What is a Community Endowment?

A community endowment is a tax-exempt public charity created by and for the people of the community and governed by a volunteer board of trustees. A community endowment provides convenient bridges between donors and charities: they act as catalysts for community improvement by working with a wide variety of partners. A community endowment is a permanent entity. Endowed funds in a community endowment will continue to benefit a community forever.

Each community endowment is made up of a permanent endowment and a collection of charitable funds that are focused in a specific geographic region, established by various donors, then pooled and invested together so that the income provides a steady resource for the community.

Those who do their charitable giving through a community endowment can make contributions for the general benefit of the community, or designate their funds for special purposes.

The first community endowment was founded in 1914 in Cleveland. Today more than 700 community endowments across the United States have over $15 billion in combined assets, and contribute more than $1 billion to nonprofit organizations every year.

It takes a whole community to build and maintain a community endowment. This is why community endowments regularly welcome and depend on resourceful volunteers to share the workload: fundraising, grantmaking, researching, convening, and providing technical expertise to other charitable organizations in the community.

The IRS protects community endowments from misuse (narrow or private-interest focus, for example), by requiring funds to come from a variety of donors, and a community endowment’s governing body to be diverse and representative of the entire community. Besides ensuring that the public will be better served, such close regulation gives donors maximum allowable tax advantages, and makes contribution to new or existing endowments a smooth process (no legal or accounting hurdles).