How we work

In order to build positive impact for their communities, the main work of community foundations is to establish and transparently manage funds for a well-defined purpose. There are several types of funds, according to how they are established and to their purpose.

As far as designated funds are concerned, contributions come from a large number of donors. Designated funds may be:

• Field of interest funds, for example youth fund, health fund, environment fund;
• Unrestricted funds for various community initiatives;
• Funds that inspire a particular approach to problems, for example the fund for volunteering initiatives or district initiatives.

Donor-advised funds focus on the relationship with a donor or a well-defined group of donors, and their purpose is decided by the community foundation according to the recommendations of the donor(s). Hence, donor-named funds are set up, such as:

• Company X Fund;
• Family/Donor Y Fund;
• The Fund of the employees/residents/individual donors of company/organization/district Z.

Beyond the current needs of the community, foundations are a tool for people with resources on their hands to help successfully address future needs through contributions to endowment funds.

Endowed funds are saved in a bank or invested and only the fund-generated interests or dividends are used – as a result, the fund ‘does not run out’ and may generate a relatively stable flow of resources for the community.

Using an endowment helps contain the rise and fall of funding from year to year and gives donors the chance to see their resources yield results for the community over an indefinite period of time.

To build and maintain public trust, community foundations invest in transparency and open communication with regard to the goals and objectives set for the established funds, funds raised, use of funds, and decision-making procedures.