Shaking the Foundations

The idea, says Donlea, is to offer a set of operating principles but give local SVPs ample room to experiment. "Three cities have already taken our approach and twisted it," he says. The SVP in San Francisco, for example, makes all its grants in a single neighborhood. San Diego changes the focus of its giving each year. And the Kansas City SVP is creating a social-venture-capital fund. "If there is reason and value here," says Shoemaker, "it will be because there is real learning taking place."

Local Heroes

In 1992, Fidelity Investments strode onto the philanthropic stage with a product designed to attract the assets of new donors. The Charitable Gift Fund, which bore a strong family resemblance to both retirement and mutual funds, pooled charitable contributions and invested them collectively but allowed individual donors to direct where their money would go. Today the oft-imitated fund, which requires a minimum $10,000 contribution, has more than 27,000 donors and total assets of $2.6 billion. Its participants have given $2.7 billion to charity.

Bank and brokerage customers probably know about such "donor-advised funds." They probably don't know that community foundations thought of them first. Community foundations -- there are about 600 nationwide -- are public charitable funds through which community members, including businesses, individuals, and families, make grants to local nonprofits. Donor-advised funds within community foundations have been around for decades. They give those contributors more say in where their money goes and offer information and advice on various charities. Minimum contributions generally range from $5,000 to $10,000 plus an administrative fee. As happens with private foundations, donors receive an immediate tax break.

But while community foundations spawned donor-advised funds, it was Fidelity's marketing dollars that made them popular. And that, in turn, has led more and more community foundations to adopt the vehicles and to ramp up services to compete with the private sector. "We needed to offer the kind of service that was competitive with entities like Fidelity," says Jan Kreamer, president and CEO of the Greater Kansas City Community Foundation. "We had been benchmarking against the community foundations but realized we needed to benchmark against the for-profits."

So the Greater Kansas City Community Foundation streamlined its back-office functions, invested in new technology that let donors check balances and give online, and built the capacity to perform complex transactions (such as accepting donations of real estate and closely held stock). More important, the foundation made educating donors a priority. "We live in an information society," says Schervish, of the Social Welfare Research Institute. "Whether it's a disease or a school we want to attend or how we want to give money away, we want to make informed decisions."

That's certainly what attracted Stephen Carter to the Kansas City organization. Carter, the owner of an $18-million franchise of Right Management Consultants, is no stranger to philanthropy, having given money to numerous nonprofits and his time to Angel Flight, a network of private pilots that transports people who need medical treatment. But he and his wife, Joan Strewler-Carter, wanted their children to become philanthropists as well. So Carter set up two donor-advised funds for them within the community foundation. "Our children will be directing a lot of the charitable giving," says Carter, 59. "So we've set up small funds for them to be involved in before we die."

The foundation helped Carter's 17-year-old stepson, Blake Narendra, make two $5,000 donations to the Wonderscope Children's Museum and to Operation Breakthrough, a day-care center serving low-income families. A client adviser spoke with Narendra about his interests and then tapped a database of local nonprofits to find organizations that fit them. She even accompanied the teenager on visits to nonprofits that intrigued him. "In essence, the foundation offers a training program," says Carter. "They helped Blake investigate organizations that would be worthy of the gift. I didn't get involved at all." His own children, ages 31 and 34, will make contributions as well.

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