The government is today the single largest provider of funds for charitable and development work by voluntary organisations, but red tape and lack of flexibility are inhibiting factors. Are there other alternatives?

Foreign donors--bilateral and private humanitarian--are the second major source of funds for voluntary development work. Apart from supplementing other funds, they play an invaluable role in bringing in new and progressive ideas. They are popular with the voluntary sector, not only because the money they give is substantial in Indian terms, but alsobecause of their helpful attitude.

But foreign assistance has its drawbacks. Even private humanitarian assistance is governed by geopolitical considerations and can dwindle as donors switch to other countries, whom they feel are in greater need. The assistance is available only for a limited period, after which other sources have to be tapped. Most foreign agencies also prefer to give money only for "innovative" projects, rather than routine work, and most organisations need funding for routine work.

Moreover, foreign donations are subject to draconian government regulations under FCRA. It is important, therefore, to mobilise resources locally from within the community. It is in this context that a community trust or foundation offers many advantages.

What is a community foundation?

It is the modern and legal version of a practice that has existed in most societies from time immemorial when after the harvest, surplus cash or grain was set aside by the better off in the community in a "chest"for the use of the needy in times of emergencies. A community foundation is established, not by any one wealthy individual, family or company, but by a group of leaders of the community, and represents a voluntary pooling of a community's resources to meet the social needs of that community in a planned and impartial manner.

Typically, one community foundation serves one geographical locality such as a town or city, and serves three constituencies: donors, voluntary organisations, and society at large.

How does a community foundation get its funds?

A permanent endowment dedicated to the welfare of a defined locality, say a city, is created by gifts of all sizes from the citizens of that locality. A donor interested in the well-being of the people of his her city can leave a large bequest of cash, real estate, other property, or securities to the foundation as part of an endowment. Equally, a donor can give as little as Rs 10 to the common pool. The common pool of money is professionally managedand interest on the endowment is used to address a broad spectrum of community needs.

How does the community foundation benefit a donor?

Because the foundation is a tax-exempt organisation that also offers tax deductibility for donations to it, the donors get tax benefits. Being permanent in nature, donors are assured that the spirit of their gift will endure. Moreover, the CF provides flexible options for giving. One can either create one's own fund under the foundation, the income from which will support specific areas of one's choosing, or make donations to already established funds that address a charitable need that interests one.

For instance, a named fund can be established as a donor advised fund, in which a donor can be actively involved in the distribution from the fund; in a designated fund, one or more charitable organisations can be named by one to be the exclusive recipient/s of income from one's fund. The fund can also be named in the memory of or to honour someone chosen byyou.

Gifts not intended to create a named fund can also offer choice. A totally unrestricted gift can be added to the endowment to enable the application of the income from it to the areas of most pressing need. Alternatively, it is possible to specify a field of interest, such as arts and humanities, education, health, etc, to which you would like your gift to be directed. In all cases, a donor is able to exercise his will without having to go through the cumbersome procedure of creating and running his own trust.

Many people would like to give for charity, but are unsure of which organisations exist in the city for what purpose, their addresses, or whether they would be worthy recipients and use the money well. Giving to a community trust that is well-known for its reputation and professionalism, and can redirect the gifts wisely solves these problems.

How does a community foundation help local voluntary organisations?

The community foundation represents a pool of local money that can beaccessed by those engaged in meeting social needs in the city, without the red tape inherent in getting government funds, and without having to worry about FCRA permissions, etc, in the case of foreign money.

How does society benefit from the establishment of a community foundation?

The foundation is administered by community leaders of unimpeachable integrity, known for their knowledge of local needs and local organisations, and who are specialists in some field. Funds are given on the basis of an expert assessment of the local community, and the credibility and competence of local organisations. Thus, fund disbursal is planned to yieldthe maximum long-term benefits to society, instead of being ad hoc and without verifying organisations.

There are two other advantages: One, it is easier to ensure accountability in the use of funds because local reputations are more easily known. Two, money left for charitable causes by wills in trusts are inflexible and cannot be diverted to more beneficial usesif the original purpose becomes obsolete or irrelevant over time, without cumbersome legal procedures.

On the other hand, the endowment of a community foundation can continue to work for the benefit of society in perpetuity, redirected periodically by its trustees according to current need.

Can you mention the names of some well-known trusts?

Since the first community foundation, the Cleveland Community Foundation, was established in 1914, there has been a rapid multiplication of community foundations throughout the world, and almost every major city has one. There are over 300 such foundations in America alone, two well-known ones being the New York City Trust and the Cleveland Foundation.

What about India?

Bombay has the only community foundation in India--the Bombay Community Public Trust (BCPT), which was established in 1991. Since then, over 55 NGOs have received grant assistance for a wide variety of welfare activities, but especially for improving the lives of underprivilegedchildren, and for improving municipal education. Unfortunately, BCPT has remained the only one of its kind, for a variety of reasons. We need one for each city. Explorations are on for establishing one in Delhi.