Community foundations are charitable organizations designed to pool donations into a coordinated investment and grant making facility dedicated primarily to the social improvement of a given place.
Families, individuals, businesses, and nonprofit groups establish funds within community foundations into which they can contribute a variety of assets to be used for charitable purposes. Donors may also make gifts to existing funds. The donor receives a charitable deduction in the year that gifts are made into these funds.
The assets of community foundations are pooled and invested. The funds established at community foundations can be expendable funds (i.e., grants are made from them) or they can be endowments, which limit distributions to the interest earned on the assets. Expendable or pass-through funds can be exhausted while endowments last in perpetuity because the principal is not spent.
The first community foundation was set up in Cleveland in 1914 by Frederick Goff and operating now as the Cleveland Foundation. Community foundations are now a global phenomenon. There are at least 700 in the United States and perhaps 1000 more around the world with numbers growing rapidly.
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