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Community Foundations Are Looking Abroad

May 2004

STANFORD GRADUATE SCHOOL OF BUSINESS—Traditionally,community foundations, unlike most private or corporate ones, are tied to a specific region or city and act as a "savings account" to meet the current and future needs of that area. But gradually, says Peter Hero,president of the Community Foundation Silicon Valley (CFSV), that's changing. His organization, for example, now gives about 5 percent of its grants outside the United States. Just a few years ago, it sent no contributions abroad.

Increasing globalization and emerging networks between community foundations are "transforming international philanthropy, and we're at the very beginning of major changes that will affect how people give overseas and how success is measured," Hero told a May 18 audience.His talk was the last in a seven-part Philanthropy Discussion Series sponsored by the Stanford Graduate School of Business Center for Social Innovation and Stanford University's Haas Center for Public Service.

A large part of what's driving the trend is known as diaspora giving, as more and more residents of Silicon Valley want to give back to their native countries. Take the Indian population. According to a CFSV study conducted a few years ago, there are 200,000 Indian Americans in the Silicon Valley area with about $30 billion in combined net worth. "We realized we couldn't engage them locally if we didn't also provide a mechanism" for them to give back to where they came from, Hero said.

Through CFSV, donors now fund community foundations in India and also contribute to disaster relief. For example, when an earthquake struck India's Gujarat region, CFSV sent about $6 million to the area. Working with Czech Americans who have formed a group called Czech Tech, the foundation is connecting the organization with community foundations in the Czech Republic.

Hero said that much of the focus on international giving started after September 11, when people were forced to take note of the issues facing countries around the world. Increased corporate globalization also is linked to giving overseas. The number of plants and employees of multinational firms continues to grow outside the United States and provides executives with greater insights into different countries and cultures.

A handful of major foundations—including the Ford Foundation and the Mott Foundation—are also helping build community foundations overseas by aiding efforts to create standards and connecting them with appropriate technology. International legislation also has facilitated the growth. In Northern Italy, for example, 100 savings bank foundations have been created with $4 billion in assets, and the banks are using most of their grants to seed community foundations. Pending legislation, which would give tax incentives for community foundations, could stimulate growth even more.

But the development of international community foundations and the relationships to their U.S. cousins won't be without some struggles. Many U.S. community foundations are restricted by their charters to giving locally, and some will want to continue to focus solely on their local agendas. U.S. nonprofits also may try to discourage international giving since the grants going overseas would be taking dollars out of their coffers. At the same time, foreign governments—especially those informer communist countries—are likely to be suspicious of the growing foundation sector over which they can exert little control. Lastly,international community foundations tend not to be as transparent as those in the United States and don't have enough quality leaders, Hero said.

Still, Hero remains "very optimistic despite the barriers. I see tech spreading around the world in nonprofits. The networks that have been created to link up the new foundations are expanded. There is a grassroots awareness."

Community foundations already are playing a very important role in the United States. They are vehicles to build endowments, but they also work to connect donors and unite sectors of the community to determine how to face problems and issues. For example, when Hero first started his job 15years ago, he said he realized that 12 cultural groups were all about to embark on capital campaigns at the same time. Instead of watching them fight for a limited amount of foundation dollars, Hero convinced the organizations to band together and raise and share one single endowment.CFSV now has a $20 million Silicon Valley Arts Fund, which each of the organizations can tap into. The foundation also has partnered with schools, the government, and churches to help boost immunizations for children in California. It discovered children hadn't gone to clinics because their parents were concerned about their immigration status or weren't properly informed. Once all the groups got together to work on the problem, the number of immunizations jumped. In this case, getting better health care for children "wasn't about money. It was about getting the right people together."

"Community foundations don't only bring local players together. Often they can be very effective in bringing money in from outside from other foundations." If a large foundation like the Ford Foundation"can't fly close enough to the ground" to get to the heart of issues, it will give money to a community foundation that has spent much more time researching the best funding methods.

Connecting donors is also a large part of community foundations,especially in Silicon Valley, a transient area where many people have lived only a few years. CFSV works to connect donors not only monopolist in the area but also with other donors who have shared interests. The donors can partner together around one cause and leverage their donation dollars. Community foundations can act like "training wheels" for donors. "It's a safe way to give," said Hero.

Community foundations are finding new partnerships themselves. A growing trend in the sector is increased partnerships between the foundations and corporations. CFSV recently partnered with Citigroup to create"Meaningful Assets," a fund designed to help the bank's high net-worth individuals effectively and intelligently give their money away.CFSV will provide both back-office administrative support and philanthropic advice to Meaningful Assets' donors. "Over time, these clients will be giving money away smarter and connecting with each other.It's an interesting collaboration. Citigroup could have gone out on its own, and instead they created this collaborative entity. The idea of public-private partnership around an entity often with a global vision is something new in the last five years and seems to be catching on,"said Hero.

About the Philanthropy Discussion Series
The Philanthropy Discussion Series, sponsored by the Business School's Center for Social Innovation and Stanford University's Haas Center for Public Service, brings in some of the leading thinkers and practitioners in foundation philanthropy. Speakers address foundations' accountability,effectiveness, community responsiveness, and civic mission.

—Sarah Robertson

Stanford GSB News

Community Foundations Are Looking Abroad

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