Are community foundations heading for extinction?

The following excerpts are from Sean Stannard-Stockton, A new role for community foundations, FT.com, Nov. 25, 2008:

Community foundations in the US are at risk of becoming irrelevant unless they can transform into trusted donor advisers.

Since the founding of The Cleveland Foundation in 1914, community foundations have raised charitable funds from a community and distributed the money back to that area’s non-profit organisations. But a new role is emerging. In the near future, community foundations could supplant large private foundations as philanthropy’s leading voices and, in the process, change how individuals engage in philanthropy. * * *

While the transition will be difficult, community foundations now have an opportunity to quit the business of offering donor-advised fund administration. These foundations should entirely outsource the administration of donor-advised funds and instead build world-class donor-advising services.

While many community foundations will argue that they already offer this service, the truth is few donors view community foundations as the “smartest people in the room” or “masters of the universe”, the way that investors view the best investment advisers. * * *

Community foundations should not simply be aggregators of philanthropic dollars, but instead become high-impact, philanthropic investment advisers. * * *

Community foundations can make this change. They can emerge as the leaders of philanthropy in the 21st century. Donors deserve skilled advisers to whom they can turn for advice on how best to support the causes about which they care.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.