The Various Tools and Processes that Community Foundations Use to Improve Practice

Executive Summary

Briefly, the information compiled showed that:

In the late 1990s, work was started by several associations of community foundations to develop ways to continually improve performance of community foundations, producing a variety of tools and instruments. The associations or networks developed these either ‘organically’ or based on existing templates and manuals from other associations/countries. The associations adapted the tools to the actual needs of their members, citing how they involved the members in this important process.

The study identified at least these tools and processes that CFs use to improve practice:

  1. Definition of a community foundation - ‘Who we are’ is the anchor of principles development or standards-setting. In some cases, the definition of a community foundation is standard no. 1, and in other cases, it is the preamble of ‘Characteristics’ or ‘Operating Standards‘.

  2. The legal rules and regulations set by the government are, naturally, an integral part of what associations developed as guidelines or standards of practice of community foundations. Basically, these pertain to registration, taxation, funds management, reporting and dissolution (from ‘cradle to grave’ processes). There are marked differences in the development of these laws, especially tax laws and other incentives for community foundations. In Germany for example, new tax laws have provided incentives for more giving, spurring the growth of community foundations in the country.

  3. There are national standards that are very much in place in countries like the United States, the United Kingdom, and Germany.

    • Periods of validity of certification/confirmation range widely. In Germany, it is 2 years; in the U.K., 3 years, in the U.S., 5 years.
    • Every certification/confirmation process is basically independent of the previous one.

  4. Looking to another model, Canada has Principles and Guidelines very much in place. Australia may be developing along a similar route even as they also look to the experience of other countries. There is very proactive communications support for the Principles not only through extensive online resources but also through regional meetings and technical assistance.

  5. ‘Standards that are more of minimum guidelines’ as opposed to certification of excellence are the experience in three Visegrad countries (Czech Republic, Slovakia and Poland) according to a key informant. There are varying experiences in the development of tools and processes in these countries but there is commonality in putting a premium on regular peer learning or networking.

  6. Criteria for membership is for compliance in most countries. In the case of Canada, members need to comply with most if not all of it (there are criteria for more established foundations).

    • To help prepare CFs for full compliance with membership criteria, Canada also provides technical support and training.
  7. There are registration processes that are long and stringent, described by informants as a very important first step. This is the experience in Germany and Australia. In the latter, the registration resembles accreditation, notes the informant.

  8. There are grant-making processes proactively used as capacity building tools for grant seekers. Due diligence is practiced.

    • In Slovakia, for example, this is an important part of the association‘s standards.
    • The Puerto Rico Community Foundation produces a ‘balanced scorecard’ to monitor grantees on a quarterly basis. The yearend Impact Report is an outlook based on the evidences in the scorecard.

  9. Standards of practice cover endowment building, funds and investments management, donor education about community needs, community engagement, among others.

  10. ‘Quality control measures’ especially in the areas of grant-making and donor relations are described in Australia, Puerto Rico and Slovakia. Regular meetings and forums provide the venue for discussing important matters. The Annual Forum in Australia, is a major ‘quality control check.’

  11. Best practice guides are common in the countries surveyed.

    • In the U.K., best practice holders are encouraged to do further training to become Centres of Excellence and to be able to support other community foundations.
    • Best practice sharing is regularly held in annual community foundation forums.

  12. In the United States, the United Kingdom, and Germany there are benchmarking tools that produce reports to inform individual foundations as to how they are performing alongside peer-CFs (as in the case of the U.K.) and/or the bigger foundation sector (as in the U.S. case).

  13. Compliance monitoring tools and processes are in place. While compliance is the responsibility of the Boards (or Councils) of individual community foundations, the associations or networks also undertake a process of independent review which results in awarding the community foundation the proof of compliance.

    • Proofs of compliance: Examples: the German Seal of Approval, the U.K.‘s Quality certificate and logo, the U.S. National Standards Seal, the association‘s membership logo for other areas.
    • The task of monitoring compliance at the level of the network is the responsibility of peer CFs in several areas, grouped as a Board advisory committee. In the U.K., however, an independent management consultancy, takes the role of the assessor. The assessor does the assessment of the Community Foundation Network as well.
    • Non-compliance with membership criteria/guidelines/standards results in termination or suspension of full membership in most areas. However, there are opportunities to continue to be engaged, as a ‘support organization’ in the Czech Republic; as an ‘affiliate member’ in Slovakia; as an ‘associate member’ in the U.K. In Poland, as of 2010, there was the need to enforce the termination policy by supporting the network secretariat to be able to do this.
    • Appeal processes are generally avoided in the areas surveyed by putting in place a feedback mechanism (or a similar mechanism) provided to the CF Board of the network. This is the opportunity for non-compliant members and their Boards to respond to comments or questions from their reviewers. The U.S. has an appeals process under a Determinations Committee, the result of which is affirmed by the CFNSB Directors.
    • There are technical support programs provided outside the networks/associations. Examples are: in Australia, corporate lawyers provide legal assistance. In Poland, this is the Academy for the Development of Philanthropy in Poland thru the V4 Maturity Program; in Germany, there are the Aktive Burgerschaft and the Affinity Group of the Association of German Foundations; etc.

  14. Annual reports are a common tool for reporting, often (but not always) accompanied by financial audit reports. In the Czech Republic, the audit requirement was not a written rule nonetheless compliance was practiced. In Slovakia, this was a written rule. In Poland, the audit report was not obligatory (only the Annual Report). The Academy for the Development of Philanthropy in Poland , however, highly encourages inclusion of the audit report.

    • The Annual reports with audits are presented during Annual Meetings which are regularly held in the areas surveyed.

  15. The network‘s websites contain important tools and serve as valuable resource centers for some countries. Philanthropy Australia has the ‘Community Foundation Gateway,’ , the U.S. has Puerto Rico uses the web-based information repository for report documentations.