and facilitates learning from different contexts ing capacity for farmer's associations; the next challenge in these five countries. will be translating this capacity to build assets that reduce WARF faces a number of challenges; one challenge poverty for the majority of rural poor people. Experience has to do with its regional nature. Working across bound- in other rural foundations (for example, Mexico) shows aries and in five countries is difficult because donors the need to fully engage government and private sec- usually fund country programs and not regions. The tor resources because the problem is too big to be han- challenge associated with the regional nature of the CF dled adequately by one institution. Further capacity is local ownership. A number of mechanisms need to building should be clearly linked to resources if the CF be put in place to facilitate different countries to own is going to have an impact on reducing poverty. the process and not feel that it is a Dakar-based orga- Another issue linked with both poverty and endow- nization; having one or two members from each coun- ment building is the lack of philanthropic mechanisms try represented on the board is not enough. One other for community development. This does not mean that regional case study, in Eastern Europe, has adopted a there is not a tradition of giving or of concern for soci- structure whereby country directors deal with specific ety, but rather that societies in the five countries have country programs. Others have CFs representing dif- never had an environment conducive to the growth of ferent countries or regions. These, while linked to the local foundations. For example, there is no established main foundation, have autonomy and have local direc- system of tax incentives in the context of high income tors, boards, and structures that make sense in the local- and estate taxes that would encourage gifts to endow ity. It is important that WARF be viewed as a regional institutions or foundations. There are few individuals institution but with specific country representation and or families of means and inclination sufficient to set a character if it is going to make an impact. WARF there- precedent. According to WARF, CFs have no place to fore needs to decide the appropriate structure needed "plug" because there are no existing sources of wealth to increase ownership and presence of the organiza- to tap. These problems are compounded by the fact that tion in these other countries. there are few indigenous institutions with a tradition Related to this issue of ownership is raising endow- of transparency to be credible enough to command trust ment. So far, WARF has not raised endowment and from potential donors. while this process is bound to take time, it will also The goal, from both WARF's and its donors' per- require some form of ownership by different countries. spective, is for an indigenous African institution to This is particularly important given the fact that the take responsibility for funding its own programs through endowment concept is new and it does not provide partnerships with the local private sector and govern- immediate benefits for people to see. People need assur- mental agencies. Although challenges exist, the poten- ance that these funds will eventually benefit their peo- tial is there because governments in these countries need 64 Community Development Foundations: Emerging Partnerships partners to reach various groups of people with pro- of experience has been compounded by the geograph- grams. The for-profit private sector needs a variety of ic isolation of the board members and the infrequent nonprofit partners, and the nonprofit sector needs diver- contact with staff (the board meets twice a year), which sified, local sources of support for their activities. Each limits the board's conceptual contributions. Another sector has capabilities that the other sector needs; in related problem is the fact that the board was founded other words, needs that can be met through partner- after the CF itself was set up and running, and it still ships. For WARF to take advantage of these opportu- struggles to get representation from the private sector. nities, it needs to assert itself more rigorously and pub- The presence of reputable private-sector professionals licly into the development community that still knows is critical at this time when the Foundation has devel- too little of its existence; to extend its operation with- oped an aggressive fund-raising strategy. It is impor- in the sprawling five-country domain where its outreach tant to point out that the current strategic plan addresses is still quite limited; and to compete more aggres- some of these issues. For example, both the executive sively in the arena of fund-raising, where donors still and partnership investment committees have been need to appreciate the great potential of a truly African formed and a new board of governors from the private foundation. sector has joined the board. Another challenge for WARF is the lack of legal frame- At the staff level, WARF lacks national diversity; most work and incentives to donate funds. This is even more staff members are French-speaking and from Senegal. daunting because WARF has to address this challenge If the CF maintains the regional focus, this must be in each of the five countries because the situation is dif- reflected in staff composition as well. The issue of board ferent in each one. Again, this effort is time-consuming and staff diversity has been recognized, and efforts are but because WARF has an established program, it can underway to address these issues as outlined in the now concentrate on being a regional institution and 1999­2003 Strategic Plan. Another issue is the num- not just a Senegal institution. ber of staff handling five countries. Given the growing At the institutional level of WARF, there are chal- demand for services provided by WARF, there is a need lenges in terms of governance and programmatic focus. to get adequate staff to enable this community founda- For example, no member of the board of directors has tion to keep high standards and prioritize in a mean- had prior experience with developing local foundations, ingful way. and it has taken time to build this capacity. This lack 7. Eastern Europe Case Studies Healthy City Community Foundation, requiring that they spend 15 percent or less of endow- Banska Bystrica and Zvolen ment on on administration, and by stipulating a mini- mum endowment of at least 100,000 korunas. Banska Bystrica is located in the center of the Slovak Foundation Development in the Slovak Republic Republic and is situated along the banks of the Hron The nonprofit sector in the Slovak Republic is relative- River, surrounded by three mountain ranges. It is the ly young but has grown fast; as of June 1998, there were third largest city in the Slovak Republic and has a local 12,599 nonprofit organizations registered in the Slovak economy that is diverse and oriented to services such Republic. The sector has been growing in strength because as education, banking, and tourism. The population of of the apparent lack of support by the previous gov- the city increased five times between 1946 and 1994, ernment, which forced NGOs to organize themselves. which created many problems, especially in the areas For example, they have a democratically elected repre- of environment and infrastructure. The Healthy City sentative whose mission is to defend and pursue the Community Foundation of the City Banska Bystrica interest of the NGOs, and this representative explains (CFBB), created in 1992, was the first community foun- and publicizes the role of this third sector. The third dation to develop an endowment and has been instru- sector, or the Gremium as it is commonly referred to, mental in supporting emerging foundations in the country has developed links with other sectors and has helped and region as a whole. to create a better environment in which NGOs can oper- ate. The Slovak Republic also has a donor's forum, which Historical Development of the Community Foundation is an informal group of grant-making organizations of Banska Bystrica (CFBB) that distribute financial resources to Slovak nonprofit organizations. After the collapse of communism, the city of Banska Like the other sectors of civil society, formation of Bystrica elected its new officials in 1990 and the new foundations has been recent in the Slovak Republic. Council created a Healthy City Project under the aus- Prior to the passing of the Law on Foundations, there pices of the World Health Organization's (WHO) Healthy were 2,634 foundations. This law requires registration Cities Project. The success of the Healthy City Project of foundations with the Ministry of Interior. The regis- led the local Rotary Club to formally establish the Healthy tration requirement is an attempt by the government City Foundation in 1992; the foundation was charged to ascertain the activities, policies, and budget of each with the task of raising funds, creating programs, and foundation. Under this law, 422 organizations have reg- implementing projects to help improve the quality of istered as foundations, 161 have been converted to non- life for Banska Bystrica's residents (CFBB 1996). The investment funds,9 and 259 have registered as civil inspiration to form a community foundation came from organizations; the remaining foundations have either the U.S. community foundations model and the local been dissolved or are choosing another form of orga- experience of a partially successful realization of the nization (Aserova and Thomas 1998: 13). This new children's playground in the Sasova neighborhood; thus law has also restricted the activities of foundations by a decision to change the character of the foundation's 65 66 Community Development Foundations: Emerging Partnerships activities was made. This meant that rather than con- for the long-term development of the foundation. Building tinuing to prepare and execute projects, the CF would trust is very important in the Eastern Europe context support a wide spectrum of projects initiated by citi- because of their recent history in which the state dom- zens. This change in focus took a year to complete. inated both the social and political arena and citizens The decision to form a community foundation was lost both self-confidence and mutual trust. For the made after many discussions, explanations, and per- new foundation to be trustworthy in the eyes of the cit- suasions. Finally in 1994, the city of Banska Bystrica izens, and in order to be able to help meet the needs joined the foundation as a cofunder and contributed and problems of the city and its inhabitants, it was one million korunas; a new bylaw was approved, and necessary to start a solid grant-making program. A solid a Board of Trustees was created. Given the history of the grant-making program requires a fair and open selec- CFBB, members of the Rotary Club, the City Council, tion of projects, technical and advisory assistance for and activists from the Healthy City Project were given the applicants in the period of project preparation, help seats on the board. towards successful realization, transparency of all the The CFBB mission statement, according to the CFBB CF's activities, and continuing publicity in local and 1997 Annual Report, says that "the Foundation's mis- regional mass media. To reach these goals, it was decid- sion is to strengthen social assets, to improve civic par- ed to make grants for the first three years on a quar- ticipation in the search for solutions to problems in the terly basis, up to 8,000 koruna for citizens' initiatives. city and surrounding region, and to improve environ- NGOs and citizens were able to secure grants from CFBB mental quality of life in the city and the surrounding on the basis of the submitted project. region. This will be done through grants, advice and The Board of Trustees awarded the grants based on educational and cultural social activities." how the project improved the cultural and environ- CFBB has twelve board members: three from the mental quality of life of the community; how the pro- city of Zvolen, two from the local Rotary club, two ject strengthened citizen participation and cooperation; from Banska Bystrica, and two from the Healthy City and the applicant's capacity to realize the project. project. After one year, they decided they needed busi- In 1995, CFBB started the "challenge grant" program. nesspeople on the board, and they increased the size of This was established for applicants who were able to the board by three members. The representatives from raise money for their projects from other sources but three civic organizations will always be represented on were also making a request to the foundation. The CF the board and will be selected by their respective orga- matched up to 10,000 koruna. In 1997, the Board of nizations. For the three board members selected from Trustees decided that any applicant who had received the private sector, the board identified the skills required 20,000 koruna in project support from the foundation by the CF and then got nominations from several peo- could only apply for additional funds through the chal- ple to make the final decision. Each board member lenge grants program. This was to encourage the group serves a four-year term. to diversify their funding base and reduce dependence The board, which is in the process of adopting a on the Foundation. new structure, will create four committees. These would In 1995, CFBB supported 61 projects, which includ- include the executive and fundraising committees and ed alternative energy sources, transportation, ecology, two grant-making committees (one for Banska Bystrica help for handicapped people, culture, nature, waste col- and one for Zvolen). lection separation, neighborhoods, social areas, schools, sports, and special grants. This was a year of making contacts and building partnerships at the local, region- Program Development and Activities al, and international levels, and a time for experienc- During the initial years, CFBB concentrated on build- ing and learning. In 1996, the CF launched three new ing a good image for the foundation, gaining trust of programs, including youth, neighborhood, and women's the local citizens, and creating the endowment needed programs. These were designed to provide more focused Eastern Europe Case Studies 67 Box 7.1. Even the Youth Matter CFBB has targeted young people since its inception by mak- awareness about the CF. People are free to donate any ing sure they are involved as volunteers in many of the amount to the CFBB, and in turn, to receive these painted activities of the CF. CFBB has mostly worked with high stones. This is entirely a youth project, which they designed school students and has gone from one school to another and are implementing. telling youth about the CF, introducing the idea of philan- The CFBB also has a project with elementary school chil- thropy, and explaining how the students can be involved. dren, who have an art contest. Each year the foundation The youth have their own advisory board with a rotating decides on a theme (like drawing their favorite event from leadership, and each of the participating schools take turns the history of their city). In 1998, there were 254 entries every month. They have their own grant-making pro- from 10 elementary schools. These are looked at by a gram, where they identify both the needs and the possible panel of judges, who select the thirteen best. One thou- beneficiaries. There is now a group of 20­30 youth who sand calendars entitled "by children for children" were regularly volunteer for the CFBB, and another 30­40 who printed and these included the picture of the artist on them. do it occasionally. This process has empowered students The production of the calendar is fully funded by the pri- to address issues that affect them and to do something vate sector, and some of the proceeds go back to the par- about them. ticipating schools to support their art programs. The CF The youth also received a two-day training seminar twice then organizes a big cultural event at the square where to discuss the psychology of giving and team-building. all the entries are displayed to sell. This yearly event has Youth are also very actively involved in fundraising and increased the number of friends and partners of the are fully involved in grant making. They have their own foundation. advisory board; they have a rotating leadership with each The projects described here represent more than just of the participating schools taking turns every month; and raising funds for an activity. In its early years, the CFBB they can also use the computers, make telephone calls, and realized that for development to be meaningful and long- mail at the foundation. A notable youth project involves term, it must involve not only volunteers but families liv- painting stones, which they use to raise both funds and ing in these areas. support to activities within specific areas of the com- problems in their villages. The CFBB funds the improve- munity. In 1997, the above programs were continued ment of public areas and the creation of cultural and and the challenged grant program was introduced. In recreational facilities in the villages. cases where the group could not raise matching funds, it could be supported for a maximum of two annual Grant-Making Process grant applications. For youth programs, CFBB involved the parents of these children and any other stakehold- The grants given CFBB are usually small and amount ers that were relevant. to $300 or less because the CF wants to support grass The CF's activities were initially in the city, but in roots activities, which do not require a lot of money. the last few years they have included the surrounding CFBB also wants to match funds and not give the entire 70 rural villages and a nearby city. Most of the people amount. Even schools have to match their grants, and living in these villages work in the city. The villages have they cannot be given grants for regular activities that a distinct structure, which the CF seeks to fully involve the government should fund. The group requesting in their activities. These include mayors, priests, schools, funding organizes itself, and it has to prove that it can sports clubs, and retirees. The rural program gained implement the proposed project. Some of the funded momentum in 1997, and the foundation continues to activities include public meetings in neighborhoods, try to improve the quality of life in rural areas. Th pro- schools, club meetings, and so forth. gram encourages mutual cooperation within villages Grants are given on a quarterly basis and are usual- as well as within the region. The citizens from rural areas ly advertised in the local papers. The maximum grant are encouraged to participate in finding solutions to the is $300 because CFBB wants to support as many local 68 Community Development Foundations: Emerging Partnerships institutions as possible. The qualifying organizations ity and development of the CF. It also allows the foun- submit proposals and those that have good ideas but dation to be flexible and to react to sudden and do not know how to write a proposal are supported by unexpected needs and problems within the com- the foundation or somebody paid by the foundation to munity. Eventually, the interest from investment help the organization develop a proposal. This has of endowment should cover part of the grant-making enabled CFBB to both build capacity and fund groups program. that have never been funded before. These groups do The first success in fund-raising was a contribution not have to be registered but do have to be organized by Banska Bystrica in the amount of 1 million koruna with volunteers to implement the work because the ($30,000), when it joined the foundation. The first pay- group must take responsibility for implementation. The ment of this contribution, received at the end of 1994, group gets half of the money at the beginning of a pro- made it possible for CFBB to start a grant-making pro- ject and the rest after a brief report of what they have gram. Next and very important for the CF's develop- done with the funds up to that point. An evaluation is ment, was a substantial grant from the C.S. Mott done when the project gets completed. The CF staff helps Foundation (U.S.) for the years 1995­97 in the amount the groups realize the project throughout the process. of $90,000 to be distributed in the amount of $30,000 The requirements for grant applications include: for each of three years. The contribution for the year 1995 was provided without any additional terms; the · Not-for-profit activities; second and third parts of the grant for the years 1996­97 · Citizen involvement (the majority of the work has will be paid out under the condition that a matching to be done by volunteers); and amount of money must be raised from other sources. · Impact on quality of life must be indicated (capac- Half of this amount, $30,000, or 1,000,000 koruna, ity to finish the project). must be raised from local donors. Other funding sources In cases where CFBB cannot fund a good proposal, include the Rockefeller Foundation, which gave $30,000 it tries to link the group with other funding agencies. a year for three years; the United States Agency for To facilitate this, the CF has a database of fund sources International Development (USAID); the Poland and within the community. Also, when the CF helps with Hungary Assistance for Economic Restructuring Pro- the funding proposal, the proposal stands a better chance gramme (PHARE); and the Soros Foundation, which of being accepted. can only provide matching funds. It is important to point out that, like other CFs, CFBB A grant from the National Forum Foundation (U.S.) has a small staff of four full-time employees (one based allowed the director of CFBB to spend a three-month in Zvolen), although it occasionally engages volunteers. internship in several community foundations in the In 1995, the CF office opened with two full-time staff United States; this was as an indirect financial contri- persons, and soon a third person was employed. The bution. At the end of 1995, the CF received 4,000 British role of the office is to receive grant proposals, to pro- pounds from Charity Know How Fund (Great Britain), vide advisory assistance, and to keep active contact with and 684,900 koruna from USAID for support of three grantees and voluntary organizations as well as indi- new programs prepared for the year 1996; these were viduals. Its other task is to secure financial support for programs for youth, neighborhoods, and women. In the foundation from domestic as well as foreign sources. December 1995, a local fundraising campaign was begun. The office staff is in continuous contact with the mass By 1997, foreign revenue sources amounted to 82.9 media, preparing publications about the CF and admin- percent of total revenues and domestic revenue totaled istering grants and financial accounting. 17.1 percent. In 1997, domestic revenue sources, which included both cash and gifts in kind raised by CFBB for individual events and programs, totaled 38,610 Resource Mobilization and Building Endowment koruna. The CF turned to hundreds of people and small Building endowment was at the core of the strategic businesses for support, which has given it both visibil- goals for CFBB; it is necessary for the long-term stabil- ity and credibility. Eastern Europe Case Studies 69 According to CFBB, fundraising is part of the own- Most of the funding CFBB gets is unrestricted but it ership process and the foundation is committed to does have some designated funds (for example, for youth people to considering the CF as their own. CFBB has and environment). involved a lot of groups in fundraising, including youth, and it has been able to raise $20,000 a year, which cov- Key Issues and Challenges ers half of its annual budget of $40,000. Raising ade- quate endowment is of great concern to the CF because CFBB has played a significant role in strengthening the it would enable them to tackle problems that it is not civil society sector by facilitating economic develop- able to address now. Endowments would also give the ment. The CF has brought together partners that do not CF the flexibility to address people's felt needs. Raising traditionally work in concert to transform their city. It operating funds has been less of a challenge because, has facilitated partnerships at all levels and has been so far, the foundation has been able to raise a signifi- very innovative in bringing in the youth of the city. cant amount locally. Further, CFBB has brought visibility to organizations Initially CFBB had a general fund but since have that were struggling and unable to get funding from opened several funds to target specific issues like envi- donors. The CF has gone out of its way to support ronment, women, rural development, youth, and one small organizations that sometimes have creative ideas for Zvolen. The foundation found out that it is easier but do not know how to actualize them. to raise specific funds because people have different CFBB has also linked donors with local groups and interests. For example, CFBB has encouraged people vice versa. In 1998 alone it wrote ten recommendation to start named accounts; to date, there are four named letters for local NGOs and CBOs for funding. CFBB is funds. The minimum amount required to start a named recognized as a leader for the civil society sector and is fund is $1,000. One of the named funds is for work- trusted by donors. ing civil society organizations that perform training. CFBB is clearly a leader in philanthropy in the area That organization received the money but does not have and has already helped start three other local founda- mechanisms to manage it. tions, and there are discussions for another three. CFBB CFBB has started a Slovak Fund in the United States has visited Hungary, Poland, and Russia to discuss the with the Greater Kanawha Valley Foundation, located CF concept with interested groups. It continues to get in Charleston, West Virginia. This fund is for those visitors who are interested in CFs in a number of coun- donors in the United States who would like to make tries in Eastern and Central Europe. CFBB openly shares contributions to the CF. with new groups what it is learning and seeks to strength- Two-thirds of the funds raised in Zvolen were given en the network of CFs in the region. as grants; and the remaining one third was put in endow- Finally, CFBB has managed to raise endowment from ment. Any unrestricted funds not utilized at the end of all kinds of stakeholders and to raise most of its oper- the year are put in endowment, and this is helping the ating budget, including grants money, from local sources. foundation increase its endowment faster. The process of development has been inclusive right CFBB uses public events to raise funds and to intro- from the beginning, and it is paying off in many ways duce the CF. For example, in the summer of 1998, the in terms of support. Peace Corps supported an open garden for environ- While CFBB has been successful in raising endow- mental education in one of the schools. The school ment, it needs to raise even more funds than it is cur- uses this open garden during school time, and it is open rently able to raise. While the CF has managed to raise to the public over the weekend. Similarly, at the end of funds from local businesses and local people, it still each year, CFBB holds a reception for sponsors and has a hard time getting money from big companies invites the three best projects, which are picked by the that are not in the habit of supporting the civil society board according to set criteria (impact, efficiency, and sector. These large companies tend to follow the gov- new approach). These three get an extra award, and ernment's lead, and since the government that was allow the donors to meet with the grantees. in power until 1998 did not support the civil society 70 Community Development Foundations: Emerging Partnerships sector, those enterprises were reluctant to support the benefit corporations; and the fourth category is foun- sector as well. It is important to realize that the private dations, which numbered 5352 by the end of 1997 sector is very young and closely linked to the govern- (Aserova and Thomas 1998: 1). According to Aserova ment. This presents problems for the civil society sec- and Thomas, many of these foundations were estab- tor, which may not get the needed support; it seems to lished to raise money for a specific purpose or project, be that it is the government in power that determines and some others operate their own programs. Only a the dealings with the nonprofit sector. few of these are real foundations that grant funds for The Slovak Republic suffers from the lack of an nonprofit activities. To regulate the activities of this sec- enabling legal environment, and the current law makes tor, parliament enacted legislation in 1997 that required demands on foundations that could greatly affect the each foundation to be registered with the local court and sector. Although governments want to control endow- to raise a minimum of $15,000 in endowment. This ments and foundations, they do not know how the requirement led to many foundations changing their sector works and they mostly get in the way. Furthermore, registration status. The law provided for a foundation the same government has provided an investment cli- to operate without endowment, but then all its income mate that affects the growth of local foundations. CFBB would be subject to taxation. The law has a number of is, for example, not allowed to invest outside the Slovak other requirements that are not clear and therefore are Republic, but the local banks offer very little interest. subject to different interpretation by the courts who reg- If CFBB invests in an institution other than a local bank, ister the foundations; this creates unnecessary hurdles it will be taxed as much as 40 percent. Although CFs and expenses for new foundations just getting started. are growing faster in the Slovak Republic than in any According to the study by Aserova and Thomas, the other country in Eastern and Central Europe, these laws fact that the banking community in the Czech Republic work against the small local foundations. It is, howev- is in transition poses undue risks to local foundations. er, worth noting that the new government (elected in Many of these banks have nonperforming assets, and a 1998) generally supports the third sector, and a new few have been closed or liquidated. Many banks are foundation law should be approved by the end of the unfamiliar with the concept of fund management "espe- year 2000. The government has involved foundations cially in regard to the endowments of nonprofit orga- in the discussions about this law. Also, the parliament nizations" (Aserova and Thomas 1998: 7). Another approved the tax law, which will allow individuals to problem is the small size of endowments, which is not give one percent of their taxes to nonprofit organiza- attractive to banks. tions. Further, if the new law is approved, the founda- Philanthropy for nonprofit organizations is minimal, tion's income, gift, and endowment earnings will not although there are examples of generous giving by cit- be taxed. These are important steps in the right direc- izens. According to the study by Aserova and Thomas, tion, but governments still need to address the problems "the reasons for this low level of philanthropy include related to unstable political and financial environments. lack of a culture of giving, the role of the state and church of taking care of social concerns, the state of the econ- omy and the lack of incentives in the government pol- Usti nad Labem Community Foundation icy. Currently, the tax code provides tax relief for individuals who give to nonprofit causes by allowing them to deduct contributions up to 10 percent of their Development of Foundations in Czech Republic taxable income. The limitation for corporations are The nonprofit sector grew rapidly with the fall of com- two percent of taxable profits" (Aserov and THomas, munism, and by 1997, there were over 48,000 non- 1998: 7). Since many people believe that the state is profit organizations. These organizations are registered responsible for the social problems of society, those peo- under four categories: the majority are registered as civic ple believe that they should not contribute to these caus- associations (28,000); 3,600 are registered as groups; es; or they believe that charitable giving is the members of the third category are registered as public responsibility of the church. Furthermore, the concept Eastern Europe Case Studies 71 of endowment is entirely new for most people, making Many consultations lead to the establishment of a region- it difficult for the foundation to attract endowment funds. al fund with a self-selected board from public, private, Initially most of the funding for the nonprofit sector came and social sectors. The first project supported by this from international donors, but this is changing and some fund was community care for the mentally ill, drug of these donors are pulling out of Eastern Europe. addicts, and mentally handicapped people. The found- In spite of these difficulties, the need to increase ing group endeavored to introduce the concept of com- domestic funding is evident, and there are potential giv- munity care, which integrates individuals into society ing opportunities that need to be explored. Although and is more humane and economical than institution- education regarding the CF will be required, there have alization. This effort resulted in the Project of been successful fund-raising efforts, for big disasters like Development of Social Services in the Region of Usti floods. Further, the Parliament in 1992 decided to con- nad Labem, whose long-term goal is to change the man- tribute a 1 percent share from the privatization process agement, planning, and financing of social services to endowments that would benefit the nonprofit sector. and to assess their quality and efficiency. Since 1993, The first distribution was going to be for $15 million the founding group has linked NGOs, core providers while the second would be $45 million. By the time of established by the city and state, local institutions (city, the study in early 1999, these funds had not yet been district, labor office, local social care, and health insur- distributed. There is a very clear criterion for distrib- ance offices) The fund had become the chief mediator uting these funds but most of the foundations will not of communication and cooperation between institu- benefit from these funds because they do not qualify. tions and social services providers. The board agreed on the activities to be undertak- en. Eventually, it became clear that similar changes were Historical Development of Usti nad Labem Foundation necessary in other public sector programs, and that the The district of Usti nad Labem is one of the smallest dis- founding group had both sufficient experience and skill tricts in the North Bohemia region. It has a population in seeking system solutions, community-building, and of 117, 834 inhabitants. The municipality has about problem solving. At just this time, a CEO introduced the 100,000 people, and it is the largest municipality in group to the idea of community foundations based on the region. The city is an important transport junction a CF in the United States. The CEO met with 40 repre- both within the region and internationally. The city is sentatives from the city of Usti nad Labem who liked connected to Vienna, Prague, and Berlin by road, and the idea of a CF. At the end of 1996, the group submit- it is a main railway and river transportation junction. ted a proposal to the C.S. Mott Foundation asking for It is also an important industrial center and has, in the the financial support to help create a CF. One of the attrac- past, mostly offered menial jobs. tions of the CF model was its ability to create resources The Usti nad Labem Community Foundation (ULCF) for the future while addressing current local problems. was one of the first CFs in the Czech Republic. The Thefoundinggrouprequestedathree-yeargranttoenable history of the CF dates back to 1993 when a founding them to transform the regional fund into a community group composed of experts who had been providing foundation. In 1998 they separated professional advi- care for mentally ill people decided that a different sory services from social services, and founded- a new approach to the needs of the mentally ill was necessary. organization called the Center for Community Work. This new approach would require partnerships between This organization coordinates general social services for different service providers including the public, private, the city. Half of the original team works at the Center and social sectors, so they approached people from all for Community Work while the others work at the ULCF. of these sectors and suggested the possibility of part- The Usti nad Labem Community Foundation hopes nership to address the issue of caring for the mentally for the following: ill. At this time, no strategy was on the table; it was clear was that institutionalization was not working, and · To support various communities, interconnecting different people needed to be involved to change this. the public with the private, and determining the 72 Community Development Foundations: Emerging Partnerships needs of the community in Usti; to nonprofit organizations and civic activities; facilitate · To create opportunities for citizens, entrepreneurs, the process leading to improvement of environment, cul- representatives of nonprofit organizations, and the ture, education, social services, health care and general representatives of the local administration so they local development; and to facilitate initiatives which strive could come to common visions shared by the whole to involve the public in solving community problems. community, and seek solutions to identified prob- There are two types of grants: lems; · To contribute to the solution of the present and future · Closed grants: These are donor-advised funds and are problems by acquiring financial resources and over- designated for a specific project or group of people. seeing their distribution in the form of grants to the These are usually very small grants and could address areas of culture, environment, education, social an activity like funding the Mental Health Week pro- and health services, and local development; gram that now takes place in 25 cities in the autumn · To support the projects and processes that lead to of every year. cooperation of institutions, NGOs, and the public, · Open grants: The grant committee creates topics based and create conditions for finding the needs, assess- on research. These are published in the local news- ment of quality and efficiency, joint planning and papers for those interested to apply. In the first year coordination, economic financing, and mutual infor- of open grants, there were 52 applications; 22 mation sharing; and projects were funded with total grants of 470,000 · To initiate the projects and processes that unite the korunas. community, and promote and assist the nonprofit organizations that organize them. Resource Mobilization and Building Endowment Governance Structure The Usti nad Labem Foundation has received support The ULCF Board of Directors is made up of important for three years from the C.S. Mott Foundation. It has personalities from the area; for example, directors of also received some funds from the Regional Fund. ULCF state institutions like the labor office, health insurance has an endowment of 10 million korunas in the form companies, directors of local banks, and local enter- of a building (recreational building), which was donat- prises and people from the private sector. The board ed by a construction company in Prague. (The chair- has 10 members who serve three-year renewable terms. man of the board of ULCF used to work with this They meet three to four times a year, and have grant enterprise.) and financial committees that meet more often. The average yearly budget for ULCF is 3­4 million Czech krounas (part of this is spent on operations and the other on the grant program). The foundation does Program Development and Activities not want to get funding from the government yet because ULCF has two priorities; the first priority is to use the there is a lot of misunderstanding between communi- experience from the area of social services and initiate ty and the local government, and this misunderstand- similar processes in the other public sector areas. The ing could destroy the image of ULCF. They will, however, second priority is to gain financial resources and to start continue collaborating on other issues. For the CF to creating endowment for the CF. The long-term goals for accomplish its goals, it needs to establish its own iden- ULCF outlined in a concept note written in 1998 include: tity and credibility. to assist in creating space for cooperation and support various communities that want to participate in com- Key Issues and Challenges munity development, initiate and jointly organize the process of assessing the needs and problems of the ULCF has tried and proved that partnerships in devel- community; to gain financial resources and become an opment have better impact especially when programs economically independent foundation; provide grants target poor people. What started as one project has now Eastern Europe Case Studies 73 spread to other areas, and hence the need to start a foun- al leaders of the neighboring areas of five countries dation that targets most development areas. (Hungary, Poland, Romania, the Slovak Republic, and ULCF was started to create links between different Ukraine). The discussion centered on methods to pro- levels including public, private, and community groups, mote and enhance cross-border cooperation in the and it has done this with considerable success. These Carpathian Mountains and Tisza Valley. These discus- links have brought in funding that was not available sions led to the establishment of an institutional struc- for community development, and it has engaged peo- ture of the Carpathian Euroregion composed of a council, ple who would otherwise not have been involved. secretariat, and several working commissions. It also This method of doing development also enables ULCF led to closer border cooperation between local and to target areas that need immediate attention, like the regional governments, facilitated the opening of sever- environment and youth, and to address the needs of the al new border crossings, and promoted the movement most vulnerable in society. Like most of the other CFs, of people, goods, and services across the border. New this foundation is new but is already proving that things cross-border networks of people such as the Association can be done differently, which has great potential in of Carpathian Region Universities and the Association facilitating community-led development. of Regional Development Agencies in the Carpathian It is not easy to implement the U.S. model of com- Euroregion were created. munity foundation because of differences in culture, Although these activities promoted intergovernmental traditions, and tax legislation; it will take ULCF some cooperation and played a crucial role in establishing a time to figure out what works in the local situation and framework for cross-border cooperation in this part of what does not. This is a long process that may not nec- Central and Eastern Europe, they were not able to respond essarily be understood by many donors and other stake- to the growing interest of local citizens, NGOs, and holders. municipalities wishing to participate actively in cross- The regulatory framework in the Czech Republic border and inter-ethnic cooperation. It became more does not support foundations in a meaningful way. For and more obvious that cross-border collaboration was example, the new law formed in 1998 limited the num- dependent on the strengthening of civil society in the ber of foundations in the country because of unrealis- Carpathian Euroregion. tically high criteria, which made it difficult for most The Carpathian Foundation was founded in 1995 by local organizations to qualify. the EastWest Institute with generous support from the Communism destroyed philanthropy and made peo- C.S. Mott Foundation; it was based on a bold vision to ple very cautious. It will therefore take time for people create a vibrant CF in the Carpathian Mountains to sup- to start seeing their valuable role and be willing to sup- port citizen initiatives through local governments and port a local institution. This transition is compounded NGOs. The idea to develop this type of foundation in by poverty, because even if people want to donate money, Eastern Europe emerged from the belief that supporting they may not have it, and this limits how much can be democracy, economic development, and cross-border done with local resources. These factors make endow- cooperation at the local and regional level is a corner- ment building a daunting challenge. stone of a stable and democratic Europe. The Carpathian Foundation was created to address the following: Carpathian Foundation · To target rural and marginalized people because the economic situation in these areas has suffered; there is now the additional problem of high unem- Historical Development and Governance Structure ployment because most of the local industries have The history of the Carpathian Foundation, also known either been relocated or closed down; as the Fund for the Development of the Carpathian · Most of the people in these areas are minorities Euroregion, dates back to 1992 when the EastWest with a significant population of Romany (Gypsy) Institute (EWI) convened a meeting of local and region- people; 74 Community Development Foundations: Emerging Partnerships · Most of the money going to the NGOs is still con- Governance Structure centrated in the capital and has no connection with The foundation started with an advisory board, which rural areas and marginalized groups; was mostly external because the concept of a local foun- · Some of the regions are isolated because of poor or dation was unfamiliar to most people. After two years, nonexistent infrastructure, especially in Romania the board of directors was changed and then included and Ukraine. representatives from each region. During this time, the · The Carpathian basin is ethnically mixed, culturally policy of the foundation was decided, and a CEO and diverse, and characterized by economic underdevel- country directors were hired. Currently the CF has 15 opment resulting from its peripheral local and com- board members, 10 of which are from the region (two plex history of interstate and interethnic relations; representatives from each country). They have a rotat- · After WW II, this region became part of the Soviet ing membership--two years with a maximum of two block, which installed fixed borders that separated terms--and they attend three board meetings a year. people. This system also destroyed democracy, civil society, and civic engagement; and · After the collapse of communism in 1989, people Programs Activities and Resource Mobilization in the area wanted to reestablish cross-border coop- Program Activities eration. The foundation provides grants and technical assistance to grassroots NGOs and local governments, focusing These issues are reflected in the following mission primarily on economic development and transfrontier statement: "Our main mission is to promote good neigh- activities. It encourages the development of public/pri- borliness, social stability, and economic progress in the vate/NGO partnerships, including cross-border and bordering region of five countries." This mission is sup- interethnic approaches that promote regional and com- ported by the provision of financial and technical assis- munity development to help prevent conflicts. tance to projects that result in tangible benefits to the The CF maintains offices in each country so that communities on both sides of national borders, and country directors can closely monitor the projects it which will improve the quality of life of the people in supports. This also allows people in the area--local small towns and villages of rural areas in the Carpa- politicians, staff of regional NGOs, and so forth--direct thian Mountains. The Carpathian Foundation works contact and access to the experiences of the foundation. to revitalize rural areas by promoting integrated com- The main administrative headquarters are located in munity development, and cross-border and intereth- Kosice, the Slovak Republic, with regional offices in nic cooperation. the rural areas of Hungary, Poland, Romania, the Slovak The goals of the foundation include: Republic, and Ukraine. From this central location in Kosice, all CF activities are coordinated, grants are · Strengthening local democracy and the development reviewed, and funds dispersed. of civil society by promoting local action with local In its first three years of operation, the Carpathian responsibility and accountability; Foundation provided grants to 280 organizations total- · Enhancing the capacity of nonprofit and local gov- ing $1.6 million. Grant recipients ranged from local gov- ernment organizations to address community and ernments for conducting workshops on cross-border regional needs; tourism development, to regional TV programs that · Promoting cross-border and interethnic coopera- document community development projects in moun- tion, the sharing of information, and the replica- tain areas, to a Romany self-government that orga- tion of successful practices; nized workshops on how local governments can better · Encouraging citizen participation in local and region- promote interethnic cooperation. Program staff prepare al development; and alternative proposals and the board discusses and · Promoting cooperation between NGOs, local gov- approves them. The board makes decisions on grants ernment, and businesses. more than $2,500. The country directors play the key Eastern Europe Case Studies 75 role of maintaining contact with grantees, providing Integrated Rural Community Development technical assistance, and short-listing proposals. Program The CF has three programs, which include capacity- The Integrated Rural Community Development Program building, integrated rural development, and cross- is designed to promote larger multiyear projects, or a border cooperation as outlined below. cluster of related projects linked by a consistent focus, in each of the five countries in the Carpathian Foundation. Capacity-Building Program This multiyear community development program is The capacity-building program strengthens the capac- based on local knowledge, culture, and resources, and ity of local governments and NGOs to respond effec- it provides an example for others to follow. tively to local needs. The three grant components include: The Integrated Rural Community Development grants are awarded to local governments or NGOs sup- · Capacity-building grants of up to $5,000 are award- porting projects that promote integrated rural devel- ed for activities that directly address local needs opment in small towns and villages of the rural moun- and simultaneously enhance the programmatic and tain area (integrated rural community development is management capacity of the recipient organization(s); defined as environmentally and culturally sensitive, · Microgrants of up to $2,500 are allocated for local socially responsible, community-based economic initiatives; and development). Multiyear grants of up to $160,000 were · Training and technical assistance of up to $10,000 awarded. are offered to NGOs through third-party contacts with one or more organizations, providing a range Cross-Border Cooperation Programs of workshops on topics related to improving the The Integrated Rural Community Development Program management skills of NGOs and local self-govern- promotes transfrontier and interethnic cooperation in ment in the region. economic, environmental, and cultural fields; the grants Box 7.2. Capacity Building for Romany People The Romany people were greatly affected by the break from also with the local government. At the end of this training, communism. The most dramatic change was that the new many partnerships between different groups formed regime required skills in order to be employed. Many of and discussed problems of community and tried to find the Romany people had very limited skills and are still gen- the most important thing to start development. Three erally discriminated against. Most of them live in isolation years ago they established microregional associations. in the Carpathian Mountains, making it difficult to access This group established formal connection with the local whatever new skills are being offered. This change, there- government. fore, meant many were unemployed, and for many, the This organization received financial support amount- resulting isolation was worse. Some of them started local ing to $100,000 from the Carpathian Foundation over a organizations to try and address the problems affecting period of three years. The program is providing profes- them as a group, but they could not get funding because sional training in areas like handicrafts, house building, funding agencies hardly knew anything about them. and technology development. Technology is very impor- The Carpathian Foundation funded one of these groups tant for Romany people because it will reduce their isola- in 1995­96. Although the organization has existed since tion and give them access to work. They have already star- 1974, it had failed to get funding in spite of repeated requests. ted a training program and a long-distance computer job It serves a total of 13,000 people. A total of 9,000 Romany network; with this they can work at home or at the people live near the border of the Slovak Republic and center. Another possibility for them is to join the labor Hungary. The organization was started by Lazlo Galyas, market. who had moved back to the village to change the fate of According to the project director, the biggest challenge his people. The organization has a local name that trans- is to deal with everyday crises while having long-term devel- lates to "brotherhood." He started to organize these small opment in view. The other challenge is accessing funding groups and tried to encourage them to work together and to continue supporting project programs. 76 Community Development Foundations: Emerging Partnerships are up to $25,000. The program focuses on regional telecommunications systems, and underutilized labor development between two or three partners and on eco- also hamper economic development. nomic development in several countries. The intereth- The Carpathian Foundation is funding activities that nic program provides grants for cultural activities and bring people together and stimulate partnership between training programs to support different ethnic groups. different groups of people including religious groups. It is also bringing together the private, public, and busi- Resource Mobilization ness sectors on a cross-border level to address com- The C.S. Mott Foundation issued a grant of $4 million mon problems. over a period of four years for grant making. The foun- The CF seeks to improve the quality of life of the peo- dation started fund-raising one and a half years ago. It ple in smaller towns and villages of the rural areas in is trying to get additional resources and are currently the Carpathian Mountains. Rural areas are being revi- targeting West European foundations. The Carpathian talized by promoting integrated community develop- FoundationhasalsoreceivedsomefundingfromtheOpen ment and cross-border and interethnic cooperation. Society Fund and matching grants from the King Buidiun These activities promote cultural identity, which has not FoundationandfromPHAREofEU100,000.TheCFplans been addressed for most Romany people, who suffer to approach national and international private founda- discrimination in the region. tions for more funding but the funding issue is one of the The Carpathian Foundation gives seed money to sup- most challenging issues facing the Carpathian Founded- port local groups and intends to start a long-term devel- dation due to its regional nature and the fact that so far, opment process It has also supported very small groups it has been funded by international organizations only. that are unable to access funding from elsewhere. Most of the funding that came after the fall of communism has tended to stay in the cities, which leaves the rural Opportunities and Challenges areas marginalized and isolated at best. Opportunities Most of the country directors are from the region and The Carpathian Foundation addresses important region- have to work closely with the grantees to try to be part al development issues that are not being addressed by of regional life. They make links between different groups other organizations. There is also no other grant-mak- and try to create synergies among these. ing activity of this scale going on in the region. For exam- ple, facilitating cross-border grant-making and Challenges cooperation is an important step towards preventing The foundation faces a number of challenges due to its conflicts and wars, easing ethnic tensions, and stabi- scope and the number of relationships it has to man- lizing the region during the transition to a free-market age. One of the main problems is that of operating in economy. This region has a long history of ethnic con- five countries that do not have a history of working flicts, which cannot be addressed by one country only. together. The strict border crossings, even after 1989, There is a need to connect the people and groups who created (and to some extend still do) a lot of problems have been isolated. These links promote good neigh- for staff and other groups that want to work across the borliness, social stability, and economic progress in the border. These countries are also all at different stages of bordering region of five countries. development, and it is difficult to address the specific The Carpathian Foundation also targets an eco- needs of each while making sure at the same time that nomically underdeveloped area because of its periph- the initiatives create or sustain cross-border relationships. eral location and complex history of interstate and Traditional financial support by donors is country- interethnic relations. This area is often neglected and based, not regional-based, which makes it hard for the overlooked with regard to financial possibilities; dis- Carpathian Foundation to get funding from both bilat- tance from capital cities and a lack of knowledge about eral and multilateral agencies. Most countries do not the region greatly hinder both domestic and foreign usually think about their neighbors across the bor- direct investment. Inadequate border crossings, poor der; many countries also reject the idea of providing Eastern Europe Case Studies 77 support that may help people in the neighboring coun- Privatization in these countries lacks a strong entre- tries because of existing differences. preneurial elite, and the sector is unstable making many This problem is linked to the issue of ensuring long- people leery of participating in philanthropy, especial- term financial sustainability for the Carpathian Founded- ly in a country where the philanthropic tradition does dation. So far, the major source of funding is the C.S. not exist. Further, tax deduction incentives are inade- Mott Foundation, and because of the nature and mag- quate. Other problems regarding the concept of phil- nitude of the problems to be solved, other donors have anthropy is the bias against the idea of volunteerism not come forth to provide more funding. Furthermore, because it is associated with forced labor that existed most organizations are not used to working in part- during the communist era. nerships and so are reluctant to support initiatives cre- Although some tax deduction incentives exist, they ated by other groups. So far, the CF has been unable to are too small to make any difference. But the local peo- raise significant resources from other donors. Another ple are giving small amounts of money for the public related problem is that CFs has been unable to raise funds good, and this something to build on. There is also no from the private sector. The private sector is new in tradition of philanthropy in the region, and the rich do these countries and has no history of working with local not feel the need to support local communities. Further, groups; as for a local foundation, they are leery because the concept of a community means different things to CF is a new concept in the region and it needs to estab- different people in the region and especially among those lish a track record before it can be seen as trustworthy who have been isolated from interacting with other for funding. groups for a long time. Although the Carpathian Foundation maintains the The mountain people are isolated historically and objective of involving different stakeholders in the devel- geographically by bad roads and lack of infrastructure. opment process, this is a very difficult task. For exam- They have a strong sense of community but this also ple, the previous government in the Slovak Republic makes it difficult to relate to outsiders. The lack of the was opposed to the NGO sector and hardly gave the necessary infrastructure makes it difficult and expen- CF any support. All efforts to ensure government par- sive to operate in these isolated places; and the Carpathian ticipation were unsuccessful and this, to some degree, Foundation lacks the necessary funding to build the affected private sector support because there is a very required infrastructure. strong link between the public and private sectors in most emerging democracies. 8. Latin America Case Study Oaxaca Community Foundation A brief discussion of the activities of a few of private foundations visited will also be outlined in this chapter. Oaxaca is located in Southern Mexico, and it is the Context and Historical Development country's second poorest state, after Chiapas. It has Although indigenous communities have practiced mutu- one of the country's largest indigenous populations al assistance for a long time, and wealthy individuals (around 68 percent), with 30 percent of the state's res- have created private foundations, the culture of phil- idents belonging to the Mixtec, Zapotec, and other Indian anthropy as it is known in the United States is uncom- groups. About 42 percent of them are illiterate and 75 mon in Mexico. The reduction of government funding percent live under marginalized conditions. There is a to address local community needs in recent years has, significant gap in income between the rich and the poor however, led to a search for alternative funding for com- (30 percent of the poor living in extreme poverty) and munity development. Community philanthropy seems a very limited middle class. Over 50 percent of the to present some possibilities because there are existing population has not completed primary school and traditions of giving in the country. In recent years, only 5.2 percent of the indigenous population has pro- community philanthropy has received considerable ceeded to middle and higher education. It is estimated attention, especially since the establishment of the that 50 percent of the state's population has no access Mexican Center for Philanthropy (CEMEFI) in 1988. to primary health care. This situation is even worse for This membership organization promotes philanthropy the vulnerable and marginalized populations like chil- through broadcast and printed media and alliances with dren, youth, and women. These issues are further aggra- other institutions. It has, for example, supported com- vated and maintained by poor basic infrastructure, which munity foundation­like organizations in Mexico and leads to a low rate of investment. played a significant role in establishing the Oaxaca The history of the Oaxaca Community Foundation Community Foundation. dates back to 1995 when, with the support of interna- Because of the long-standing traditions of giving tional foundations, civil society organizations and busi- among certain groups and of private foundation estab- ness leaders from Oaxaca and Mexico City agreed to a lishment by business people, Mexico has the potential joint framework and a common set of values, mis- to grow vital community foundations. Although the foun- sions, and goals for the creation of a community foun- dations established by businesspeople are not necessar- dation to strengthen civil society. This agreement ily community-based, they represent this tradition of developed out of the desire to promote a more plural- supporting community development efforts. The con- istic, harmonious society in Mexico through the vehi- tribution to community foundations is evident in the cle of community foundation, following the Chiapas Oaxaca Community Foundation, which receives 40 per- uprising in 1994. Although the initial focus in 1995 was cent of its funding from the private sector. The follow- on both Oaxaca and Chiapas, attention was shifted to ing sections will look at the development of the Oaxaca Oaxaca because Chiapas was too unstable at the time. Community Foundation, specifically the governance The organizations involved at this initial stage includ- structure, program activities, and sources of funding. ed the MacArthur, Ford, Kellogg, Rockefeller, and 78 Latin America Case Study 79 International Youth foundations; the Mexican Center lasting social impact; and of Philanthropy, and prominent Mexican social and busi- · The belief that the CF should give priority to the ness leaders. After a number of discussions, the Chairman causes of problems, rather than their effects. of Commerce in Oaxaca was chosen to lead this initia- tive. The chairman chose other people in the local pri- The CF plans to achieve its goals by: vate sector to work with. After a few meetings, they decided to invite three NGO leaders from Mexico City · Gathering resources from various sources and mobi- and four from Oaxaca in December 1995. Three broad- lizing them strategically toward the targeted vul- based workshops were organized by the International nerable populations; Youth Foundation (IYF) (one) and CEMEFI (two) to dis- · Having in place inclusive, innovative, and effective cuss the CF idea further. By the end of 1996, the group programs that are oriented to supporting civil soci- had agreed on a vision, on goals, and on the method of ety organizations with which they share a common constituting a new board. The process of establishing goal; the CF took time because this was a new concept, and · To improve the well being and standard of living of with a large board of 25 members, there were many the Oaxacan community; and interests to balance. In spite of these difficulties, the · Generating spaces for analysis and consensus regard- CF started implementing some programs in 1997. A ing community strategies among the various social new director was also hired at the end of 1997, and he sectors. was able to raise operation funds and start making grants. The mission of the Oaxaca Community Foundation Governance Structure is "to promote the participation of the civil society in improving the well being and standards of living of the The Oaxaca Community Foundation has seven struc- vulnerable and marginalized sectors of the Oaxaca com- tures, including a partners assembly, a board of trustees, munity by means of initiatives that generate fundamental a consulting council (created in February 2000), an and lasting change." executive committee, and the analysis and finance com- The main goals include: mittees. The operations level has three units: the office of the executive director, the office of programs, and the · To raise and channel resources efficiently and trans- office of social responsibility. parently to the initiatives of the civil society of Oaxaca; The partners assembly includes prominent Mexican · To strengthen and promote capacity building of local businesspersons and leaders, plus international foun- civil organizations; dations, including the IYF, the John D. and Catherine · To encourage a culture of social responsibility; and T. MacArthur, Kellogg, Rockefeller, Ford, and Inter- · To ensure the strength and permanence of the CF's American foundations. This number will continue to programs. grow because board members whose term ends can join the partners assembly and continue supporting the CF. According to the CF, the values motivating them include: This is a creative way to continue benefiting from the expertise of those who have served on the board and · The belief that strategies for improving the standards also to strengthen their continued link with the foun- of living should be based on the premise that pover- dation. ty is a complex phenomenon that varies according A total of 25 board members were selected, and a to geographic areas and is modified over time; legal constitution was signed in December 1996. A coor- · The belief that the model of social development for dinator was hired, and by March of 1997, all the legal a community should be based on the dignity, iden- documentation was done including those for tax exemp- tity, and autonomy of its members; tion. The newly selected board met in March 1997 but · The belief that participatory and inclusive decision- the people barely understood the community founda- making is a prerequisite for making a positive and tion concept and had different perceptions on what a 80 Community Development Foundations: Emerging Partnerships local foundation should do. The disagreements led to Pauline and Rich, in October 1997. The CF raised the resignation of some of the members, including the $30,000, made grants, and provided other necessary president. After this, a new board had to be convened funding to local NGOs to support victims of the hur- and the selection process of a new director was start- ricanes. In December of 1997, a bank in Mexico City ed. The director was selected in 1997, and currently the gave the CF $415,000 to rebuild a school in Santa Maria Oaxaca Community Foundation has a board of trustees Colotepec. Apart from being hit by the hurricanes, this with 20 members. The board of trustees mainly deals area had very few schools, and children had to walk with the mission of the CF and any political issues long distances to get to the nearest secondary school. that arise. After responding to the emergency, the foundation Given the large size of the board and the varied started making grants to local organizations in 1998; skills of its members, the CF decided to adopt a com- in 1998, the CF made seven grants; in 1999, it made mittee structure; it chooses members for the three sixteen grants; and plans to make 39 grants in the year committees based on their expertise. The executive com- 2000. The CF supports two kinds of programs that mittee has seven members and mainly deals with finance aim at supporting multisector alliances: capacity devel- issues. The analysis committee is responsible for the opment for nonprofit organizations, and the promotion analysis of developmental strategies and decides the best of a philanthropic spirit among the state's business and way to support the different issues that arise; the analy- affluent residents. The first program targets certain pop- sis committee also gives direction to the program and ulations like children and youth, women, and microre- works closely with the executive director and the pro- gions. The microregion project mainly targets isolated gram director. The committee is currently trying to groups that may not necessarily be reached by regular improve the criteria for supporting projects. The com- programs. To implement its programs, the foundation mittee structures are connected to the programs of the usually uses the existing local NGO capacity. Since NGOs CF through the program director who does the initial working in these areas are few and may lack the need- short-listing of proposals and then presents the list to ed capacity, the CF identifies the NGOs working in these the analysis committee. The committee in turn short-lists areas, and meets with them to decide on how to work the proposals and presents these to the executive com- together more effectively. The CF usually asks the NGO mittee to make final decisions. If there is disagreement to do a diagnosis of the area and then together, they on the list of priority projects, the whole list is present- build a project to address some of the pertinent issues ed to the board of trustees to make the final decision. in that area. Other than the local NGOs, the CF also The board composition includes people from the uses the expertise of the board members to identify mar- business sector, social sector, and academic and pro- ginalized areas and issues to be addressed. This is effec- fessional sectors. The people from the business sector tive because most board members know these areas include two local businesspeople and three from the from previous work or other connections. The CF has national arena. The social sector includes three local two funds to support these three areas; a total of 85 NGOs, national NGOs (CEMEFI and an environmen- percent of the funds are being used for project support tal organization) and a few international foundations. and 15 percent for capacity building, which includes Those from academic or professional sectors have var- activities like research, round table discussions, and dif- ied backgrounds, which include finance, culture and ferent forms of information dissemination. museums, communication, and marketing. In total, The second set of programs addresses strategies for eight people are citizens of Oaxaca, which is a big change development and includes intersector alliances, civil from the original board that had very few local people. society reinforcement programs (strengthening capac- ities), and social responsibility programs. Intersector alliances aim at improving the collaboration between Program Development and Activities private, public, and social sectors, and support pro- The first program backed by the Oaxaca Community jects with potential for trisector alliances. The Oaxaca Foundation addressed a natural disaster, hurricanes Community Foundation has, in particular, encouraged Latin America Case Study 81 Box 8.1. Examples of Projects Supported by the Oaxaca Community Foundation Helping to Get the Street Children off the Streets: The Oaxaca communicating with others. CANICA has a separate pro- Community Foundation supported Centro de Apoyo al gram for children who live at home and work in the streets. Niño de la Calle (CANICA), which works with children aged 5­19 who live and work on the streets. The program Supporting Comprehensive Community Development: The helps children rebuild their lives by providing education, CF is supporting Centro de Desarrollo Comunitario Centeotl personal development, counseling, and access to social ser- to provide technical training in environmentally sound agri- vices. CANICA's goal is to reintegrate the child with their culture, vocational skills, and culture. This program also family or foster family, and to get the children back to offers citizens a revolving fund for savings and loans and public school. Before children are permanently settled, they assistance in developing microenterprise. Their goal is to stay in half-way houses run by CANICA and staff who reinforce indigenous culture, preserve the environment, provide intense attention to children regarding discipline, and generate income in the community. Young people self control, sharing, planning and completing tasks, and play a key role in this organization. partnerships between municipalities, NGOs, and the of its funds from international organizations, 39 per- private sector to strengthen these links. The founda- cent from national sources, and one percent from local tion plans to pursue its alliances with other institu- sources; the CF is working towards reversing this situ- tions to address community issues, play a convening ation. The national sources include funds from the stock role, and conduct research. exchange and banks; a small amount was from indi- In the second program, the strengthening of capac- viduals, and one of the board members donated office ities refers to the institutional and individual capacities furniture worth $50,000; other donations in kind includ- of local NGOs. The social responsibility program, which ed materials and labor for renovating the foundation is the third program of the Oaxaca Community Founded- office (a local architect did the renovation drawings dation, targets all sectors and aims at raising awareness free of charge). In 1999, funding from international pri- and funds. With this third program, the CF promotes vate foundations remained at 60 percent because most values, beliefs, and involvement of different partners. of the donors gave funding for three years. Funds from The objective of this program is to try and see how dif- national sources decreased to 29 percent while local ferent partners approach change. They are targeting resources increased to 10 percent (this was mainly in the issue of change because there is a need for struc- terms of time and talent). Plans for aggressive local fund- tural changes for programs to benefit the poor. The CF raising are under way. In 1999, the CF developed some strongly feels that poverty is a complex issue that can- fund-raising tools, which included an institutional video, not be approached in a simplistic manner. Poverty reduc- written materials, and newspaper space; and the CF has tion requires a number of partners because lasting change been offered TV airtime for information dissemination can only be possible if each organization plays their part. and fund-raising activities. It has also developed a Web page that is now online. In 1999, the CF started a fund-raising campaign Resource Mobilization and Building Endowment that had four objectives: involving owners of compa- Although most funding for the Oaxaca Community nies and businesses in development initiatives; pro- Foundation has come from international private foun- moting social responsibility by sensitizing people to the dations, a significant amount has come from the Mexican importance of their participation; making visitors to private sector. To date, the CF has raised $30,000 from Oaxaca aware of their situation and asking for their businesspeople and $415,000 from banks in Mexico. support of the CF; and generally, raising funds for the It has also received funding for three years from a num- foundation. ber of international private foundations. In the first month, the CF was able to get five hotels The foundation has an endowment of $100,000 involved, and it has already raised $800 plus the 30 per- and $400,000 for programs. In 1998, it got 60 percent cent match from these hotels (totaling $1,004). It is 82 Community Development Foundations: Emerging Partnerships currently reviewing the campaign to see what needs to of this community and appreciates its diversity would be improved, and how to build on lessons learned. go a long way in bringing people together around com- The CF is planning to reach five new hotels every two mon issues. This is a role the CF hopes to actively play. months. This campaign is to benefit the development The philanthropic nature of the CF also hopes to tap of children and youth--priorities identified by the local existing traditions like active participation in traditional people and supported by the hotels (the hotels indi- giving. This participation would be an asset for the CF cated that this is a project they would give priority to which views common issues like community develop- in terms of funding). The CF hopes to raise funds for ment as a real opportunity to unite people. other development areas. The CF targets many busi- The formation of the foundation allows for partner- nesses, and after they finish their campaign with hotels ships with local stakeholder groups. Historically, local they plan to target restaurants and other tourist sectors. institutions and government do not usually work togeth- Through these activities, the Foundation is promot- er, and they do not always work for local people. Also, ing values, beliefs, and involvement through the Social NGOs do not usually engage the growing middle class Responsibility Initiative. This initiative is meant to in their development efforts. The CF, therefore, hopes produce resources of three types: time, talent, and money. to link all of these different groups and to encourage The focus is not just to raise money for the CF but also their participation in the development process. This is to improve the visibility and capacity of NGOs and other a very challenging task, and it partly explains the diffi- civil society sector organizations in such a way that in culty the foundation has had in getting established and the future, they can directly access resources by them- gaining local support. selves. The CF also wants to link those who want to The CF is also forging partnerships with local peo- work with groups at the local level. The idea is to cre- ple and businesses by involving them in the activities ate space for different kinds of people to participate in of the foundation. Although the involvement of the development. This will, for example, link donors with private sector in development is not new, most funds projects, NGOs with communities. come from Mexico City and do not necessarily involve local people. The CF, through its social responsi- bility program, is educating different stakeholders Opportunities and Challenges to get involved in community development in various Opportunities ways. Although there are many private foundations in Mexico, Oaxaca has one of very few locally run CFs in the Challenges country. The Oaxaca Community Foundation is focused The Oaxaca Community Foundation has faced a num- on a specific poor area of Oaxaca and has programs ber of problems; many of them have to do with intro- targeting vulnerable groups, including isolated indige- ducing a new way of doing development. For example, nous people. The CF is also strengthening existing local the idea of starting a community foundation involving capacity and has, as one of its objectives, increasing the private sector produces a number of problems regard- the visibility of the work of NGOs. NGOs and other ing the control and management of the institution. The local organizations are very important to the CF in terms involvement of the private sector without the involve- of informing its agenda and implementing it. These ef- ment of local people made it difficult to bridge the gap forts will go a long way to strengthen and build local between the new institution and local people. Given the institutions that can effectively address poverty in Oaxaca. diversity of the community and the large number of eth- The Oaxaca community is fairly fragmented, and is nic groups, the issue of local involvement is very impor- composed of 16 ethnic groups who do not necessarily tant, otherwise the foundation remains isolated from the work together. The community is not easy to pene- people it expects to serve. There were also many sensi- trate, and local people take a long time to accept out- tive cultural and political issues and those needed to be siders. A local institution that understands the dynamics addressed first. Latin America Case Study 83 Some of these issues are presaged by the difficulties rience with the hotels in Oaxaca is promising, but the foundation had in getting a board to agree on the more has to be done to harness community, individual, issues it should address and how the community foun- and local private sector resources. As in most of the dation should be run. These difficulties were com- case studies, people seem to be willing to give resources pounded by the many board members and their many to specific projects, but not for of raising endowment; different views and perspectives. Although the new board the CF has to find innovative ways to educate people hasdevisedawayoftappingtheresourcesofalargeboard, on the benefits of giving to an endowment. it took the new foundation a long time to sort out these While involvement of the private sector in this CF issues. The Oaxaca Community Foundation start-up was commendable, it had its own challenges. For exam- process was also long because of these issues, and were ple, it was difficult for the private sector to value local it not for the commitment of the founding members, the involvement and ownership; their decisions only con- CF would probably never have been established. The sidered the interests of the private sector. This created resilience and vision of a number of board members problems from the very beginning, which led to some whowantedtoseethesituationinOaxacachangedplayed people resigning from the board. Further, most of the a significant role in supporting the CF through these ini- people from the private sector were not linked with local tial hard times. There was also a clear commitment to issues and groups, which made it difficult to link with involve local people, and this caused part of the delay; existing development activities, further delaying the however, it is an important issue in terms of the long- process. It is also difficult to separate politics from the term development and ownership of the CF. These issues private sector because most powerful businesspeople underscore the importance of a committed local lead- are also politicians or are part of the political system, ership that is willing to work through difficulties to estab- which makes it hard for them to take a neutral stand lish a locally owned and controlled institution. on development issues. Other potential areas of con- Another start-up challenge had to do with getting flict are between politicians and NGOs because some an appropriate director for the CF. The first director was are working on human rights issues and others focus appointed by a board that had a large representation on conflicting issues. from the business sector. Although the first director rep- Another challenge of the foundation is that the con- resented business interests, he lacked adequate com- centration of NGO activities is higher in some regions munity development experience. He was also from than in others. For example, most of the 70 NGOs work- outside Oaxaca and did not know the important key ing in Oaxaca concentrate their efforts in the central players in the NGO sector, and he did not have links region, leaving the rest of the state without much sup- with local communities. This made it very difficult for port. This poses undue challenges to the CF, which is the director to start operations at the local level, and it committed to working with poor people and especial- significantly delayed the process of starting the foun- ly those in the microregion where NGO activities are dation. A new director from Oaxaca was appointed in limited. The few NGOs that may exist in these regions 1997 and since then, the CF has raised funds and are weak, and the CF will have to invest in capacity made grants. This process in Oaxaca underscores the building to improve them, which takes time and money. importance of getting the relevant kind of staff who The lack of strong NGOs is compounded by the many understand the local situation and are able to balance differentethnicgroupsthatarenotusedtoworkingtogeth- both the internal and external interests and--at the same er. Most of these groups do not even speak the same lan- time--promote local ownership. guage. Further, the environment is politically sensitive, The Oaxaca Community Foundation faces the same making it very difficult to get people to work together or challenge that most CFs do: raising local funds, espe- even devise common goals. While the CF is aware of all cially for endowment. Many national and internation- these issues, it will take them a long time to devise a al funds have come in, but this is not the case for funds strategy that meets the needs of the different groups from Oaxaca. It is, however, worth noting that the expe- while maintaining local control and ownership. 84 Community Development Foundations: Emerging Partnerships A Brief Discussion of Other Local Private health issues. Local support has been evident since the Foundations in Mexico beginning. The foundation deals with issues that peo- ple care about and has recently done a country study Apart from the Oaxaca Community Foundation, five of the relationship between health and the economy. private foundations in Mexico were briefly visited with Many organizations have also used this foundation as the aim of understanding their activities and whether a pass-through for funds to local organizations. The they bear any resemblance to community foundations. foundation has provided this service free of charge, The main differences were found in areas of governance and has thus improved the access of funds by local structure, areas of operation, and the mobilizing and groups and the access of donors to local organizations. building of endowment. For example, the CF focuses The biggest challenge to this foundation is raising endow- on a very specific geographic area with a governance ment funds. This has been a very difficult exercise, and structure that includes local leaders and business peo- the foundation realizes this is the only way it will be ple. The programs of the CF are locally determined with able to support fully what Mexican people care about. a large input of local NGOs and CBOs. The composi- The foundation has assets of $1.5 million and $400,000 tion of the governance is broad-based including both in endowment but has administered more than $52 mil- local and international members. Further, the CF focus- lion and 405 funds since it was founded. es on local philanthropy and building endowment. As indicated in the following discussion, the private foun- Compartamos Foundation dations visited are significantly different but have the potential of supporting the Oaxaca Community The Compartamos Foundation was started in 1982 by Foundation if partnership activities could be funded. young volunteers. It gained full recognition in 1985 A total of six private foundations were visited; all are after the earthquake, when it got very involved with located in Mexico City. The following is a brief descrip- the people affected by the earthquake. The foundation tion of their activities. started a food program in 1988 in Chiapas and Oaxaca with the help of USAID. This large project was in six states but support from USAID was stopped in 1990. Mexican Health Foundation The program has continued by raising funds from local The Mexican Health Foundation was started by six busi- citizens and businesspeople. It has a campaign with 800 nessmen in 1985. These men invited the government supermarkets all over the country. The foundation has and other private sector individuals to participate; and cards in each of these stores that asks people while initially they benefited tremendously from the debt swap. they shop to include one more kilo of beans for the poor. They have since restricted their activities to health issues The supermarkets collect this money for the founda- countrywide. The foundation works closely with the tion and food is bought and sold at half-price to needy government and has significantly benefited from health families. This has made the program sustainable to a sector companies in the country. It also has a health sec- great extent. tor human resource development unit, and it is help- The Compartamos Foundation has also developed a ing doctors who are trained outside the country to return microenterprise program and has benefited from $2 mil- to Mexico. They have also organized meetings of all lion from CGAP and is in the process of forming a local the health foundations in the region and beyond, and bank to lend to the poor. It has lent $800,000, and this has created a network. has all been recovered. The CF also has a health pro- The unique thing about this foundation is that it gram and has been given a hospital to run by German was started by local people. One hundred business- and Swiss owners, who were not making money from people contributed 1 million pesos and asked others the enterprise. The hospital was a receiving full subsidy to join them. It has also benefited from other institu- but the subsidy now is 35 percent, and the idea is to tions, including private foundations, and has won three make this hospital self-sufficient in future. The founda- contracts from the World Bank. It is clearly a leader on tion is also helping local shopkeepers to get wholesale Latin America Case Study 85 prices to benefit consumers. Before, these shopkeepers to the banks if the farmers could not repay their debts. depended on middlemen and had to pay very highly The foundation realized that farmers needed more for their merchandise. Now the foundation buys the than money and therefore had to provide technical assis- goods at wholesale prices and passes the savings on to tance; it is at this point that the group decided to form consumers and still makes a profit. This foundation is a foundation because they realized there were many compelling in that it believes in sustaining its efforts, issues to be faced. They decided to focus on loans in treating social development as an enterprise, and in related to technical assistance, education, family edu- finding ways to benefit the poor. Most of its programs cation, and health issues. The foundation sees the rural can financially sustain themselves. family as an entrepreneur and aims to make it an efficient unit of production and market through its programs. The foundation currently supports 35 orga- Foundation Vamos nizations in 24 out of the 32 states. Funds are from the The Foundation Vamos is a new foundation created in private sector, and loans are from banks. The founda- 1995 by a group of 16 Mexican leaders from the civil tion is a major contractor for the government in rural society sector. The foundation is committed to access- areas. It is also implementing programs for IADB and ing Mexican resources from both the public and pri- IAF. Endowment is not a priority for this foundation vate sector. It was created without endowment but because its members believe that money would be bet- considering its expertise in local development, what it ter spent if utilized now rather than invested for the brings to the foundation is unique. It has a goal to cre- future, given current circumstances. ate an endowment but need solid programs on the Most of the foundation's funding is from the Mexican ground. The foundation is mainly focused on rural areas private sector. The foundation has been innovative in where 70 percent of its work is on economic empow- generating its own resources through its education erment. A considerable number of its activities are in programs and doing consultancies. It also get credit from Chiapas and Oaxaca. banks to distribute to local farmers as loans, and it is One of the challenges faced by this foundation is handling more than $10 million of these funds. This addressing the issue of historical separation between figure was double before the Mexican economic crisis. the private, public, and social sectors. There is no mutu- al trust between these sectors in most cases, and it is Fondo Mexicano para la Conservación de la difficult to link their activities. Naturaleza, A.C. The Fondo Mexicano para la Conservación de la Fundacion Mexicana para el Desarrollo Rural A.C. Naturaleza, A.C. was established with endowment The Fundacion Mexicana para el Desarrollo Rural A.C. funds mostly from USAID but it is handled through is one of the oldest private foundations and was start- the Mexican government. It started with a pilot ed in 1963 by Mexican businessmen who wanted to phase, which deals with 10 pilot areas. This pilot pro- support rural farmers. The businesses interested in gram is supported through GEF funds with the Mexican this endeavor had extra credit that they could not uti- government making some contribution as well. Phase lize and decided to lend this money to farmers who were two of this program is under negotiation now. The unable to access funds from the bank. These business- program deals with the conservation of natural pro- es also decided that they would pay back this money tected areas. 9. United Kingdom Case Study Community foundations in the United Kingdom date growing concern about funding for voluntary activity back only 12 years. However, within this 12-year time in the Bristol area. Its major support and funding ini- frame, 27 CFs have been formed and an additional 30 tially came from the Society of Merchant Venturers, a are emerging. Most of these CFs began with the help of networking trade association that dates back 400­500 the Community Foundation Network (CFN), former- years. This society was facing increased demands on ly known as the Association of Community Trusts and its charitable resources, heard about the community Foundations (ACTAF). This national network organi- foundation model, and thought that establishing one in zation, established in 1991, exists primarily to pro- Bristol would provide the vehicle for new sources of mote the CF concept, to encourage the growth of the charitable funding to meet needs in the area. In partic- CF network, and to support existing community trusts ular, the government had just introduced tax-effective and foundations. The network's primary task is to payroll giving which it hoped would bring in signifi- assist its members in raising endowments and to sup- cant "new" money for the local community. port their efforts to become self-sustaining. The CFN The GBF is an independent charity and a local grant- makes development grants to CFs and consults with making organization. It raises funds and provides advice them as they grow. It also provides them with the nec- and practical help to local charities to support a coor- essary technical advice and information. The CFN serves dinated program of work. This program aims to devel- a diverse membership of CFs in the United Kingdom op the potential of local communities for the benefit of and is funded by private foundations, government grants, all who live and work in Greater Bristol. GBF offers the and membership fees. The following two CFs are mem- following activities: researching the community needs, bers of this network and have benefited significantly setting priorities, working in partnership with donors from services offered by the national body. and local communities, taking the lead in raising aware- ness, raising funds and building endowment, making grants, and monitoring and evaluating progress. Greater Bristol Foundation The CF's overriding aim is to invest in communities in order to build the capacity for local development; specifically, the priorities (GBF 1998) include: History and Governance Structure History · To provide efficient and flexible service for all donors, The 1980s in the United Kingdom were characterized and to add value to their charitable giving; by recession, which resulted in increased local prob- · To provide a long-term source of support for Bristol's lems that the local authorities were unable to address. voluntary organizations through building and effec- This was also a time when the central government was tively managing a permanent endowment; withdrawing its funding from local authorities. These · To direct resources and make an impact for partic- factors, among others, led to decreased funding for the ular areas and needs; and voluntary sector. The Greater Bristol Foundation (GBF) · To act as a catalyst to meet changing needs in the was established in 1987 to respond primarily to the community. 86 United Kingdom Case Studies 87 Governance Structure losinghope.Tomaketheirimpact,GBFstrategicallyworks GBF has up to 18 trustees who come from the public, with other organizations and leverages help from local, private, and social sectors in Bristol. This group includes national,andinternationalsourcestoinstigaterealchange. two ex officio Trustees: the Lord Lieutenant of Bristol GBF gives grants to the voluntary sector, including and the Bishop of Bristol, plus a nominee of the Society small groups. The foundation has extended itself in of Merchant Venturers. A Trustee Appointment order to fund these small groups that are not usually Committee takes responsibility for identifying and connected to donors and may at times lack capacity to proposing new trustees. GBF has three main commit- access these funds. In addition to money, GBF gives tees: Grants Committee, Finance Investment Committee, other support and advice to organizations and links and a General Committee for Fund Development. GBF them to appropriate sources of specialized help. For is starting to use the powers of co-option to include example, GBF made a grant to an isolated group of dis- some non-trustees with particular skills or experience abled persons so that they could pay somebody to help on the committees. The trustees meet four times a them write a grant proposal. GBF was then able to link year. The trustees are increasingly involved in the busi- them with donors who provided funding for three years. ness of the foundation. They set the criteria for the grant This isolated group, who had not previously been able programs and make decisions on the larger grants; deci- to get funding, is now thriving and has accessed both sions on smaller grants are delegated to the staff team. capacity and funding; this organization did not need a They also take time for field visits, which have been full-time employee; they just needed the skills to get instrumental in exposing the trustees to the needs of funding for their activities. Generally, GBF is trying to local communities. move the money where the need is and to respond to needs as they change. Between 1987 and 2000, GBF made more than 2,500 Program Development and Activities grants to voluntary organizations and community GBF aims to make an impact on the needs of homeless groups in Greater Bristol. At the same time, GBF also people; those in long-term unemployment; the disabled, helped some 500 donors target charitable programs in isolated, or poor; and young people who are rapidly the Bristol area. Box 9.1. Examples of Activities Funded by the Greater Bristol Foundation Homelessness: GBF has supported Aashyana (Nest) at dif- include guarding against theft, improving leisure facilities, ferent points since 1992. This is the first Asian-led hous- cleaning up graffiti, and combating violence. Projects can ing association offering language skills, cultural take the form of, for example, a leaflet or magazine, a understanding, and support to Asian people seeking solu- community action initiative, a play for school children, or tions to their often acute housing problems. It aims at pro- a public display. viding homes for rent that are affordable, appropriately designed, and geographically relevant to the Asian com- Disabled people: These grants are intended to increase the munity. extent to which disabled people can organize their lives in the way that non-disabled people take for granted. Sometimes Youth: The program targeting youth supports youth-led ini- this is through support for organizing and lobbying activ- tiatives and aims at giving them a chance to broaden their ities, other times with practical assistance. For example, experiences and to discover the full range of opportunities the foundation gave a grant to a group called Opportunities that are available to them. For example, the foundation for People with Disabilities to support the running costs supported Bristol Youth Community Action. This is an that assist disabled people to find suitable employment. initiative that encourages groups of young people to put Other support to people with disabilities includes a grant together positive ideas to improve community safety. The towards the costs of a Festival of Theatre by people with groups are given grants to support their activities, which learning disabilities. 88 Community Development Foundations: Emerging Partnerships The CF gets its grantees by working with local orga- Charities Board. This building is an investment that pro- nizations, including the local government and com- vides office space for GBF and other voluntary organi- munity development workers who identify local groups zations, and has added 1 million pounds to the in need of assistance. GBF has restructured grant mak- endowment. It is worth noting that other than this ing to ensure greater impact. GBF now gives a small one-time matching grant, all other funding has been number of large grants of 20,000 British pounds a year raised in the country with a significant amount com- for three years. ing from the private sector. Resource Mobilization and Building Endowment Opportunities and Challenges The initial funding for GBF came from The Society of Opportunities Merchant Venturers, who paid the core running costs GBF's activities are concentrated in a specific geographic for the first three years. In its first 10 years of existence area that the CF has become acquainted with. During (1987­97), GBF diversified its resource base and received its 13 years of existence, GBF has helped to link com- funding from 195 individuals, 40 charitable trusts, munities with donors and vice versa in an unusual 187 companies, 11 societies, and 64 voluntary organi- way. GBF has also linked small groups that are usually zations and statutory authorities. GBF has an endow- isolated, and the CF has sought to provide whatever ment of almost 6 million pounds (April 2000); it support those specific groups need. This outpouring comprises over 60 "named funds" set up by donors who has brought local groups to the table that would not have contributed a minimum of 10,000 pounds into ordinarily be there. GBF's grounding at the local level the endowment. Some of these funds came from a spe- is also helping them to follow development efforts over cific fund-raising effort conducted by GBF in the early long periods and to monitor the impact of projects at 1990s. GBF was one of three U.K. foundations to win the local level. a competitive bid to secure 600,000 British pounds each The important role that GBF is playing is to support from the C.S. Mott Foundation in 1991. This was a chal- the development of the most vulnerable; this role is espe- lenge grant to raise money for endowment. The foun- cially valuable now that government spending has been dation had to raise double that amount of money by reduced. In addition to building capacity for the poor 1993. It reached its target a year ahead of schedule. This to get involved, the CF is unlocking resources that have is mainly because, to raise the match, it needed to go not been readily available to the voluntary sector. The to all potential donors in the area, including compa- CF has facilitated links between the voluntary sector, nies and individuals. This effort increased the number private, and statutory organizations, and the CF sees of people donating to the CF. The downside to this itself as a bridge builder between these sectors. kind of approach is the fact that people are willing to Other sources of funds, like income from endow- give one-time donations, but not long-term continuous ment, are also bringing in funding not previously avail- funding. GBF is looking for alternative fundraising strate- able to the voluntary sector. Building of endowment gies to ensure that it does not lose the momentum of ensures long-term availability of funds for development raising funds for endowment. It is, for example, mak- and reduces the instability of having to depend on year- ing links with the local authority and other national ly project funds. Finally, GBF has played a significant initiatives to ensure access to available public funding. role in helping the private sector companies fulfill their It also sees this as an opportunity to work with the city charitable wishes efficiently and effectively. Most com- more closely. GBF is also trying to build the endowment panies do not have time resources or expertise to do fund, manage revenue funds, and establish more donor- what the foundation does on their behalf. The CF thus advised funds. Other than building endowment, GBF becomes a valuable interface between companies and has invested in its own building, with half the invest- the wider community. ment coming from a charitable trust and the other half Another issue associated with mobilizing resources from other sources, including the National Lottery is the importance of promoting philanthropy in com- United Kingdom Case Studies 89 munity development. GBF has demonstrated the poten- Another challenge is changing peoples' attitudes tial of philanthropy in community development by its towards giving. Although there are pre-existing histor- ability to build its endowment and to raise local funds. ical charities in the city, they have a different focus and Although private sector donations for development had have not all changed their grant-making to reflect the existed for a long time, the practice was uncoordinat- changing needs of the local community. ed until GBF provided a system for the sector to con- tribute over time to development and thus to promote sustainable development. The way the CF works has Oxfordshire Community Foundation also enabled it to target the poor. For example, GBF has been able to concentrate on chronic problems like homelessness in Bristol and has convened others in the History and Governance Structure city to seek solutions. The multifaceted approach to History development and poverty makes it possible for it to The Oxfordshire Community Foundation (OCF), which bring people together to make a difference. began in 1995, was set up by a group of individuals GBF has played an important role as an advocate of who were keen to increase the amount of charitable the voluntary sector, and continues to do so by sup- funds available to local community organizations. This porting the networking of these groups, by raising aware- cause was championed by a prominent figure in the ness, and by working with other organizations to help community (the Lord Lieutenant--the representative address issues. of the Queen at the local level), who was already involved in a number of welfare activities in Oxfordshire coun- Challenges ty. He and a number of prominent citizens in the coun- One of the challenges GBF faces is the fact that the com- ty were able to raise funds locally to run the foundation munity foundation concept is new concept in the United for a few years before deciding to appoint a director. Kingdom and especially as it relates to the mechanisms The OCF was formed to address the needs of the low- of building endowments. GBF has found it particular- est income group, which is often marginalized in an ly difficult to raise endowments in the United Kingdom, affluent county. The CF sought to attract funds from unlike in the United States, where tax incentives make companies and individuals that could be channeled into it easier for companies and individuals to donate. Further, immediate grant aid to local groups. The underlying the culture of individual philanthropy is not as strong philosophy of the CF is one of self-help: enabling local in the United Kingdom, and hence, the concentration donors to contribute to local needs in their area. on private sector funding. Private sector funding has certain limitations because most companies are willing Governance to give for short-term projects but not long-term involve- There are 11 members of the board of trustees from the ment. Thus, it is intimidating to return to the same academic arena, business sector, and government and people over and over again, requesting funds. There is voluntary sector, including appointed religious leaders. also significant competition for charitable funds, both All members are residents of the county and have a term from national charities and other local groups (includ- lasting six years. The main role of the board is to raise ing the Society of Merchant Venturers). money to address the problems of the most vulnerable GBF also must develop a capital pool of resources in the county. It therefore needs to understand local that would enable the CF to continue the involving work needs by spending a considerable amount of time con- they do with voluntary organizations. Because it lacks sulting with different people in the country. sizeable capital, the CF is continually preoccupied with raising additional funds. This task, coupled with Program Activities and Resource Mobilization the difficulty in creating new donor markets and facil- itating the development of a long-term strategy of giv- The CF provides grants to voluntary organizations from ing, is daunting. the county who are addressing local needs from one or 90 Community Development Foundations: Emerging Partnerships more of the following areas: education, disability, health the end of their first three years, the CF had given grants promotion (particularly mental illness), and poverty. to 80 local organizations and there has been consider- The CF intends to play a continuing role in the fund- able growth since then. ing infrastructure of the county by establishing a per- OCF always offers opportunities for unsuccessful manent endowment fund to provide revenue to support candidates to discuss reasons for not getting the grant. its grant-making operations. The flavor of the message This is a process aimed at promoting transparency and is different although the root cause is poverty. it allows the CF to present other types of support that The CF hopes to operate in the following way: it can offer to unsuccessful candidates. For OCF, grant making is a capacity-building pro- · To focus on significant areas of poverty and unem- cess. The foundation gives priority to applications ployment; that focus on the greater participation of volunteers · To serve the whole county by meeting rural as well so as to build skills. Clearly this is a new CF, and its as urban needs; programs will continue to expand as the foundation · To support voluntary organizations rather than indi- grows. viduals; · To support innovation and experimentation; Resource Mobilization · To support small-scale projects rather than com- Since its formation in December 1995, OCF has raised peting with large-scale regional or national organi- over 250,000 pounds, of which 95 percent has come zations that already have significant fund-raising from private or corporate sources. Moreover, OCF has capacity; and secured further pledges of 200,000 pounds. By the · To encourage self-help and unlock other resources. end of 1998, OCF had an endowment of 50,000 pounds. OCF aims at the more creative processes of grant An important source of funding has been a local brew- making, which support and strengthen groups and er known as Morland who established a named fund can be described as investment in the community. For within the CF. The company was already investing in example, some groups applying for funding were not the area but saw the CF as a positive vehicle for dis- yet in a position to receive funding; they needed fur- tributing funds to the most needy. The brewers have ther training and support before funding could be given. been very involved in the allocation of funding because The CF would either directly provide such support or it is important for their public relations. Other funding commission others to do so. for OCF includes an investment company, which has given OCF full decision-making power as to how its Grant-Making Process money should be spent. Oxfordshire is one of the richest counties in Britain. OCF has more recently attracted substantial fund- OCF targets the poor who are not always visible, their ing from the European Union and a fund for small grants organizations, or those that serve them. OCF aims to from the British government. build the capacity of the voluntary sector as reflected by its grant-making process. OCF typically gives small Key Issues and Challenges grants of up to 2,500 British pounds. To facilitate the grant-making process, OCF has a The establishment of this CF has enabled the targeting database of most groups eligible for grants. OCF adver- of poor people for support and funding. OCF has iden- tises the grants widely through the press, and it also tified other isolated groups, some of which are in rural mails application forms with a simple clear set of guide- areas, and it helps bring together donors and commu- lines to organizations it knows would be interested. Its nity organizations. Further, the CF obtains resources recommendations for grant recipients are then circu- from nontraditional sources like individuals and pri- lated to all the trustees for approval. The groups award- vate companies. This process of fundraising is, howev- ed grants are notified and invited to an event with the er, in its infancy, and it will take a long time to develop donors, after which they are given one-year grants. By to significant levels. What is important is the fact that United Kingdom Case Studies 91 the foundation has initiated a process that should bring given the tendency of donors to want to give once only in significant resources to help the poor in the county. and not regularly. Further, the reasons individuals or The concept of building endowment, though a chal- companies give money are based on self-interest in one lenge, is itself an innovative way of ensuring long-term form or another. The challenge for the CF is to turn and future availability of funds to address these issues in this interest into long-term commitments for the mis- the county. The support of a few companies at this early sion of the foundation. It is because they believe in that developing stage of the CF is promising; hopefully their mission that people are willing to leave their legacies to actions will inspire others to follow their good example. the foundation. In spite of all of these opportunities, the notion of Finally, like all community foundations in the United permanence and perpetuity, of gifts to the foundation Kingdom, OCF faces the task of tapping resources for present and future operations, is a new concept from those who have the most money in places like and will take time to attract the attention of wealthy Oxford County. Encouraging people to give locally, individuals and companies. This requires the CF to keep strategically, and for the long term continues to be a the long vision of the nurturing and drawing in of donors challenge. It will be interesting to see whether the incen- in clear sight, and to gain their confidence and support tives for charitable giving since April 2000 will signif- over time. This is difficult given the nature of available icantly affect this situation. It is, however, worth noting funds, which do not usually require this long-term rela- the encouraging contribution from the private sector, tionship with donors. The ability to change funding which is over 70 percent in some of the community instruments, like challenge grants, becomes difficult foundations. 10. United States Case Studies Community foundations have existed in the United 1997:15). These funds are contributed by individual States since 1914 when the first CF was initiated in citizens, corporations, other charitable organizations, Cleveland, Ohio. A banker named Frederick H. Goff and government agencies to benefit a specific geographic "developed a cooperative model of philanthropy that area. The following is a brief discussion of two com- gathered together a mix of charitable funds under one munity foundations, the Montana Community Founded- umbrella" (James 1989: 63 in Magat 1989). Goff was dation and the New Hampshire Charitable Foundation. also responding to the fact that some donors were unaware that community needs were in constant flux and therefore, tended to leave bequests and make grants Montana Community Foundation designated for specific purposes. At the same time, some donors left small, unrestricted bequests--just as cost- ly and time-consuming for bank trust departments to History and Governance Structure manage as large bequests. While the bank continued Montana's current economy is said to have been shaped to invest the money from bequests, it relegated respon- by a history of "dependence and extraction, beginning sibility for distributing the income to a separate entity, with the itinerant fur trappers and gold miners and con- the Cleveland Foundation, with a publicly appointed tinuing through the more ambitious Silver Barons and volunteer board of leading citizens (Council on Copper Kings who prospered personally from Montana's Foundations 1992). Since then, the number of com- wealth of mineral resources" (MCF 1994: 2). Most entre- munity foundations has increased steadily. By 1999, preneurs who came to the state did not consider it home there were more than 500 CFs in the United States. It because they settled mainly and temporarily to seek is worth noting that "community foundations are one their fortune. Whatever fortunes they amassed were of the fastest growing sectors of U.S. philanthropy, exported out of state. Today, Montana has little wealth with combined assets that have more than tripled to to call its own and is still struggling to establish eco- over $10 billion between 1985 and 1995" (Tully 1997: nomic security. The state has "few major corporation 3). Even in the United States, there is no agreed-upon headquarters, no well-established corporate endow- definition of what CFs are; as in most other countries, ments, no major private foundations, no critical mass they are each distinguished by their unique character- of population to provide adequate funds through char- istics. According to Agard, a community foundation can itable giving or taxes to meet our ever-increasing needs" be defined as "as a tax-exempt, independent, publicly- (MCF 1994: 2). supported philanthropic organization established and These issues are compounded by the fact that the operated as a permanent collection of endowment state of Montana is undergoing rapid transition with funds for the long-term benefit of a defined geograph- its historic economic mainstay in agriculture, mining, ic area. . . . A community foundation actively seeks new, and logging no longer maintaining adequate levels of typically large contributions, and functions primarily employment. In the last three decades, almost one-third as a grant-making institution supporting a broad rage of the state's farmers have gone out of business; the of charitable activities"(Agard, Monroe, and Sullivan majority of counties on the agricultural plains of east- 92 United States Case Studies 93 ern Montana have lost population; labor union mem- · To enhance, by orders of magnitude, Montana's bership has been cut in half; around 7,500 jobs in agri- embrace of endowed philanthropy as one effective culture, wood products, oil and gas, and mining have response to social and environmental problems been lost; and, since 1985, $210 million in state tax rev- and unforeseen opportunities; enue from minerals has been lost (Strategic Plan of the · To create a new capacity to serve Montana's far-flung Montana Community Foundation 1995­2000). In spite and diverse nonprofit community statewide; of this grim picture, other sectors in Montana have grown · To use the creation of endowed philanthropy as an over the same period. For example, the economy has organizational and community development tool; added 141,000 new jobs, wealthy individuals are and moving to the state, and the population is projected to · To act as a catalyst for change by providing an impar- increase by 120,000 new residents. These challenges tial, ecumenical vehicle for encouraging coopera- continue to preoccupy the Montana Community tion among disparate groups--by offering creative Foundation (MCF), whose formation was based on the approaches and specific tools and techniques for conviction that the situation in Montana can only be community vitality, and by providing objective, changed by empowered communities and individuals understandable information. who are committed to transformation and are willing to make it happen. The main purpose of the CF is: This history of MCF dates back to the 1980s when a few people from Billings (who had begun a local foun- · To serve charitable donors in Montana by provid- dation but realized they could not accomplish their goals ing a variety of flexible means for meeting their char- at that level) decided to engage people of like minds in itable objectives; the state to consider the possibility of starting a com- · To serve the nonprofit sector by providing profes- munity foundation in Montana. For two years, they sional management of endowment funds; talked to different people in the state about the CF · To become a leading charitable grant-making agen- concept and finally decided to obtain more information cy in Montana for funding projects that meet the to inform their decision. The group sought support from existing and emerging needs of Montana and its peo- the Council on Foundations, which provided them with ple; and an advisor funded by the C.S. Mott Foundation. The · To collaborate with other public and private agen- advisor, Eugene Struckhoff, often called the "father of cies on special projects. modern day community foundations," helped get essen- tial funding for the group in the form of challenge grants. The mission and goals of MCF have been developed These came from two sources, the Northwest Area and through extensive meetings with different stakehold- McKnight foundations. With this support, a decision ers that reflect the felt needs of the people in the state. to establish the Montana Community Foundation was This process has been interactive and has been charac- made in 1988. The group from Billings had already terized by open participation as is demonstrated through raised $300,000 and, in creating the new foundation, the governance structure adopted by the CF. offered the funds to start their endowment. The mission of MCF and its members is to to strength- Governance Structure en the long-term funding capacity of Montana's non- Community foundations were a new concept to Montana profit organizations, strengthen the fabric of its residents. Most residents had a general mistrust for out- communities through expanded educational opportu- siders, so it was necessary to establish a governance nities with scholarship programs, and to strengthen structure that would address this issue. Thus, the board the ability for communities and institutions to sustain had to be representative geographically. MCF also had themselves into the future. to address the issue of trust, particularly in regard to The CF has, thus far, tried to accomplish four broad financial management. Therefore, an audit structure goals: and an investment committee were set up right way. 94 Community Development Foundations: Emerging Partnerships The CF decided to go a step further and it obtained an security to rural families and address rural poverty; in independent financial evaluator to perform an inde- turn, the community would be required to raise funds pendent quarterly investment analysis. to establish a local community foundation affiliated with MCF has 20 board members and can increase that the statewide foundation. In order to accomplish this, number to a maximum of 27. All nine regions have the executive director and a consultant visited 35 rural representatives on this statewide board that are elected communities to inform them of the opportunity, and by regional committees. To be selected for the Board of they were in contact with many more about their local Directors, members should have served at the region- priorities, strategies, and decision-making processes. al committee level. The Board of Directors meets quar- They also used this opportunity to start talking about terly for one and a half days and moves the meetings both the community foundation and endowment around the state. Interested citizens can attend the board concepts. After these discussions, communities were meetings, although they are not allowed to vote. In addi- invited to apply for grants. After careful review by the tion, the board also hosts a Community Leaders Dinner board, three beacon communities were selected and where some of the grantees are invited to share what awarded challenge grants totaling $117,000 for each they have done with the grants. This gives the board an community. opportunity to experience first-hand the impact the The CF makes grants from its Unrestricted Endowment grants made, and it also allows the community leaders twice a year, and it focuses on one of the five designat- to acquaint themselves with the board and the activi- ed issues each grant cycle. In 1997, the CF focused on ties of the CF. The membership of regional committees arts and culture and basic human needs, and the CF is voted on at annual meetings, but the selection process gave 41 grants totaling $85,000 from its unrestricted is participatory, allowing a wider audience to select board funds. It also gave an extra $47,000 that was provided members. The open broad-based participation is designed by the Steele-Reese Foundation for a small grants pro- to increase ownership by the local people. The rotation gram. In 1997, the Turner Foundation asked CFs in of meeting place and open participation in board meet- the states where the Turner family has ranch property ings shows the CF's commitment to transparency and to develop a youth development program. The accountability to different constituents. Community Youth Development Initiative provides grants to preselected communities for youth develop- ment programs. The emphasis is on local community Program Development and Activities priority-setting, consensus-building, and decision-mak- The main grantees of MCF are nonprofit organizations ing. The CF provides ongoing monitoring, evaluation, and local communities. MCF also gives leadership devel- and technical assistance to the communities. opment grants (for seminars, conferences, or to buy ser- In 1998, the focus was on education, and the CF vices that it needs). The unrestricted funds have five awarded $71,223 in grants and scholarships. The 1999, focus areas that include arts and culture, economic vital- the grants cycle focused on programs to boost Montana's ity, education, natural resources and conservation, and economy by supporting communities and organizations basic human needs. In addition to these competitive as they design new strategies to address a changing econ- grants, donor-advised, leadership development grants omy, revitalize their communities, and develop educa- and scholarships have been awarded. tion and training opportunities to assist Montanans MCF expanded its interest in rural community devel- as they seek employment. Also in 1999, the Gold Region opment in 1994 when it was chosen to participate in of MCF started an internship program, in collaboration the Ford Foundation Rural Development and Community with the local college, aimed at exposing young people Foundations Initiative. Because it had not been involved to the nonprofit sector and endowed philanthropy. in rural program work, MCF decided to use the same After awarding grants for a number of years, the criteria that the Ford Foundation had provided to it: to Distribution Committee in 1998 took a year off to exam- offer, in a competitive process, program money to a com- ine its grant-making structure and to ascertain whe- munity project that would help provide better economic ther the grants achieved one of its goals--namely, to United States Case Studies 95 Box 10.1. The Journey from Poor to Beacon Communities The three selected beacon communities included Browning ning to attract art lovers and collectors from all over Montana. on the Blackfeet Indian Reservation; Scobey, and Broadus. The Beacon Community Foundation of Daniels County, Each of these communities then expanded reservation-wide which has a population of 2,000 people, surprised every- or countywide, establishing the Beacon Foundation of body by developing an innovative program to bring small Daniels County and the Powder River Community communities together and utilize local resources to build Foundation. The three communities knew nothing about a countywide endowment. The leaders looked at the community foundations or building endowments, but they resources they had in the county and devised a local strat- were interested in changing their communities. The needs egy to obtain these funds. They did not duplicate a strat- for some communities were so great that it was difficult to egy from another county; rather their extensive knowledge see the way ahead. This was particularly true for the Blackfeet of the county enabled them to select viable ways to both Reservation, which has a population of 12,400 people raise funds and get the rich and poor involved in the and suffers from one of the highest unemployment rates county's development. In spite of their small numbers, the and the lowest per capita income in the state. The group people in this county used the media to publicize the poten- decided to build on previous efforts of people with dis- tial they saw in their county. They also made all residents abilities to handle the recycling. So they created a Browning- aware that it takes the whole county to make a difference, based, regional recycling center, which would support the and they made sure that everyone got involved. employment of developmentally disabled persons. This In all of these activities, MCF provided both matching project also provides education and stimulation of com- grants and technical assistance through training and con- munity-wide cleanup and recycling efforts. This project stant contact with the three communities. MCF soon real- not only strengthened the capacity of the grantee but also ized that these communities would have to lead the process provided access to incomes that did not exist before. Although and devise strategies to solve their problems. The CF facil- the recycling program was initially thought of as a volun- itated the process and brought in whatever skills the com- teer activity, it quickly turned into an income-generating munity needed, but the community continued to own the business. The confidence built by the success of this effort process. This has been a very effective way of building local helped a very poor community defy the odds and raise capacity and ensuring local ownership of the community funds for endowment and other development projects foundation process. To sustain the program, the CF had to that have changed the lives of many people. In order to raise $1 million to meet the Ford Foundation chal- raise funds for the Blackfeet Community Founda-tion, the lenge, which is placed in a permanent endowment, called Blackfeet people looked to their own resources and rec- the Montana Renaissance Fund. This fund will continue ognized that Indian art was important. Well-known Indian to empower rural communities throughout Montana to artists from throughout the state contribute their artwork, devise and implement their own community vita- while other businesses contribute prizes for an annual Art lization strategies and solutions, while building their own Auction and Harvest Moon Ball. Held at the historic Glacier local CF. The first three grants from this fund were award- Park Hotel, this festive and successful celebration is begin- ed in 1999. promote community vitality. MCF also wanted to devel- For a grant to be given, there must be some investment op a holistic approach to grant making for lasting results. from the community in one form or another. The grants It realized that making this change required a shift given are flexible and take into consideration any changes from project to program mode. MCF also wanted to that may have taken place since the application was made. change the culture of the nonprofit sector by influenc- The grants are openly advertised with notices sent ing the way the nonprofits view each other and the com- to all partners, including those who merely seek infor- munities they work with. mation from the CF. Each region has its own local review The grants that are given are mostly seed money committee, which reviews and short-lists the nonprof- and the largest grant does not exceed $5,000. Most of it proposals. All proposals are sent back with their scores, the organizations funded are small and are obtaining and they are further reviewed by the statewide distrib- matching grants. Many CFs raise operating funds local- ution committee. This committee makes recommen- ly and depend on volunteers to run the foundation. dations to the Board of Directors. 96 Community Development Foundations: Emerging Partnerships Resource Mobilization and Building Endowment the philanthropic, business, industry, government, At the time MCF was started, Montana ranked among and individual communities who participated in this the lowest in philanthropic giving, and most people did historic forum on endowed philanthropy. According not know anything about the community foundation to the governor, "the conversation represented a con- concept. The state also suffers from a high level of pover- scious and deliberate effort to break Montana's pattern ty. This problem is perpetuated by the lack of large com- of fatalism established by decades of isolation, antici- panies; the few that operate in Montana are headquartered pation of failure, and history of exploitation" (MCF elsewhere, which reduces access to their resources. 1994: 2). The CF provided research and assisted the Furthermore, most of these companies and individu- governor in advancing endowed philanthropy as a means als came to Montana to make money, not to invest in to offer tangible, practical, and achievable means for Montana's future. Montana to control its own destiny. It was also hoped The first step for MCF was to embark on a campaign that this focus on philanthropy would strengthen to raise awareness of the CF concept and to build long- Montana's spirit of giving and its sense of community. term local wealth through endowments. Some of the In this meeting, the governor gave the keynote speech, earlier activities of the foundation were linked to the and foundation and business leaders presented addi- Ford Foundation Rural Economic Development Program, tional information; then people broke into small groups which gave MCF $500,000 in program money for the to decide what the state of Montana could do to pro- Rural Initiative and required a match of two to one in mote endowed philanthropy. This was a chance to permanent endowment. The CF was required, within have others outside of the foundation talk about phil- three years, to raise $1 million--a task that looked insur- anthropy. The forum was grappling with the issue of mountable given the high poverty levels, lack of phil- encouraging philanthropy in the whole state. Those par- anthropic tradition, and lack of experience and expertise ticipating asked the governor to form a Governor's in rural grant-making. The awareness-raising activities Taskforce on Endowed Philanthropy, which was open and other programs of the CF planted the seed for 46 to all those wanting to think through the issue of endowed community foundations throughout the state.10 philanthropy. After reviewing programs used in other Today, MCF has over 400 funds, including local com- states, those on the taskforce decided that one of the munity foundation funds, designated funds, scholar- ways to promote endowed philanthropy was to enact ship funds, donor-advised funds, field of interest funds, a tax credit for contributions to permanent charitable and unrestricted funds. The total endowment funds endowments held by a community foundation. This ini- raised by these groups and the CFs is over $23 million, tiative was patterned after a tax credit offered by the managed as one unique fund by MCF; almost $20 mil- State of Michigan. The legislation failed in the 1995 leg- lion of the endowments have come from various com- islative session, but after two years of working with munities, nonprofit organizations, businesses, and many interested groups and organizations, new legis- individuals. It is important to note that, although this lation was drafted and subsequently, a tax credit bill was has been a long and difficult process, it proves that poor passed in 1997. This is a generous tax credit, unique in communities lacking enabling environments can build the nation; the passing of this bill clearly increased the on their existing assets, raise funds for operations and philanthropic giving in the state, not just for MCF, but endowment, and get fully engaged in the development also for other nonprofit organizations. of their communities. The governor also created a Governor's Business To further the discussion on philanthropy, the foun- Council specifically to help raise funds for the Montana dation decided it was important to involve both the Renaissance Fund--the $1 million endowment to meet public and private sectors. It did this by holding com- the Ford Foundation's challenge grant. One of the out- munity forums on endowed philanthropy in a number comes of the governor's meeting was the decision by of cities, patterned after the first such conversation, host- two national businesses to give to the statewide fund ed by Governor Marc Racicot. Racicot's forum on phil- and to provide small donations to establish 18 local CFs anthropy included a total of fifty representatives from in amounts ranging from $5,000 to a little less than United States Case Studies 97 $2,000. Initially, only four communities took advan- idea of endowment were both new, MCF decided to give tage of this gift and began to build their endowments; incentives to nonprofit organizations wanting to start however, new challenge grants from MCF, along with an endowment fund with the CF by matching their con- the incentive of the tax credit, are boosting interest and tributions. Starting an endowment with the MCF would assets for many more communities at this time. The rea- make it possible for small organizations to start build- son for the lack of interest in this program was due to ing endowments. MCF would pool together their limited understanding of the endowment concept and resources and invest them and thus provide a valuable the challenge of getting people to own the process and service that the nonprofit sector could not afford. invest in it. This enlightenment process is a long one, Currently MCF does not need to match these endow- and most donors do not have the patience when it can ments because they have a proven track record, and lead to isolating the most vulnerable. As indicated by the benefit to those who started building endowments the beacon communities, it is possible to work with with the foundation is evident. This strategy could be communities to realize their resources and to raise funds useful in developing countries where the CF idea is new from other sources for their development. This takes and nonprofit organizations lack the endowment funds time, technical expertise, and resources for relevant and skills to invest. capacity. To date, MCF has accumulated an endowment of Endowment building for MCF has not been an easy over $20 million in 10 years. Of this, $3.7 million is task, and over the years, the CF utilized different strate- the unrestricted endowment belonging to MCF. The gies to build endowment. One of the strategies was to CF has adopted an aggressive strategy to continue to encourage the nonprofit sector to build their endow- grow the endowment by involving people in different ments through the CF. This would encourage even the ways. There are, for example, family contributions, small organizations and communities to start with what- which come from friends of board members and staff. ever they had and build on it. Since the CF and the Funds are also being mobilized from friends; most of Box 10.2. Even Small Communities Can Build Endowments Given the prevailing circumstances, especially among the ple. Both money and awareness were raised with the Harvest poor, MCF had to think of a way to facilitate meaningful Moon Ball and Art Auction. This event gave people an discussions. So it decided to get an expert to discuss the opportunity to look at Native American culture in a dif- idea of community assets with the Browning Community ferent way. This function has helped raise more than Foundation. When the discussion focused on existing com- $150,000 for the Blackfeet Community Foundation endow- munity assets, the group initially did not think they had ment, and it also raised the income of participating artists. any assets that could generate resources for the organiza- Nobody would have thought this possible. tion. After a long discussion, the group realized they actu- The Daniel County Beacon Foundation used a different ally had a valuable asset, Indian art. After this discussion, method. During their first year, the CF was dedicated to the group decided to organize around Indian art and see educating people about endowments. To do this, it want- if it could raise funds for them. They decided to have a fes- ed to host a "radiothon," an idea that was initially reject- tival to try and sell the art. The Harvest Moon Ball and Art ed by owners of the radio station. Instead, for a period of Auction has been running for the last four years. In 1999, ten weeks, it used the local papers to discuss philan- this event was sold out in advance. Those in the state who thropy and what it was trying to do as a foundation; it usually had little business with Native Americans partici- raised $300,000. The radio station later allowed the CF pated to both purchase the paintings and sponsor the event. to use the airtime. The CF was also able to raise funds This festival brings people from other regions and people from people who had left the county but still cared for with second homes in Montana; thus it links the commu- their old communities. Although Daniel County has nity with rich people both inside and outside the area. only 2,000 people, it has raised more than $1 million The event also links businesses in the area with local peo- to date. 98 Community Development Foundations: Emerging Partnerships these friends are wealthy people who live part-time in In spite of the MCF's many accomplishments, the the state and care about Montana. The CF is not just foundation faces a number of challenges and problems mobilizing financial but human resources as well; it is that are briefly outlined here. getting more people involved and considering them- Community foundations are a new concept in selves part of the organization. The third source is the Montana, and most people still do not understand corporate sector both inside and outside the state. The how endowments work and why they should be involved corporations outside the state have businesses in Montana in building them. This lack of knowledge of endowed but are headquartered elsewhere. Funds have also philanthropy and is complicated by the fact that, for the been raised from other private foundations primarily most part, Montana is a poor state. The state is also large from out of state. in area and has isolated communities that are hard to MCF has designed an investment policy and any deci- reach because of both geography and weather. sions on investments are made by the Investment MCF faces real challenges in raising unrestricted Committee, which is composed of some board mem- funds, as well as the funds needed to cover adminis- bers and members of the public who are well-versed in trative costs, which are high due to the size of the state investments. MCF haves three professional mana- and the decentralized nature of the CF operations. These gers who are evaluated by Merrill Lynch on a quarter- constraints put undue stress on the small CF staff, who ly basis. cover large regions and audiences. Opportunities and Challenges New Hampshire Charitable Foundation The previous discussion shows the critical role that MCF played to promote and facilitate local philanthropy that benefited people who would otherwise have been History and Governance Structure invisible. The CF has also created an enabling envi- The history of the New Hampshire Charitable Foundation ronment for endowment building for the nonprofit sec- (NHCF) dates back to 1935, when a former New tor as a whole. The CF has been the catalyst in making Hampshire governor, his wife, and his sister established it possible for the nonprofit sector to build endowments the Spaulding-Potter Trusts. These charitable trusts through the foundation. became effective in 1957, following the deaths of the MCF has played a significant role in facilitating basic benefactors, and the trusts were designed to terminate, community building and developing local leadership all principal and interests expended in grants, by 1972. and ownership of the development process. This is clear- In 1962, the three lawyers who were the trustees of the ly indicated by all the groups that have come together Spaulding-Potter Trusts decided to start a community and raised human, social, and financial capital to bring foundation so that there would be an ongoing source vitality to their communities. In this regard, MCF has of support for New Hampshire nonprofit agencies, once demonstrated that even poor communities can make a the Spaulding-Potter Trusts had been terminated. To difference if they are willing and able to build on what launch the NHCF, Spaulding- Potter Trust made an ini- they have. The CF has also demonstrated the critical tial grant of $25,000, with the promise of a total of and important role of community foundations to bring $100,000 if the CF raised $400,000 by 1972. about change in values and attitudes. These funds grew very slowly over the early years of MCF has helped build the capacity of the nonprofit the NHCF because people knew little about the foun- sector by enabling it to start and build endowed funds. dationanditsactivities.By1965,NHCFassetsapproached This process has also helped build and sustain com- $124,000 and by 1971, assets exceeded $700,000. By munity wealth from untraditional sources. The import 1979, assets stood at $5.8 million. At the close of 1999, of partners from public, private, and social sectors to however, foundation assets stood at over $220 million, this process will create sustainable communities in the and today NHCF is the largest philanthropic organiza- future. tion in New Hampshire, making grants in excess of United States Case Studies 99 $9 million each year. In recent years, people have been the CF and sometimes identify possible future board more willing to give to the CF because they are now members. familiar with its activities and they share in its concerns. The NHCF board requires its members to actively The mission of NHCF is to improve the quality of participate in board deliberations and encourages all life in New Hampshire. It achieves its mission through to be fully engaged in the work of the foundation. The the following: board has a limited number of standing committees to advise it in specialized areas such as investment, finance, · By encouraging the dedication of assets for charita- nominating, and joint grant-making. Ad hoc commit- ble purposes of all kinds in New Hampshire, par- tees are created as needs arise, and membership on all ticularly permanent endowments; of these committees may include persons who are not · By making grants and loans from funds contributed members of the board. This structure enables others in by individuals, organizations, and corporations to the state to contribute their expertise to the CF for short meet the changing needs of the state; and periods of time, and it broadens participation in the · By exercising leadership in the efforts of New activities of the foundation leading to a broader own- Hampshire residents and public and private insti- ership of the organization. tutions to address emerging issues. NHCF has six regional community foundations, name- ly Monadnock Community Foundation, Greater Governance Structure Piscataqua Community Foundation, Lakes Region NHCF has a governance structure that allows it to main- Charitable Foundation, Northern New Hampshire tain local focus and impact and at the same time, pro- Founded-dation, Manchester Regional Community tect statewide identity. The governance structure of the Foundation, and the Upper Valley Community CF has both statewide and regional governing bodies. Foundation. Each region operates with a high degree The statewide board has full legal, financial, and admin- of local identity governed by its own board of direc- istrative authority. This board must secure and retain tors, a larger pool of Incorporators, a nominating process, the full trust of a broad range of constituencies to ful- and annual meetings. Each issues its own annual report fill its responsibilities. Some of these key constituen- and administers its own grant-making program, oper- cies include the corporate community, donors, nonprofit ating budget, development program, and special ini- organizations, the media, state government, and other tiatives. Each develops its vision, mission, objectives, national foundations. Although the statewide board has strategic plan, and annual work plan jointly with NHCF. the primary responsibility for the governance of the Through all these different structures, NHCF continues foundation, it also has regional boards that operate with to bring together a diverse and committed group of peo- a high degree of local identity. ple from across the state to help develop its policies The statewide board has nine members who meet and make its grant decisions. ten times a year. These frequent meetings ensure con- tinued involvement in the ongoing work of NHCF; in Program Development and Activities particular the meetings enable members to respond quickly to the emerging issues, needs, and opportuni- NHCF has many programs that have evolved over the ties, and to oversee and direct the work of the CF's pro- years, and today it manages more than 1,000 funds. fessional staff. Each director may serve two conse- These funds address "gaps in education, health care, cutive four-year terms. Members of this board are drawn and social services; stimulating community and eco- from community leaders throughout New Hampshire nomic development across the state; and working togeth- via a nominating committee of the NHCF Board. The er to protect, preserve, and enhance our natural, historic, nominating committee consists of the Chair and Presi- and cultural resources (NHCF, An Introduction: 2). dent of NHCF and the chairs of each regional division. Working through these issues enables the CF to meet Within the state, the CF has friends whom they refer its goal of enhancing the quality of life in the state. to as "Incorporators." These Incorporators support This is done through grant making, which has been 100 Community Development Foundations: Emerging Partnerships growing every year. For example, in 1998, a total of process is funded by the C.S. Mott Foundation, which $9.4 million was granted to 1,391 nonprofit organiza- enables the CF to work with the network to share basic tions and 1,344 scholarships and loans were awarded business skills and other matters of importance to the to deserving students. The funds were distributed as group. The network has also dealt with both neigh- follows: 20.3 percent to student aid; 19.4 percent to borhood housing repair and new affordable housing for human services; 17.7 percent to education; 17.4 per- people earning $25,000 or less. The network works in cent to public society good; 9 percent to arts and human- a community and tries to respond to the needs of the ities; and the remaining 5.1 percent to health. In 1999, community so that it can eventually become stable. grants and loans totaled $9.5 million, representing 1,587 The New Futures Program is one of the new pro- grants to nonprofit organizations and 1,614 scholarship grams in the CF that was made possible by an anony- and loan awards to deserving students--a total of 23.4 mous gift of $9 million. The mission of this organization percent to student aid; 11.6 percent in arts and human- is to promote and support innovative approaches to ities; 10.3 percent in education; 13.2 percent in envi- reducing alcohol, tobacco, and other drug problems in ronment; 4.1 percent in health; 26.4 percent in human New Hampshire. services; and 11 percent in public society benefit. To facilitate dialogue on important issues, NHCF Grant-Making Process funds the Center for Public Policy Studies, which was The foundation has developed clear and simple guide- formed by the Business and Industry Association, New lines to facilitate grant making. NHCF also organizes Hampshire Municipal Association, Chubb Life, and several grant-making meetings a year to discuss simi- NHCF. The Center was formed to provide well-researched lar issues with other funding organizations to avoid policy options and better-informed policymakers. The duplicating their efforts. After each of three grant cycles, Center produces information, data, and policy alterna- proposals are assigned to staff who assess them accord- tives on issues of public interest in New Hampshire. For ing to the priorities of NHCF. After this, the staff go example, in 1998, NHCF funded the Center to partic- through the process of judging the effectiveness of the ipate in a discussion on how public education should organization and also trying to figure out whether funds be funded. The CF's role in this discussion was to ensure are needed. These recommended proposals are then that political leaders had complete information and taken to the local board which is familiar with the area. thoughtful analysis to aid them in their deliberations. Afterwards, the recommended proposals are taken to The Center provided information through regular reports the main board for approval. and over public radio stations in New Hampshire. Guiding the grant-making process are mandates that The CF has other programs like the Statewide includedensuringthattheCFbuildsonexistingresources, Partnership, formed in 1996 to facilitate support for avoids duplication, and engages local leaders multi-regional institutions and programs that address issues affecting the quality of life throughout the state. Resource Mobilization and Building Endowment The main purpose of this fund is to support initiatives that transcend local boundaries. These are issues that Of all the case studies in this report, NHCF has the would not necessarily be funded by the regional divi- largest endowment, more than $230 million, and a grant- sions of the CF. making budget of almost $10 million. NHCF is also NHCF, together with 14 businesses, participates in the oldest and most experienced of all the CFs. Raising a Corporate Fund, which gives grants to nonprofit orga- the initial endowment was much slower because peo- nizations statewide for technical assistance, strategic ple did not know much about the organization. More planning, and board management. Grants ranging from recently, the CF has done exceptionally well in terms $5,000 to $15,000 a year are given to facilitate learn- of assets; today it ranks among the top 10 percent of ing between these two groups. Another example of part- the more than 500 community foundations in the coun- nership is the support offered to a network of 12 try. More than 90 percent of these funds come from indi- organizations working on affordable housing. This viduals who are committed to the state and want to see United States Case Studies 101 it thrive and grow. Other sources of funds include the for those willing to do so. private sector, other foundations, and the government. NHCF encourages both small and large gifts, although These funds are given in the form of cash, stocks and in most cases, the interest is in people who invest large bonds, real estate and other appreciated property, amounts over time. The CF's experience is that, typi- bequests, life income gifts, life insurance, and transfer cally, people give to the foundation after they have known of assets from private foundations. It is worth noting it for 7­10 years and have lived in the state for some that NHCF has a far larger number of funds than most time. The foundation leaves the door open for those foundations its asset size or even many times larger. with small amounts of money to give to build owner- (1,200 funds together constitute NHCF's $230 million ship. In this case, the emphasis is on participation, not endowment.) Only the New York Community Founded- on amount. There are also examples of giving that dation, with almost $2 billion in assets has a larger are organized through grassroots efforts. For example, number of funds than NHCF. This reflects the giving a total of 140 people contributed over $132,000 patterns of New Hampshire and the CF's support for to establish the Lilla Fund, which honors the retiring building small funds. To facilitate giving, NHCF has founding chair of the Upper Valley Community several types of funds that people can donate to, as Foundation. outlined below. Endowments are of little value if not well invested. Over the years, NHCF has wisely invested donor con- · Unrestricted funds: These funds are the most flexible tributions by pooling resources together in a com- and responsive to changing community needs. With bined Investment Fund. This work has been overseen these funds, the responsibility for selecting the most by a very able Investment Committee "whose primary appropriate grantees is placed with the board of goal is to make current grants, while assuring that we directors. do not erode the funds' capacity to meet future needs. · Field of interest funds: The donor specifies their par- Our secondary goal is to achieve the best investment ticular field of interest to the beneficiary of income return possible without taking risks that are inappro- from the fund. Possible areas of support include priate for an endowment" (NHCF 1997: 4). The com- human services, affordable housing, public educa- mittee is assisted by the New England Pension tion, and performing arts. Consultants, which are the foundation's investment advi- · Advised funds: In this case, the donor establishes a sors. Examples of diversification of investment manage- fund and retains the ability to make suggestions ment include: real estate, global fixed income, high yield regarding distributions. They assume the role of an fixed income, domestic fixed income, international equi- advisor and work with the foundation to make sug- ty, domestic cap equity, and domestic large cap equity. gestions for annual grant making. · Designated funds: These funds are given to provide ongoing annual support to one or more designated Opportunities and Challenges charitable organizations in perpetuity. Donors who This discussion clearly shows the pivotal role that NHCF wish to continue providing support for organiza- played to create a very impressive endowment fund, tions they have supported over the years find this mostly from local sources. It is undeniable that the CF method ideal. has promoted and sustained philanthropy in New · Scholarship funds: In this case, the donor gives funds Hampshire; it has wisely invested its endowment and for scholarships and may at times specify criteria has given some of that money back to the communi- for a fund that assists an individual in pursuing edu- ties it serves. cational goals, or recognizes individual excellence. The CF is a powerful, statewide voice that has These diverse ways to contribute to the CF allows clearly linked the energies, talents, and needs of com- donors different opportunities to advance their chari- munities to the generosity of donors who want a bright table interests and to decide their level of involvement. future for New Hampshire. The CF, through its many This is also a great way to keep in touch with the CF funds and experience, provides philanthropic options 102 Community Development Foundations: Emerging Partnerships for donors and helps focus support where it is most and localities that it may not be reaching now. Maintaining needed. relationships with current and prospective donors is NHCF has played a significant role in building capac- an issue that the CF has to continually face. ity for the nonprofit sector and has effectively facilitat- The NHCF has a very large number of funds that are ed local ownership and participation through regional time-consuming to manage. But this large number of community foundations. This innovative regional struc- funds is a direct result of a decision by NHCF to sup- ture allows for the targeting of resources to those who port the creation of small endowments by donors of most need them. Having a statewide mechanism also modest means, enabling many people in New Hampshire allows the CF to keep the state together and address to "own a piece of the `Rock'" and participate in phil- issues that are common to all. This structure also enables anthropy. In spite of these many funds, there are still NHCF to benefit from other initiatives and both nation- many more initiatives that NHCF cannot fund because al and statewide dialogues. This process is facilitated there is no funding source. by the CF's involvement in public policy and debate; Another issue that the community foundations have the CF also convenes different groups to address nation- to face is the fact that capacity building is a long pro- al and state issues that affect them. cess. The myriad demands on a foundation's time may The main challenge for the NHCF seems to be the affect what the CF is able to accomplish and could ability to continue growing endowments to levels that eventually lead to leaving out groups that may need would enable it to have the resources to reach groups the most help. Notes 1. The term civil society is defined as diverse organizational thropic institution serving a defined geographic area and gov- forms that exist outside the state and the market which give erned by a volunteer board of private citizens representative voice to important social concerns or seek to meet human of the public interest. It administers funds from an endow- needs that neither the market nor the state can adequately ment built from contributions by individuals, corporations, address. The civil society sector includes organizations like other foundations, or government." NGOs, foundations, cooperatives, associations, cultural and 4. Endowments are funds in which the principle amount regions groups, and trade unions, to name a few. is never spent in order to provide ongoing income in the 2. The term donor agencies will be used to refer to estab- form of interest, to be used for charitable and development lished formal development agencies like bilateral and mul- purposes. tilateral organizations and large international foundations. 5. This is particularly the case in developing countries and Where the general term donors is used, it will cover a broad- in Eastern Europe where CFs have been created to fill spe- er group of donors to include individuals, companies, and cific gaps in each development context. any other group providing funds for development. 6. The term NGO tends to be confusing. Taken literally, 3. There is no consensus on the terminology of these insti- it would refer to organizations neither governmental nor tutions, especially in developing countries where they take private. In practice, however, the term has evolved to be different forms. In the United States, the term community foun- proprietary to nonendowed intermediary organizations (that dation covers institutions that provide donor services with- is, between government and others) whether their primary out necessarily targeting poverty or specific development role is advocacy or operational. issues. Community development foundations are used in this 7. Community-based organizations (sometimes referred report because the emerging CFs in developing and transi- to as civil society organizations) are mainly grassroots orga- tion countries target community-based development and nizations characterized by distinct membership and usually poverty reduction by raising funds to build endowments defined by specific interests. Although these CBOs are most- and make grants to local organizations. In these contexts, a ly informal, some countries may require their registration in community development foundation has been defined as "an various government ministries. independent, philanthropic organization (part of the non- 8. The major foundations have demonstrated success in profit, non-governmental sector) dedicated to addressing crit- pooling their resources to support CFs in developing coun- ical needs and improving the quality of life in a specific tries. Examples of partnerships in support of CFs in devel- geographic area" (C.S. Mott 1998a). Community develop- oping countries include partnerships between: the Ford, the ment foundations can, however, be better identified by their C.S. Mott, and Kellogg foundations in South Africa; Ford and characteristics, which include mixing program operation with Aga Khan foundations to form the Kenya Community grant-making, mobilizing resources to fund the civil society Development Foundation; the Rockefeller and Ford foun- sector and for endowment, providing donor services, con- dations in Esquel Foundation in Ecuador; International Youth vening civil society groups, bridging institutions to other sec- Foundation, Ford, Rockefeller and MacArthur foundations tors, as well as providing technical assistance and training. to form the Oaxaca Community Foundation; and the In some countries like the United States, community foun- MacArthur and Ford foundations to form the Mozambique dations have been defined as "a publicly supported philan- Community Development Foundation, which has also 103 104 Community Development Foundations: Emerging Partnerships benefited from the debt swap from the World Bank and nization. All financial assets must be held in a financial insti- other bilateral agencies. Other partners in these efforts include tution registered in the Slovak Republic. Management expens- large international NGOs and the private sector. es must be 15 percent or less of the total annual disbursements 9. Noninvestment funds have become an attractive alter- of the fund. All other regulations of the noninvestment fund native for endowments because these funds allow the orga- are similar to that of the foundation except the registration nization to attract, manage, and distribute funds for the benefit process. Although these are supposed to register in regional of the endowment. The law defines the fund as "a nonprof- administrative centers, the amount of scrutiny, reporting it legal person, which gathers funds for the purpose of ful- requirements, and controversy are greatly reduced (Aserova filling general public benefits or individual humanitarian help and Thomas 1998: 15). for those individuals or groups who are under threat or who 10. A community foundation starts when a small group have suffered disaster in their lives." A noninvestment fund interested in community issues gets together and invites may own property, provided that the income from the prop- others to join them; they then decide to raise endowed funds erty is used for the purpose defined by the statues of the orga- with the foundation irrespective of the amount. References Agard, K.A., H. Monroe, and E. Sullivan. 1997. Report. Usti nad Labem. "Community Foundation Primer: An Outline for Council on Foundations. 1992. "Building Successful Discussion and an Initial Organization Start-up Kit." 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Case Study Questionnaire General Questions · Who owns these assets? · What are the sources of contributions (individual, · Historical development of the organization (when, corporations, other foundations, government, etc.)? by whom, and why). · Does indigenous philanthropy exist and how are · Initial and current objectives. you building on this? · Have these changed over time and why? · Rules and regulations that facilitate/discourage phil- · What are the main activities of the organization? anthropy. · Area covered: national, regional, etc. (constituency · How are assets linked to the community assembled? served and how it is delineated, whether geo- How are endowments built; main contributors and graphically or ethnically). main problems. · Target group and why? · Where do they get these funds from (external/ · Is it a grant-making organization, capacity building internal)? etc.? Please give details on the organization's focus. Involvement of Stakeholders Governance Structure and Management · Which stakeholders are involved (include public, · Governance structure. private, and civil society organizations)? · How are the board members selected and how often? · Identification of major partners. · Interests represented on the board. · Discuss the process highlighting benefits and chal- · Decision-making structure. lenges. · What determines whether one activity is done as · What are the roles of the different partners? opposed to another (what do you do if there is no · Specify community involvement (explain in detail money for a project yet it is needed by the com- what this means in your situation). munity)? · How do donors and benefiting communities work · What do you give grants for? together? (Does this foster relationship of commu- · How are the funds distributed? nities to donors? What are the mechanisms used to · How is local leadership identified and how is it ensure this) developed? · Challenges and opportunities. · What defines your agenda and work programs? · Who makes decisions on activities to be under- Community taken? Describe the process. · What constitutes community? Assets/Asset building · What, in your experience, are some representative community structures? · Total assets. · What is the role of existing community structures · How these assets were acquired and over what peri- and how have you built on these, or did you build od of time? new structures? 107 108 Community Development Foundations: Emerging Partnerships · Have you been involved in community capacity Sustainability building? What does this mean and how has this been done? · Main sources of funding. · Had these communities dealt with other donors and · Community funds--do they exist and who decides how were the activities handled how much to access? · How are relationships with the community strength- · Availability of long-term funding? ened? · Flexibility of funding and what determines this? · How extensive is the knowledge base of communi- · Identify main challenges to sustainability and how ties they are working with, and how was this knowl- these challenges are being addressed. edge acquired. · How is community ownership facilitated? · Main challenges and opportunities. Annex 2. List of Persons Interviewed AFRICA Elkanah Odembo Board member and chair Thomas Miller Board member Foundation for Community Development Mozambique Aga Khan Foundation Av. Eduardo Mondlane, ICEA Building, 1170 R/C Maputo, Kenyatta Avenue, Nairobi Mozambique Mirza Jahani Regional Chief Executive Fumo Carlos Executive Director Officer Carlos Manjate Fundraising and Communication Officer The Ford Foundation M. Cumbi P.O. Box 41081 Machel, Graca President and board Chair Nairobi Kenya Diniz, Celia Founding member Katharine Pearson Representative--Office for Carrilho, Julio Board member Eastern Africa Ana David TEIA Tade Akin Aina Program Officer Carvalho Neves Founding member Manuel Condula Rede National De Ongs Uthungulu Community Foundation Contra Droga P.O. Box 1748 J. Mutombene Rural Association for Richards Bay 2900 Mutual Support (ORAM) S. Africa. John Mabuyakhulu Board chair Ministry of Foreign Affairs & Cooperation, Louis van Zyl Board member Mozambique Av. Julius Nyerere N. o3, Center for Organizational Effectiveness (SED- Maputo, Mozambique IBENG) Luis Adelino da Silva Deputy Director P.O. Box 32286 Braamfontein, 2017, South Africa Kenya Community Development Foundation Mogano P.O. Box 40898 Reuben Mogato Associate Program Nairobi, Kenya Director Monica Mutuku Director Margaret Lubaale Asset Development Officer Charles Stewart Mott Foundation Nora Mwaura Program Officer 23 Jorissen St. P.O. Box 32088 Braamfontein, 2017 Beverly Nuthu Finance Officer South Africa Aleke Dondo Board member 1200 Mott Foundation Bldg. Flint, MI 48502 Christa L. Kuljlan Program Officer 109 110 Community Development Foundations: Emerging Partnerships Interfaith Community Development Association Coumba Fall Head of the P.O. Box 31389, Braamfontein, 2017, South Africa Organization and Ishmael Mkhabela Executive Director Network Dev. Unit Momadou Ba Head of Unit for the Kagisco Trust Review of Sustainable 209 Smit St. Braamfontein, 2001 Dev. Strategies South Africa, Thierry Barreto Fernandes Program Officer Thabiso Ratsomo National Program Oumou Wane Administrative and Director Finance Director Simon Maleka Administration and Human Resources Manager CODESRIA B.P. 3304 Dakar, Senegal Office of the Deputy President Hakim Ben Hammouda Senior Program Sibongile Mkhabela Director of Projects and Officer Programs Pact S. Africa EASTERN EUROPE Sable Center 6th Floor 41 de Korte Street P.O. Box 32286, Braamfontein 2017 Community Foundation of Usti nad Labem Marilyn W. Richards Horova 1262/6 400 01 Usti nad Labem South African National NGO Coalition Czech Republic (SANGOCO) Tomaz Krejci Executive Director P.O. Box 31471 Braamfontein, 2017 Lubimor Krbec Former Executive Director Anthea Bingle Healthy Cities Community Foundation, Banska Southern African Grantmakers' Association Bystrica and Zvolen (S.A.G.A). Horná 67, 1 Poschodie 974 01 Executive Director Banská Bystrica, Slovak Republic PO Box 31667 Braamfontein 2017, South Africa Hirt Beáta Executive Director Mokhethi Moshoeshoe Executive Director Mesik Juraj Board Member Max Legodi Program Director-- Community Foundation Carpathian Foundation Hlavna 70, 040 0A1 Kosice, Slovak Republic The Development Resource Center Sandor Koles Executive Director P.O. Box 6079 Laura Dittel Country Director, Slovak Johannesburg 2000 South Africa Republic Philisiwe Bulunga Manager: Training Laslo Gaias Grantee Tlalane Lesoetsa Researcher Charles Stewart Mott Foundation USAID S. Africa Zitna 8 (rear, 3rd floor) Peter Gert 120 00 Prague 2 Czech Republic West Africa Rural Foundation Clare Brooks Representative Central and Allées Seydou Nourou Tall No. 4318 CP 13 Eastern Europe Dakar-Fann Sénégal Shannon Lawder Program Officer--Russia Fadel Diame Regional Director & Ukraine Annex 2 111 Lenka Setkova Associate Program Officer Centro Mexicanao Para la Filantropia (CEMEFI) J. Walter Veirs Associate Program Officer Cerrada de Salvador Alvarado No. 7 Col. Escandon. 11800, Mexico, D. F. Czech Donor's Forum Jorge Villalobos Grzybowicz Presedente Stipanska 61 Ejecutivo 11602 Prague 1 C. R. Consuelo Castro Salinas Asesoria Legal Helena Ackerman Executive Director Fondo Mexicano Para la Conservation de la Nadace Via Naturaleza, A.C. Jeleni 200/3 Calle Dama No 49 Col. San Jose 118 00 Praha 1 Insurgentes C.P. 03900 Czech Republic Mexico, D. F. Julia Szanton Program Manager Renee Gonzalez Montagut Directora del Fondo para Areas Naturales Open Society Fund--Prague Protegidas Prokopova 9 130 00 Prague 3 Fundacion Mexican Para la Salud Czech Republic Preferico Sur No. 4809 Col.El Arenal Deleg. Tepepan Jaroslava Stastna Program Manager 14610 Mexico, D. F. Guillermo Soberon Presidente Ejecutive Cuauhtemoc Valdes Olmedo Director de LATIN AMERICA Planeacion y Desarrollo Oaxaca Community Foundation (Fundation Comunitaria Oaxaca) Fundacion Mexican Para el Desarrollo Rural, A.C. Vincente Guerrero No. 311 Col. Centro La Quemada No. 40, Col. Narvarte 03020 C.P. 68000 Oaxaca, Mexico Mexico, D. F. Jaime Bolanos Cacho Guzman Director Antonio Ruiz Garcia Director General General Alfredo Espinose Jimezez Director de Guadalupe Cruces Carcia Coordinadora de Planeacion Responsabilidad Social Fundacion Vamos Julio Cesar Cordova Garcia Director de Peten 204, Col Narvarte Programas Mexico D.F. C.P. 03020 Rogelio Gomez-Hermosillo Director General The Ford Foundation Alejandro Dumas 42, Col. Polanco EUROPE 11560 Mexico, D. F. Pablo Farias Representative Greater Bristol Foundation Royak Oak House, Asociacion Programa Compartmos I.A.P. Royal Oak Avenue Paseo de la Reforma 1110 Bristol, BS1 4GB Lomas de Chapultepec Helen Moss Director C.P. 11000 Mexico, D.F. Alice Meason Assistant Director Kikis A. Zavala Directora de Desarrollo 112 Community Development Foundations: Emerging Partnerships Oxfordshire Community Foundation 15-19 George St. Oxford Oxi 2AU New Hampshire Charitable Foundation Nick Thorn Director 37 Pleasant St. Concord, NH 03301 Feldstein, Lewis President Community Foundation Network Vasbinder, Patricia Vice President 2 Plough Yard, Shoreditch High Street Cantor, Alan M. Vice President London, England Comstock-Gay, Stuart Vice President Gaynor Humpreys Director Speltz, Nike F. Program Officer Bernard Van Leer Foundation Charles Stewart Mott Foundation Eisenhowerlaan 156, 1200 C.S Mott Foundation Building P.O. Box 82334, Flint, MI 48502-1851 2508 EH The Hague, Elan D. Garonzik Program Officer The Netherlands Rien van Gendt Executive Director International Youth Foundation Liesbeth J.A Zwitser Advisor to the Executive 34 Market Place, Suite 800 Baltimore, MD 21202 Director Carol Michaels O'Laughlin Vice President Gerry Salole Director Program Documentation and National Center for Non-Profit Boards Communication 1828 L Street, NW Suite 900 Paula Nimpuno Program Director--Africa Washington, DC 20036 Desk Crispin Gregoire Director--Global Programs Tanja van De Linde Program Specialist Eliana Vera (former Director of Global Programs) European Foundation Center (EFC) 51, rue de la Concorde B-1020 Pact Headquarters Brussels-Belgium 1901 Pennsylvania Avenue, NW Suzanne Feurt Coordinator Community Washington, DC 20006 Philanthropy Initiative Louis Mitchell President and Chief Executive Officer King Baudouin Foundation Joy Beaton Consultant Rue Brederrodestraat 21 B-1000 Brussels Belgium The Aspen Institute Jean-Paul Warmoes Adviser One Dupont Circle NW Washington DC 20036 Janet Topolsky Associate Director UNITED STATES The Ford Foundation Montana Community Foundation 320 East 43rd Street 101 N. Last Chance Gulch, Suite 211 New York, NY 10017 Helena, Montana 59601 Elizabeth Campbell Senior Director Sidney Armstrong Executive Director Mary Ann Gorsich Chief Financial Officer The Synergos Institute Terri Haaga Grants Officer 100 East 85th Street, Bill Pratt Program Director New York, NY 10028 Ralph Yaeger Development Director Bruce Schearer President Steve Browing Former Board Chair David Winder Director of Programs Acronyms and Abbreviations ACTAF Association of Community Trusts and Foundations CANICA Centro de Apoyoal Niño de la Calle CEMEFI Mexican Center for Philanthropy CBOs community-based organizations CDD community-driven development initiative CDF Comprehensive Development Framework CFBB The Community Foundation of Banska Bystrica CFs community development foundations CFN community foundation network CNCR National Council for Consultation of Rural Actors CSOs civil society organizations EWI EastWest Institute FDCE Fund for the Development of the Carpathian Euroregion (Carpathian Fund) HCCF Healthy City Community Foundation of Banska Bystrica and Zvolen FDC Foundation for Community Development, Mozambique GBF Greater Bristol Foundation GEF global environment facility IDB Inter-American Development Bank IAF Inter-America Foundation IDRC International Development Research Center IRED Development Innovation Network IYF International Youth Foundation KCDF Kenya Community Development Foundation MCF Montana Community Foundations NGOs nongovernmental organizations NHCF New Hampshire Charitable Foundation OCF Oxfordshire Community Foundation PHARE Poland and Hungary Assistance for Economic Restructuring PRA participatory rural appraisal PRSP Poverty Reduction Strategy Papers PSAOP Program to Reorganize Agricultural Department and Producer Organizations SAGA South African Grantmakers' Association SIDA Swedish International Development Agency SNV Dutch NGO UCF Uthungulu Community Foundation ULCF Usti nad Labem Community Foundation 113 114 Community Development Foundations: Emerging Partnerships U.K. United Kingdom U.S. United States USAID United States Agency for International Development WARF West African Rural Foundations WHO World Health Organization ZCFB Zululand Chamber of Business Foundation The World Bank 1818 H Street N.W. Washington, D.C. 20433 USA Telephone: 202-477-1234 Facsimile: 202-477-6391 Internet: www.worldbank.org E-mail: feedback@worldbank.org NGO and Civil Society Unit Social Development Department Facsimile: 202-522-1669 Internet: www.worldbank.org/ngos E-mail: ngo@worldbank.org