Expanding the Role, Sustainability and Local Ownership of Community Foundations Prepared for IFC Workshop: Sharing Experience: Enhancing the Benefits to Communities from Extractive Industry Projects July 19, 2006 Foundation Strategy Group, LLC 20 Park Plaza50 California StreetPlace des Eaux Vives 6 Suite 320Suite 1500CH-1207 Boston, MA 02116San Francisco, CA Geneva U.S.A. U.S.A. Switzerland Tel: Tel: Tel:

© Foundation Strategy Group, LLC 2 IFC Presentation-FSG About FSG Strategy consulting firm that serves the social sector: private foundations, companies, community foundations, non-profit organizations, multilaterals and governments Deep understanding of field trends regarding philanthropy, domestically and internationally Two relevant field contributions -- Harvard Business Review articles –“Philanthropy’s New Agenda: Creating Value” (HBS, 11/1999) –“The Competitive Advantage of Corporate Philanthropy” (HBS, 12/2002) Presentation Agenda 1.Key learnings about grantmaking: Creating Value 2.Landscape of community foundations around the world 3.Several learnings about community foundations in the US and in Africa 4.Implications of learnings for the IFC’s community development fund Presentation Overview FSG will share a few insights about effective grantmaking to help inform thinking about community development approaches for the IFC’s community development fund

© Foundation Strategy Group, LLC 3 IFC Presentation-FSG Value of resources effected by the social investment activity Selecting the best partners Signaling other funders Improving partner performance Advancing knowledge and practice Source:Michael Porter, Mark Kramer in Harvard Business Review: The Competitive Advantage of Corporate Philanthropy When Developing Their Strategies, Foundations Should Be Aware of the Four Ways They Can Create Value Corporations bring a unique and powerful set of assets that can be leveraged to create further value Four Forms of Value Creation in Philanthropy

© Foundation Strategy Group, LLC 4 IFC Presentation-FSG Community Foundations Continue to Emerge across the Globe, with 1,175 Community Foundations Identified in 46 Countries in 2005 Source: Worldwide Initiatives for Grantmaker Support: 2005 Foundation Global Status Report Number of Community Foundations by Region Approximately 700 found in the US Community Foundations in Africa slowly continue to grow, in part due to significant financial and technical support from international funders

© Foundation Strategy Group, LLC 5 IFC Presentation-FSG Foundation Assets Vary by Region, with Kenya Having One of the More Significant Endowments of €800,000 in 2004 Growth in Southern Africa can be attributed to a five-year initiative (’99-’03) sponsored by the Southern African Grantmakers’ Association that tested the community foundation concept in ten rural, suburban and urban communities Source: Worldwide Initiatives for Grantmaker Support: 2005 Foundation Global Status Report CountryCommunity Foundation GhanaAkuapem Community Foundation KenyaKenya Community Development Foundation MozambiqueFoundation for Community Development Southern AfricaUthungulu Community Foundation Greater Rustenburg Community Foundation Greater Tshwane Community Foundation Greater Durban Community Foundation for Social Investment Lesotho Community Foundation West Coast Community Foundation Atok Community Foundation BAWSI Trust ZimbabweCommunity Foundation for the Western Region

© Foundation Strategy Group, LLC 6 IFC Presentation-FSG US Community Foundations 700 community foundations in the US –Total assets of $34.2B and grant out about $2.5B annually The purpose of community foundations in the US is largely to aggregate and represent local (mostly individual) sources of funding –Despite the moniker, community foundations were not set up by community beneficiaries –Governance is not directed by the community, though community advisory committees do exist –Overall, discretionary funding is quite limited For community foundations that have limited discretionary funding, they will consider the following to help design community-focused investments –Professional staff –Conducting objective needs assessments –Work closely with partners to ensure there is not duplication of efforts What Have We Learned about the Community Foundation Model in the US and in Africa to Date? With a few exceptions, US community foundations may not be effective model for the local sources of grantmaking in Africa Africa-Based Community Foundations Many of these entities rely on outside funding. In 2004, community foundations in Southern Africa relied on the following sources of funding: While these are interesting vehicles for directing funding at local communities, questions exist about –Sustainability for funding –Division of labor among NGOs and government Individual Contributions Corporate sponsors International foundations (Ford & Mott Foundations) Source: Worldwide Initiatives for Grantmaker Support: 2005 Foundation Global Status Report

© Foundation Strategy Group, LLC 7 IFC Presentation-FSG Description Founded: Assets: $365 M 2004 Grants: $9.6 M Geographic Focus: Baton Rouge Community Key Elements Leveraging local community members to direct grant dollars Foundation staff support volunteer advisors –Provide research and due diligence on grantees and other issues –Prepare grant reviews for Advisory Committee discussions and approval –Develop and monitor fundraising plans to generate additional funds for issue area Volunteer advisors make all grantmaking decisions in each issue area –Volunteers draw on their unique expertise of both the issue and the community –Heavily leverage the expertise and knowledge of Foundation staff –Generate additional funds for issue area Two Case Studies Illustrate How Grantmaking Entities Can Effectively Involve Communities Founded: 1998 Grants to date: $500,000 Geographic Focus: Rural Areas of 3 provinces in Matebeleland The Community Foundation for the Western Region of Zimbabwe (WRF) Description Key Elements Acting as a Community Engagement Broker –WRF is positioned as a broker between poor communities and development actors in the region –WRF uses a three step process to broker these relationships – Identifying projects –Forming partnerships –Co-financing the projects –WRF also focuses on building capacity of grantees Source: The Synergos Institute: Global Philanthropy & Foundation Building

© Foundation Strategy Group, LLC 8 IFC Presentation-FSG Local Grantmaking Entities Need to Consider/Balance a Number of Important Trade-offs as they Involve Communities Source: Worldwide Initiatives for Grantmaker Support: 2005 Foundation Global Status Report Decision Making Community Involvement Expert Staff Level of Focus Many Issues of Focus Few Issues of Focus Time Perspective Short Term Needs Longer Term Needs Reactivity versus Proactivity Reactive Proactive Institutional sustainability goes beyond ability to raise funds and includes issues of management, ability to focus on customer needs and performance Value Contribution Low Engagement High Engagement