1. Community Foundations December, 2007 www.CFInsights.org Prepared for: Findings From Cost-Revenue Analysis

2. © 2007 Community Foundation Insights 2 Purpose of This Document This set of slides is intended to provide community foundations with a template for presenting the findings of their cost-revenue analyses Foundations can use any or all of these slides as appropriate To use these slides, foundations must: Enter the results of their cost-revenue analysis in relevant slides (the foundation studied is sometimes called “Sample Foundation”) Update the peer foundation data on appropriate slides based on current benchmarking data available on the Community Foundation Insight’s database (www.cfinsights.org) The comparative data currently provided in these slides is from FSG’s analysis in 2003/4

3. © 2007 Community Foundation Insights 3 I.Background II.The Path Toward Improved Sustainability III.Conclusions Agenda

4. © 2007 Community Foundation Insights 4 Fee structures inherited from bank trust departments don’t cover the services required today The traditional fee structure – an annual fee based on a percentage of assets – was never intended to support today’s expanded range of services –Administering donor advised funds –Advising and educating donors to become more knowledgeable about giving –Managing committees who advise grantmaking –Providing advice and continuing education to professional advisors –Helping local nonprofits raise funds or develop their own endowments –Convening funders to organize solutions to community problems –Compiling studies of the local philanthropic and nonprofit sector Increased resource costs have often been covered on a case-by-case basis through self-administered grants or the rapid growth of investment portfolios Neither is a sustainable or fiscally responsible strategy A Key Initial Premise for This Work Was that the Current Fee and Revenue Structure for Community Foundations is Outdated Competitors have lower costs and alternative sources of revenue— community foundations cannot continue to compete by offering more service at the same price

5. © 2007 Community Foundation Insights 5 CF Operating Models are Increasingly Stressed, As Staff and Boards Find Themselves Caught in A Push-Pull Providing sufficient resources to: –Grow community philanthropic endowment –Create social change Raising sufficient revenue to support foundation activities Community Foundations A new approach is needed to effectively manage this push-pull

6. © 2007 Community Foundation Insights 6 A New Discipline Is Required to Make Strategic Choices and Prioritize Use of Available Resources 1.Build internal transparency into costs and revenues associated with foundation products 2.Understand the operating context for each product 3.Make intentional strategic choices that further your mission

7. © 2007 Community Foundation Insights 7 I.Background II.The Path Toward Improved Sustainability A.Build Internal Transparency into Costs and Revenues B.Understand the Operating Context for Each Product C.Make Intentional Strategic Choices III.Conclusions Agenda

8. © 2007 Community Foundation Insights 8 Community Foundations Can Build Transparency Into the Costs and Revenues Associated with their Products by Asking New Questions A New Set of Questions How much cost is associated with each Foundation product? Which products make money and which do we subsidize? Are our subsidies consistent with our mission and strategic priorities? What determines cost for each of our products?

9. © 2007 Community Foundation Insights 9 Activity Based Costing Can Enable Community Foundations to Better Understand the True Cost of Products and Services Expense 1 Expense 3Expense 4 Expense 2 Activity 1Activity 2Activity 3 Product #1Product #2 Activity Based Costing (ABC) allows organizations to determine the actual cost associated with each product or service First activities are identified and defined, then cost data is gathered and traced to activities, finally costs are allocated to products or services based on their utilization of activities

10. © 2007 Community Foundation Insights 10 100% of the Foundation’s Staff Time, Cost and Other Expenses Are Assigned to a Matrix of Activities and Products Staff costs were assigned to activities and products based on reported time, weighted by individual salaries and including taxes and benefits Cost Matrix Donor Advised Funds Supporting Organizations Agency Endowments Designated Funds Acorn Funds Competitive Grantmaking Special Projects Philanthropic Services Wisconsin AIDS Fund Women’s Fund Acquiring or Establishing a New Fund or Gift $Y Maintaining Funds $Y Making Grants $Y Providing Non-Grant Services to the Community $Y Other Staff Activities $Y 10 Products 106 Activities

11. © 2007 Community Foundation Insights 11 Foundation Staff Identified Ten Distinct Products for Cost Analysis Donor Advised Funds Donor Advised funds allow donors to be actively involved in and recommend grants from the funds they have established. Donor Advised funds require a $25,000 minimum balance. New Donor Advised fund level of $200,000 balance for enhanced services. Excluding all Acorn Funds and including Donor Advised Scholarships. Supporting Organizations Supporting Organizations are separately incorporated affiliates that operate with more independence, but benefit from the Foundation's preferred tax status and administrative services. Published fee structures assume Supporting Organizations have a $1 million minimum balance. Specific Supporting Organizations include West Bend and Bucyrus-Erie Charities. Agency Endowments Initiated by charitable agencies to serve as an endowment supporting the organization's work. An Agency Endowment fund requires a $25,000 minimum balance. Designated Funds Designated Funds support specific organizations chosen by the donor. Designated funds require a $10,000 minimum balance unless they benefit more than one agency. Designated funds that benefit two or more agencies require a $25,000 minimum balance. Excluding Acorn Funds. Acorn Funds Acorn Funds allow donors to build a fund on a installment plan. Payments are made through regular contributions and their accrued income. Competitive Grantmaking Limited to standard responsive grantmaking, Competitive Grantmaking includes Unrestricted and Field of Interest Funds. Requiring a minimum balance of $10K and $25K respectively, these funds finance grants designed to respond to broader community needs. Funding for these grants is determined by GMF. Special Projects Special Projects include proactive grantmaking, funding collaboratives, leadership development, management assistance, etc. Examples include the Nonprofit Management Fund, youth initiative, poverty, Casey, environment, gay/lesbian and diversity issues. Philanthropic Services Philanthropic Services include Council on Foundations programs and national committees, Donors Forum programs, Greater Milwaukee Committee, association memberships costs, community service, convening other funders, etc. Also includes McBeath Administration, Report Card on Charitable Giving. Wisconsin AIDS FUND The Wisconsin AIDS Fund raises and distributes more than $250,000 annually for AIDS education and prevention programs throughout the state. Launched in 1989 to prevent the spread of AIDS as a pass-through fund, all funds are put to use immediately in the fight against AIDS. Women’s Fund The Women’s Fund guarantees money for programs that serve Milwaukee-area women and girls. Including little Women's Fund. These products are provided as an example – fill in the ones that your foundation chose to analyze

12. © 2007 Community Foundation Insights 12 Foundation Statistics Source: Foundation data and analysis. $309M$133M18,217 Competitive, Designated and Donor Advised Funds Account for 86.9% of the Market Value of Assets Women’s Funds and Designated Funds (including Pass Through Fundraising gifts) account for the largest numbers of gifts received This data is provided as an example – fill in data from your analysis

13. © 2007 Community Foundation Insights 13 Distribution of Total Cost by Product and Type of Cost ($000) Providing Non- Grant Services to the Community Note; Other Staff Activities includes IT, Human Resources, management and supervision, staff meetings, professional development, Board meetings, planning, Brand management, reception, office management, reporting, etc. Acquiring a New Fund/Gift Main- taining Funds Making Grants Other Staff Activities Source: Foundation analysis of staff surveys and operating expenses. Product% of Total Cost 36.4%18.7%11.0%8.7%7.9%5.3%4.6%3.8%2.1%1.6% % of Total Assets 21.4%41.3%0.7%0.1%9.5% 1 N/A24.3%0.1%2.4%0.4% (MV 12/31/02) $1,428 $732 $429 $340 $311 $207 $182 $149 $81 $63 Donor Advised Funds and Competitive Grantmaking Account for 55% of the Foundation’s Total Operating Costs This data is provided as an example – fill in data from your analysis

14. © 2007 Community Foundation Insights 14 Cost and Revenue by Product ($000s) Subsidy Generated/Required ($868)$761($177)($144)($150)($159)$528($149)($18)($59) $1,289 $1,724 Source: Foundation analysis of staff surveys and operating expenses. Competitive Grantmaking (FOI and Unrestricted) and Designated Funds Generate a Subsidy of $1.3M that Supports a Range of Other Products This data is provided as an example – fill in data from your analysis

15. © 2007 Community Foundation Insights 15 The Subsidy Generated Should Be Directed Toward Funding the Highest Strategic Priorities for the Foundation Subsidy Generated or Required by Product ($000s) Continue Generating Subsidy Consider Adjusting Pricing to Decrease Subsidy Required Consider Funding through Grants Explore Options as Appropriate Source: Foundation analysis of staff surveys and operating expenses. The foundation should also consider how pricing, activity, or policy changes for the fastest growing products can improve the Foundation’s sustainability This data is provided as an example – fill in data from your analysis

16. © 2007 Community Foundation Insights 16 Pricing Adjustments, Cost Reductions, Or Increased Fund Sizes Would Be Required for Subsidized Products to Become Self-Sustaining Breakeven Analysis Donor Advised Funds Supporting Organizations Acorn Funds Agency Endowments Assets ($)$65.4 M$28.9 M$1.2M$7.3M Assets per Fund ($)$258,668 1 $3,616,545$11,103$101,460 Revenue per Fund ($)$2,214$20,079$43$874 Cost per Fund ($)$5,645$38,816$593$1,121 Published Fees (%) 0.8% for 1 st $2M 0.4% for $2-3M 0.2% for all over $3M 1.0% for 1 st $2M 0.5% for $2-3M 0.25% for all over $3M No fees for funds under $25,000 0.5% for funds over $25,000 0.8% for 1 st $2M 0.4% for $2-3M 0.2% for all over $3M Breakeven Point (%) 2.18%1.07%5.34%1.10% Breakeven Size of Fund (at published fees) $705,648$8,526,511$118,642$140,068 Source: Foundation analysis of staff surveys and operating expenses. This data is provided as an example – fill in data from your analysis

17. © 2007 Community Foundation Insights 17 Foundation Assets by Product Type Note: Designated is noted separately from Org/Agency Endowments only when foundations viewed these two as distinct products. Otherwise, Designated funds are included with Org/ Agency Endowment funds in the same category. Source: FSG Analysis Comparative Analysis Includes a Range of Foundations, Each With a Different Product Mix This comparative data should be updated – for current data on peer foundations, see the Community Foundation Insights database

18. © 2007 Community Foundation Insights 18 Comparing the Foundation’s Breakeven Points to Benchmarks Provides A Starting Point for Understanding Sustainability Source: FSG Analysis Breakeven Points (Product Operating Costs as a % of Product Assets) Traditional Fee Ceiling at 1.0% and up This comparative data should be updated – for current data on peer foundations, see the Community Foundation Insights database

19. © 2007 Community Foundation Insights 19 Number of products, and asset concentration in each product –Products that represent a relatively large percentage of a Foundation’s assets tend to have lower costs and be managed more efficiently Degree of customization allowed or encouraged by the Foundation –Unique processes in response to one-time donor requests add significant cost to all funds and divert staff attention from activities that serve a broader base of donors Average fund size in each product category –Exceptionally large funds tend to subsidize many small funds – All foundations have products that cover their total costs only when the average fund size is at least $100K in assets Level of transactions associated with funds in each product area –Higher levels of gift and grant activity can lead to additional cost, unless processes are streamlined and standardized Degree of enhanced services provided by the foundation, e.g., managing committee processes, creating special RFPs for individual donors or offering unique investment management options –Enhanced services, while expensive, are an opportunity to recover additional revenue for service, though few foundations generate revenue from these services in a systematic way Pricing, and discounts from published pricing –Higher effective fees, particularly for large funds, at or above 1% of assets are often necessary to recoup enough revenue to cover costs  Foundations’ total costs range from 0.7% to 1.6% of assets, excepting those foundations with assets over $1B  Breakeven points for individual products often exceed 2.0% of assets, some up to 5.0% of assets A Number of Interrelated Factors Influence the Sustainability of the Products Provided by Community Foundations

20. © 2007 Community Foundation Insights 20 Product Assets as % of Foundations’ Total Assets Source: FSG Analysis % of Assets versus Breakeven Point Products with a Larger Concentration of a Foundation’s Assets Generally Have a Lower Breakeven Point – Though Breakeven Points are Not Explained by Scale Alone Breakeven Point (Product Operating Costs as % of Product Assets) and up Sample CF This comparative data should be updated – for current data on peer foundations, see the Community Foundation Insights database

21. © 2007 Community Foundation Insights 21 For All Foundations, Large Funds Subsidize Some Portion of Smaller Funds Source: FSG Analysis Distribution of DAF by Fund Size This comparative data should be updated – for current data on peer foundations, see the Community Foundation Insights database

22. © 2007 Community Foundation Insights 22 Higher Levels of Grant Transactions Lead to Higher Costs Unless Processes are Streamlined and Efficient Source: FSG Analysis And Up Number of Grants per Fund This comparative data should be updated – for current data on peer foundations, see the Community Foundation Insights database

23. © 2007 Community Foundation Insights 23 Foundation Strategy Should Guide Prioritization and Adjustment of Products PrioritiesProduct EmphasisProduct Pricing Adjustments Opportunities to Reduce or Redirect Costs Donor Advised Funds Supporting Organizations Agency Endowments Designated Funds Acorn Funds Competitive Grantmaking Special Projects Philanthropic Services Wisconsin AIDS FUND Women’s Fund These products are provided for example only. Fill in the products your foundation used in its analysis

24. © 2007 Community Foundation Insights 24 I.Background II.The Path Toward Improved Sustainability A.Build Internal Transparency into Costs and Revenues B.Understand the Operating Context for Each Product C.Make Intentional Strategic Choices III.Conclusions Agenda

25. © 2007 Community Foundation Insights 25 To Achieve Sustainability, Foundations Must Understand Each Product’s Operating Context Community Foundation Products Fee Based Products Community Leadership Products Each product type requires a different set of questions Examples include: Donor Advised Funds, Designated Funds, Supporting Organizations, Unrestricted/FOI Funds, Scholarship Funds, and Agency Endowments Examples include: Convening, community organizing, conducting community needs assessments, special initiatives Operating Context: Foundation Mission and Values Cost To Serve Customers Competition Operating Context: Foundation Mission and Values Cost To Serve Community Need Alternatives in the Community

26. © 2007 Community Foundation Insights 26 Four Perspectives Are Required In Order to Evaluate Changes to the Foundation’s Prices, Processes and Policies for Fee-Based Products Fee-Based Product (Price, Processes, Policies) CompetitionCustomer Value Cost to Serve What are our donors’ alternatives? How are our competitors positioned in the market? What does market research tell us about our donors’ priorities and interest in different product offerings? Are our fees aligned with the cost structures of our fee based products? Values What are our mission- driven priorities?

27. © 2007 Community Foundation Insights 27 These Four Perspectives Should Be Considered for Each of the Foundation’s Fee Based Products Fee-Based Product (Price, Processes, Policies) CompetitionCustomer Value Cost to Serve Values Donor AdvisedFunds CommitteeAdvised Funds Scholarships DesignatedFunds Unrestricted/Field of InterestFunds SupportingFoundations Funds Engagedin Fundraising While the questions are the same, the answers are different for each product

28. © 2007 Community Foundation Insights 28 The Economics of Donor Advised Funds Vary By Foundation Donor Advised Funds – Case Study Sample Foundation Donor Advised Funds Average $259K in Assets Per Fund Effective Fees @ 0.86% of Assets ($3,413) Source: FSG Analysis $89 ($1751) Average DAF Contribution (Subsidy) $257K in Assets per Fund Effective Fees @ 0.80% of Assets $197K in Assets per Fund Effective Fees @ 0.98% of Assets $3,413 Subsidy Per Fund

29. © 2007 Community Foundation Insights 29 Financial institutions see donor advised funds as commercial opportunities In only 10 years, Fidelity’s Charitable Gift Fund has grown to be the nation’s second largest public charity and the largest public grantmaker Donors Are Faced with an Increasing Array of Donor Advised Fund Options Donor Advised Fund Options Organizations that have traditionally promoted philanthropy through giving campaigns have expanded to offer donor advised funds Source:Giving USA 1999, United Way of America, Fidelity Charitable Gift Fund Nonprofits with strong donor relationships are extending their own giving options to offer donor-advised fund products Enhanced service funds offer donor advised funds paired with targeted grantmaking opportunities, flexible program services and an active community of engaged donors Commercial Gift Funds Large Nonprofit Organizations Philanthropic Advisors Community Foundations Community Foundations nationally are experiencing rapid growth in donor advised funds, despite increasing competition Traditional Giving Programs Donor Advised Funds – Case Study

30. © 2007 Community Foundation Insights 30 Source: FSG Analysis, Fidelity Charitable Gift Fund Annual Report 2006, Vanguard Charitable Endowment Program Annual Report June 2007 Donor Advised Funds Effective Fee Required to Breakeven Operating Costs as a % of Assets Commercial Gift Funds With Standardized Service Have Standard Breakeven Rates, While Community Foundations and High Service Funds Such As Tides Have Not Achieved the Same Efficiencies Commercial Gift Funds Perceived Fee Ceiling at 1.0% Donor Advised Funds – Case Study The comparative data should be updated – for current data on peer foundations, see the Community Foundation Insights database

31. © 2007 Community Foundation Insights 31 Community Foundations’ DAF Effective Fees Vary Widely, With All but One Lower than the Sample Set Breakeven Fee of 1.31% Peer Foundations DAF Pricing Effective Fee Rate Donor Advised Funds – Case Study $M Average CF in Sample Set Breakeven Fee at 1.31% This comparative data should be updated – for current data on peer foundations, see the Community Foundation Insights database

32. © 2007 Community Foundation Insights 32 The Pricing and Positioning of Commercial Gift Funds and Other Competitors Have an Impact on Foundations’ Choices Competitive Alternatives’ DAF Pricing Effective Fee Rate Donor Advised Funds – Case Study Perceived Fee Ceiling at 1.0% Many community foundations perceive a fee ceiling at 1.0% and have lower DAF fees for larger funds – approximating the fees charged by competitors $M Source: Organization web sites

33. © 2007 Community Foundation Insights 33 Donor Advised Funds – Case Study Annual Funds Donors establish fund and recommend grants to nonprofit organizations over a short period of time, generally within one year Administrative fee: 1% No Minimum Contribution Long-Term Funds Donors establish a long-term philanthropic investment by creating an ongoing stream of income for charitable activities that fit their values and interests May also include a Declining Fund with a balance to spend down over a period of years Annual management fee: −1.00% Under $500,000 −0.75% Next $500,000 −0.50% Next $4,000,000 −0.25% Over $5,000,000 Minimum Contribution: $100,000 Donor Advised Funds The Tides Foundation Meets the Needs of Its DAF Customers with Differentiated Levels of Service – and Differentiated Pricing to Cover Higher Costs of Higher Service Additional Grantmaking Fees Core Services: $25 per domestic grant Payment of all grants Quarterly statements of Fund activity Due diligence by Tides staff to ensure that grants are made to IRS-approved nonprofit organizations whose work fits within the mission of Tides Foundation. Program Supported Services: 5% on grants made Consult with clients about interest areas Conduct outreach to potential grantees Acknowledge applicants' proposals/materials and notify grant applicants and grantees Forward applicants' proposals/materials to clients Meet with clients to make grants decisions Monitor grantee reports Program- Advised Services: 12% on grants made Provide customized program design Facilitate more in-depth analysis of issues and strategies for effective grantmaking Conduct site visits of potential grantee organizations Evaluate and present grant applicants in the form of a docket, which includes an analysis of the issue areas Meet with clients, at least annually, to make grant decisions, discuss relevant issues, etc. Special portfolio of services: hourly or per service charge Tides can provide a customized portfolio of program- supported and/or program-advised services listed above.

34. © 2007 Community Foundation Insights 34 No Efficiencies with Scale Efficiencies with Scale Pricing Decisions Single ProductMany Products Standardized Transactional Service Customized or Enhanced Services Commercial Gift Funds Philanthropic Advisors Lowest FeesHighest Fees Small Average Fund Sizes with Manual Processing Large Average Fund Sizes or Automated Processing Commercial Gift Funds Philanthropic Advisors Community Foundations Low Cost High Cost Many Community Foundations Match Higher Cost Options with Lower Pricing Donor Advised Funds – Case Study

35. © 2007 Community Foundation Insights 35 The Resources and Values of Each Community Foundation Suggest Different Alternatives for Donor Advised Funds Donor Advised Funds – Case Study ScenarioAssetsValues and PrioritiesChanges to Pricing, Processes, Priorities Foundation A Smaller % of assets, but area of growth Significant subsidy available from other product areas DAF are viewed as a strategic means of engaging with a wider range of donors in the community Increase or maintain subsidy as DAF assets increase – expect small funds Price to compete with alternatives Streamline processes Change policies to require local grantmaking from DAF Create opportunities for local engagement of donor advisors – events, site visits, local giving opportunities Sample Foundation Moderate but growing % of assets DAF are a lower priority means of achieving an impact in the community Prefer to invest available subsidy in acquiring unrestricted assets and leading community initiatives Eliminate subsidy over time Raise price to level at which costs are covered Streamline processes and decrease customization Change policies to increase fund size Decrease acquisition emphasis – refocus development resources on establishing planned gifts for donor advisors Foundation C Large and rapidly growing % of assets DAF are core to strategy and potential for achieving impact in the community Minimize subsidy over time Reprioritize activities to focus on opportunities to engage donor advisors Differentiate CF offering, emphasizing the unique value of local knowledge and engagement Create multiple tiers of service, each with different price levels, charging more for enhanced service levels

36. © 2007 Community Foundation Insights 36 A Look At Operating Context for Each of the Foundation’s Products Illustrates the Value of this Approach Fee-Based Product (Price, Processes, Policies) CompetitionCustomer Value Cost to Serve Values Donor AdvisedFunds CommitteeAdvised Funds Scholarships DesignatedFunds Unrestricted/Field of InterestFunds SupportingFoundations Funds Engagedin Fundraising The questions for each product are the same, but the answers are different

37. © 2007 Community Foundation Insights 37 Community Leadership Products have a Different Operating Context than Fee Based Products Community Foundation Products Fee Based Products Community Leadership Products Cost to serve should be evaluated relative to potential for unique social impact Examples include: Donor Advised Funds, Designated Funds, Supporting Organizations, Unrestricted/FOI Funds, Scholarship Funds, and Agency Endowments Examples include: Convening, community organizing, conducting community needs assessments, special initiatives Operating Context: Mission and Values Cost To Serve Customers Competition Operating Context: Mission and Values Cost To Serve Community Need Alternatives in the Community

38. © 2007 Community Foundation Insights 38 Four Perspectives Are Required In Order to Evaluate Options for the Foundation’s Community Leadership Products Community Leadership Product (Revenue Sources, Processes, Policies) Alternatives in the Community Community Need Cost to Serve Is the CF best suited to meet this community need? Are there others in the community who could play a role (non-profits, government, foundations, etc)? What are the needs in the community? What are the opportunities for impact? What are the costs associated with the development and ongoing management of these activities? Is the investment reasonable given the impact? Values What are our mission- driven priorities?

39. © 2007 Community Foundation Insights 39 Investments in Community Leadership Products Can Serve to Differentiate the CF and Enhance Community Impact Distribution of Total Cost by Type of Cost - 2003 Community Leadership Activities: Better Together Kalamazoo initiative to connect citizens with City’s resources Leadership Initiatives, which include service on national and local committees and boards Special Projects, which include the Nonprofit Management Fund, youth initiative, poverty, Casey, environment, gay/lesbian and diversity issues. Instead of viewing community leadership products as merely an extension of program activities, CFs can seek revenue to sustain these investments Acquiring New Fund/Gift Maintaining Funds Making Grants Providing Non-Grant Services to the Community Other Staff Activities Initiatives such as Women's Impact Fund, Impact Fund, CBI, Voices and Choices, POST, Donors Forum Fund Meetings with civic leaders, community foundation boards

40. © 2007 Community Foundation Insights 40 I.Background II.The Path Toward Improved Sustainability A.Build Internal Transparency into Costs and Revenues B.Understand the Operating Context for Each Product C.Make Intentional Strategic Choices III.Conclusions Agenda

41. © 2007 Community Foundation Insights 41 Informed by a New Set of Facts, the Foundation Can Engage in Productive Board/Staff Dialogue and Make Intentional Strategic Choices Are our operations aligned with our mission and strategy? To improve sustainability going forward, what changes should we make in our: Processes? Policies? Pricing? Revenue sources? How do we prioritize investment of resources? –Which fee based products will we subsidize, if any? –How should we trade off subsidizing certain fee-based products versus community leadership activities? How do we develop and evaluate new product/service introductions? Questions

42. © 2007 Community Foundation Insights 42 A New Framework Can Be Used by Community Foundations To Improve Sustainability What is our core mission/ values? What mix of products serves our mission and values best? –Within fee based products –Fee based vs. community leadership products? How do we position priority products for growth? What operational changes do we make by product: –Price –Policy –Processes

43. © 2007 Community Foundation Insights 43 Articulating the Foundation’s Values Is the First Step to Creating a Path to Sustainability By articulating its values, a community foundation gives itself a framework for prioritizing among its product areas Which Mission-Driven Goals Are the Highest Priorities? Leverages CF Expertise to Direct Funds Builds Community Endowment Addresses Local Needs Promotes Philanthropy by Expanding Donor Base Generates Revenue to Cover Costs High Priority Moderate Low Minimal Our CF Values

44. © 2007 Community Foundation Insights 44 A Key Question for the Foundation Is How To Best Differentiate Itself Through Investments in Fee Based or Community Leadership Products Fee Based Products Community Leadership Products How can we differentiate ourselves and create an impact in the community? Is the best way for the foundation to build relationships with donors underwriting fund costs, or undertaking high-profile community initiatives? Should we build new relationships with donors by underwriting the costs of fee based products? How important are specific fee- based products to accomplishing the CF’s mission and differentiating it from others? Should we invest in community leadership products to attract new donors by increasing our profile and vitality in the community? How important are specific community leadership products to accomplishing the CF’s mission and differentiating it from others?

45. © 2007 Community Foundation Insights 45 To Achieve Their Potential, Community Foundations Must Improve Their Sustainability To reach their potential, community foundations must act now: –Improve the differentiation of their operating model –Make deliberate, fact-based, strategic choices on the donors and products to prioritize and grow –Identify new revenue sources to support high priority activities Two critical ingredients are required for community foundations to improve their sustainability –Achievement of a higher level of understanding of product costs and market/community dynamics –Willingness and ability by staff and board to engage with the new fact set and adapt historical values and priorities to new realities