Feature

During the 1970s, private grantmakers in the United States launched a concerted drive to strengthen community foundations as a way of moving organized philanthropy closer to local communities. Despite the success of this effort, many women, people of color, lesbians and gays and others continued to feel excluded from philanthropic opportunities and processes. Whether as grantees, trustees or professional staff of large community foundations (and other private grantmaking institutions), those groups have largely remained outsiders. Recently, however, a new trend is developing that has the potential to change this situation—a development that stands to benefit mainstream philanthropy, as well as marginalized communities.

The next growth area for community philanthropy is the focus funds movement. Focus funds are grassroots philanthropies established by groups of people with common experiences and culture, where the power of connection lies not in geographical proximity, but rather in shared charitable interests. These publicly supported community funds both raise money and make grants by drawing on local leadership, networks and resources. Examples of this philanthropic approach are emerging throughout the country, especially in minority, women's and gay/lesbian communities.

In the process, focus funds are developing vital new knowledge about and experience with donor engagement in multicultural communities, which, in turn, is helping to identify and nurture more diverse philanthropic leaders across the country. The funds are also connecting formerly isolated pockets of philanthropy and steering needed grants to groups and organizations serving the neediest communities, often for the first time. In short, focus funds complement the goals of existing community foundations, while addressing gaps that larger, mainstream giving institutions have found difficult to fill.

Recognizing the philanthropy-enhancing potential of focus funds, several major foundations have recently invested time and money to assist their growth. The California Endowment, for example, has invested nearly $10 million since 1999 in 13 different funds. Other funders, such as The David and Lucile Packard, Ford and Charles Stewart Mott foundations and the New Ventures in Philanthropy Initiative of the Forum of Regional Associations of Grantmakers, have supported donor research and pilot programs to uncover the most effective ways to stimulate the field's growth.

In addition, the W.K. Kellogg Foundation is launching a multiyear, multimillion dollar initiative to unleash the resources of emerging communities of donors, such as women, ethnic donors and youth.

This article describes the small but growing focus fund movement by highlighting groups and leaders in California, where such funds have been particularly active. It emphasizes the emergence, structures, promise and value of focus funds and documents their capacity to activate organized community giving to better serve and engage diverse populations.

What Are They?

Focus funds are genuinely a new form of community philanthropy. They operate at a complex and busy intersection, where communities with long-standing, culturally based ways of helping others are trying to adapt the existing tools of institutional philanthropy to match the interests of new donor bases, as well as the needs of the most vulnerable in their emerging communities.

Evolving from a base of mutual aid and other culturally specific forms of charity, focus funds are now attracting a new generation's wealth and including a growing number of professionals. Focus funds are testing the vehicles established by community foundations and developing new ones to respond to and shape the interests of their donor pools.

One model is typified by the Ventura County Community Foundation's Destino Hispanic Legacy Fund. With Latinos exceeding 60 percent of the populace in parts of Ventura County by the early 1990s, effectively addressing Latino community needs and involving Latinos in local problem solving were vital.

The Destino Fund was created as a donor-advised fund in 1996 by former NFL player and Univision executive Danny Villanueva, Sr., and other local Latino leaders to address those needs through grantmaking and leadership development programs. Since its creation, Destino has made more than $300,000 in grants and enrolled a vibrant cross section of Latino community leaders and residents—most of whom had never been involved in formal philanthropic processes—in its activities. The fund has developed an endowment of nearly $500,000 through contributions of local Latino residents and business leaders.

The Asian Pacific Fund in San Francisco follows a different model. Founded in 1993 by a steering committee of Asian American community leaders with a grant from the United Way of the Bay Area, the independent fund seeks to expand social investment in the diverse and rapidly growing Asian community, which already comprises 23 percent of the region's population. The fund has produced several highly publicized reports raising awareness of the often overlooked issues facing the local Asian community, as well as sharing insights about cultural differences in working with increasingly wealthy Asian donors. Since its inception, the fund has contributed more than $2 million in grants and awards to local nonprofits and is supplementing this financial support with extensive research, public education and technical assistance to community-based organizations. The fund is beginning to build a permanent endowment and is providing tailored services to help individual donors understand their giving options, paying careful attention to differences among the Asian ethnic groups.

Comparable funds targeting other groups draw on the traditions of their specific constituencies to structure their organizations and programming. Altogether, there are now about a dozen focus funds in California alone, with total annual community grantmaking surpassing $2 million.

Adapting Philanthropy

Focus funds are not reinventing philanthropy. Instead, they are adapting mainstream practices to fit their constituency's needs and to develop new donors. By recognizing the importance of tailoring social investment approaches to diverse issues and needs in the field, the funds are enhancing the power of philanthropy in important ways.

Mobilizing New Philanthropic Capital

Despite significant histories of informal engagement in charitable activity, women, gays and lesbians and people of color often have been discouraged from participating in traditional vehicles of organized philanthropy. Orienting diverse groups to the particular culture of and legal concerns related to the mainstream field can be difficult and time-consuming work.

Focus funds thus often still serve as the only institutions translating philanthropic practice into the language, culture and interests of their target communities. But now, as those diverse populations and their wealth compose a commanding aspect of the U.S. economy, focus funds are uniquely positioned to become powerful conduits for integrating new voices and perspectives into the culture and infrastructure of organized philanthropy. Research suggests that people give to causes to which they feel a strong personal connection, and focus funds give diverse donors a true sense of connection in a way that many mainstream foundations simply have not.

For example, the San Francisco-based Horizons Foundation offers a variety of philanthropic education and support programs to increase philanthropy within the lesbian, gay, bisexual and transgender (LGBT) community. "By offering targeted philanthropy seminars, tailored services for individual donors, LGBT-focused field-ofinterest funds and other community-specific programs, we can reach LGBT donors and nondonors alike because we know their needs and we know our community," says Roger Doughty, Horizons' executive director.

Gail Kong, executive director and president of the Asian Pacific Fund, notes, "People want to be part of a community of philanthropy and learn what other Asians are doing to give back. They usually do not see Asians in other charities." Focus funds serve as an educational venue for philanthropic participation, providing a more diverse pool of donors, board members and staff.

Expanding Field Capacity

While many mainstream philanthropies support programs that touch on specific community issues, focus funds are often the only private grantmakers directly serving the grassroots constituencies they represent. Despite growing attention to the nation's changing demographics, diverse communities are frequently not well understood or served by mainstream organizations. Focus funds can provide an authentic connection with underserved populations and often involve community members directly in grantmaking to ensure that funds go where the community itself perceives greatest need. For those reasons, major funders like The California Endowment have developed extensive regranting partnerships with community-identified funds. According to Dianne Yamashiro-Omi, The California Endowment's senior program officer working with these funds, "By virtue of being closer to communities they serve, the very targeted grassroots efforts by focus funders are more likely to produce successful outcomes."

Grants from focus funds are typically small relative to the giving of larger institutions, but because they target key local needs with which grassroots, community-based funders are more in tune, small grants can be unusually responsive. With its focus on the culture and issues of Native Americans, the Arcata, California-based Seventh Generation Fund, led by Christopher Peters, has been able to effectively concentrate attention on environmental justice efforts, cultural preservation and microenterprise development.

"Our familiarity with the needs and resources in our communities," says Peters, "makes our grantmaking especially efficient. We work with our grantees continuously, thereby demonstrating an ethic of partnership and mutual respect that has proven effective in addressing community interests with limited funds."

Similarly, Charisse Bremond of the African-American focused Los Angeles Brotherhood Crusade notes that, "[Funds like ours] are able to respond immediately to the needs of the people we serve, which have been historically overlooked [by larger funders]."

This community proximity and knowledge enables focus funds to tailor solutions that address their target communities' specific needs in ways that are ordinarily not possible for larger giving institutions. The Brotherhood Crusade, for example, supports grassroots community health fairs to provide free medical and eye exams, as well as health diagnostic services, to largely uninsured California residents whose needs simply have not been met conventionally.

Brokering Strategic Relationships

Finally, focus funds play an important role in building linkages inside the community and between communities and outside leaders and institutions. Woody Carter, executive director of the Oakland-based Bay Area Black United Fund, notes that "one of the greatest potentials in many affinity funds is the capacity to serve as a trusted intermediary, a convener, an honest broker of interests within the community being served. In many cases, an affinity fund is uniquely positioned to play that role in complex and increasingly important communities."

In those ways, the funds improve their communities' understanding of local issues and increase their problem-solving capacities. The Women's Foundation of California provides a strong example of how focus funds can achieve meaningful results from their brokering role. Each year, the foundation supports a major policy study on women's and girls' needs in California that is targeted to state leaders. The reports galvanize women leaders and donors to promote needed policy reforms and engage government officials, media and philanthropy executives in public discussion of the issues.

The foundation's most recent report on environmental justice and women ("Confronting Toxic Contamination in Our Communities: Women's Health and California's Future," www.womensfoundca.org/fullreport10_7.pdf) garnered supportive responses from the office of the governor, various legislators and the editorial boards of leading newspapers, like the Los Angeles Times and the San Jose Mercury News. By bridging relationship and communication gaps that otherwise separate grassroots groups, state policymakers, philanthropists and the media, focus funds demonstrate invaluable potential to generate important policy and institutional changes on behalf of the groups they serve.

Struggling to Grow

Even as they provide these benefits, focus funds face challenges. As they grow, the funds—particularly those that depend heavily on workplace giving for their financial support—must contend with the heavy costs necessary to simultaneously administer grants, raise funds and operate public service and outreach programs. As Horizons Foundation's Roger Doughty notes, "The majority of funds start without endowments, and it's notoriously difficult to build internal capacity and have tangible short-term impact without serious investment. In business, that's called capital. Focus funds have the same basic need."

This challenge is not unique to focus funds. More established community foundations also face a difficult challenge in building the funds and sizeable endowments necessary to achieve self-sufficiency and impact.

The Community Foundation Parallel

Although mainstream community foundations have existed since the early twentieth century, significant growth in the scale of community philanthropy began only in the late 1970s, when contributions from national funders—including the Mott, Ford, Kellogg, Knight and Packard foundations—initiated programs to establish new community foundations and strengthen existing ones. Most community foundation leaders today cite this initial large-foundation support as instrumental to their growth and success. The larger grantmakers provided direct funding and pass-through monies to build local grantmaking capacity, as well as technical assistance for staff and board development, marketing and donor and endowment development. Assistance was often provided through matching grants that allowed the community foundations to use the reputations of national funders to open doors, build community support and increase the local donor base.

With this targeted and long-term investment, a handful of forward-thinking national and regional foundations were able to stimulate tremendous growth in community foundation assets and impact. More than 300 community foundations were established between 1975 and 1985. And by the turn of the century, there were more than 600 U.S. community foundations, holding assets of more than $30 billion and granting more than $2 billion annually.

Prospects for the Future

What has been learned over the years from the community foundation movement—namely, the leveraging power of communities to invest in institutions to solve their own problems—has encouraged minority, women and LGBT leaders to commit growing resources to the development of their own funds and permanent endowments to be used in perpetuity for addressing their needs.

Expanded partnerships in this work involving mainstream funders could stimulate dynamic growth of the grassroots focus funds movement, yield significant new philanthropic capital, speed the integration of diverse leaders into philanthropy and help established funders interact with needy communities in unprecedented ways. All of this would have powerful democratizing impacts on the field that would help expand organized philanthropy's relevance and reach at a time of great opportunity and need. In the words of Torie Osborn, executive director of the Liberty Hill Foundation, which houses the Lesbian and Gay Community Fund of Los Angeles, "As philanthropic institutions, focus funds are democracy in action."

Peter Pennekamp, a trustee of The California Endowment and focus fund advocate, agrees with Osborn, arguing that the funds' community roots make them essential vehicles for expanding philanthropic outreach and value added in the United States. According to Pennekamp, "Investing in focus funds is one of the most important ways to increase organized philanthropy's responsiveness, inclusiveness and social impact [since] the vast preponderance of research shows that when communities own efforts to create change, the outcomes always improve."

As focus funds continue their growth, it is important to maintain realistic expectations for their impact and to recognize that sustainable institutions mature slowly and carefully. The successes of the community foundation movement reveal that 20 to 30 years might be necessary for an emerging foundation to build credibility, effective programming and self-sufficiency. To realize their considerable promise, focus funds must continue to build support from their communities and develop strategic partnerships both among themselves and with mainstream philanthropic institutions.

Given time and assistance along these lines, focus funds should be well positioned to make important contributions to organized philanthropy's continued vitality and democratization. These funds' ability to complement mainstream efforts, to tap the real but still largely dormant social investment resources of diverse communities and to ensure philanthropy's expanded reach, all have the potential to generate a more robust and responsive civil sector.

©Robert Llewellyn/CORBIS