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Standard
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Compliance Documents
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I.
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Definition of a U.S. Community Foundation
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A.
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A community foundation is a tax-exempt, nonprofit, autonomous, publicly supported, non-sectarian philanthropic institution with a long term goal of building permanent, named component funds established by many separate donors for the broad-based charitable benefit of the residents of a defined geographic area, typically no larger than a state.
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Governing Instruments (i.e. By-laws, Articles of Incorporation or Declaration of Trust)
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Community foundations are further defined by the following characteristics:
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II.
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Mission, Structure and Governance
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A.
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A community foundation is founded and operated for public benefit and has a well-defined, articulate mission.
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Board approved mission statement
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B.
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A community foundation is recognized by the Internal Revenue Service (IRS) as tax-exempt under Internal Revenue Code Section 501 (c) (3) organized and operated exclusively for charitable purposes.
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IRS Letter of Determination
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C.
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A community foundation meets the public support test set forth in Internal Revenue Code Section 170(b)(1)(A)(vi) as modified by Treasury Regulation Section 170A-9(e)(10).
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IRS Form 990 filed for the most current two years
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D.
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A community foundation has an independent governing body broadly representative of the community it serves.
Explanation: “Governing body” means the board of directors or board of trustees of the organization. “Broadly representative” means that the governing body reflects the diverse composition and different perspectives of the community it serves, and its members are not drawn solely from a single subset of the community.
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List of governing board members with affiliations
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Governing instruments referencing nomination and appointment process
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Written description of nomination process that describes the process used to seek diverse composition and different perspectives.
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E.
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A community foundation’s governing body retains variance power by which it may modify any restriction or condition on the distribution, if circumstances warrant.
Explanation: “The governing body must have the power to modify any restriction or condition on the distribution of funds for any specified charitable purpose or to any specified organization if, in the sole judgment of the governing body, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community or area served. The governing body must be able to modify the restriction without obtaining the approval of any participating trustee, custodian, or agent of the community foundation.” (Legal Compendium for Community Foundations, Christopher R. Hoyt, Council on Foundations, 1996)
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Governing instruments (i.e. By-laws, Articles of Incorporation or Declaration of Trust) referencing the variance power
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F.
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A community foundation serves a particular geographic area such as a municipality, county, state, metropolitan area or closely related aggregation of such areas that are considered for some purposes as a community, typically no larger than one state. An organization serving a single greater metropolitan area would satisfy this criterion even if that greater metropolitan area included parts of several states. This criterion excludes national and multi-national organizations.
Explanation: Service to a particular geographic area typically includes grantmaking, community leadership, and service to donors in that identified area. Unrestricted/discretionary funds primarily serve the community foundation’s identified geographic area; other grants may be distributed beyond that area.
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Governing instruments (i.e. By-laws, Articles of Incorporation or Declaration of Trust), mission statement, and/or marketing and communications materials
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G.01
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A community foundation's governing body is responsible for the mission, direction and policies of the organization.
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Corporate record or minutes
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Board approved mission statement
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G.02
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A community foundation’s governing body ensures adequate human and financial resources and actively monitors and evaluates the organization’s chief executive officer.
Explanation: Human resources may include paid or unpaid staff. It is the responsibility of the governing body to provide adequate resources to meet the National Standards.
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Board-approved annual budget
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CEO job description
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Evidence of CEO performance evaluation
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G.03
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A community foundation's governing body approves policies to prevent perceived, potential or actual conflicts of interest.
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Board approved conflict of interest policies
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Documentation of disclosures
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G.04
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A community foundation's governing body serves without compensation (exclusive of the chief executive officer).
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Mostly recently filed Form 990
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G.05
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A community foundation's governing body is not controlled by an other nonprofit organization, or by any single family, business or governmental entity or any narrow group within the community.
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Most recently filed Form 990
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G.06
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A community foundation's governing body reviews and adopts an annual operating budget.
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Board approved annual budget
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G.07
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A community foundation's governing body ensures that the governing documents include policies for size of the board, required number of meetings annually, limits of members' terms, and structure and responsibilities of standing committees.
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Governing documents (i.e. By-laws, Articles of Incorporation or Declaration of Trust
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G.08
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A community foundation’s governing body ensures that the community foundation reflects the diversity of the community it serves
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Corporate records or minutes
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G.09
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A community foundation's governing body ensures that the community foundation meets all laws and legal requirements.
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Required annual legal filings with federal, state and local governmental agencies
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G.10
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A community foundation's governing body approves all grants.
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Corporate records or minutes and/or governing body resolution delegating authority
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III.
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Resource Development
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A.
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A community foundation has, or works to develop, broad support in the form of contributions from many, separate, unrelated donors with diverse charitable interests in the community served by the community foundation.
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List of funds
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Sample marketing materials
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B.
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Contributions to a community foundation represent irrevocable gifts subject to the legal and fiduciary control of the community foundation's governing body.
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Sample fund agreements and gift acknowledgement letters
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C.
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A community foundation has a long-term goal of securing resources to address the changing needs of the community it serves.
Explanation: Building discretionary funds to provide both flexible and permanent funding sources for meeting changing needs should be a goal of the community foundation.
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Marketing materials
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Mission statement and/or governing instruments (i.e. By-laws, Articles of Incorporation or Declaration of Trust)
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Corporate records or minutes
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D.
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A community foundation accepts and administers a diversity of gift and fund types to meet the varied philanthropic objectives of donors.
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Marketing materials and/or gift/fund acceptance policies
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List of funds
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E.
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A community foundation adopts gift and fund acceptance policies that address minimum fund size, types of fund options, types of gift mechanisms, and policies and procedures for accepting various types of assets, and makes these policies available upon request.
Explanation: This item promotes accountability, policy and process disclosure, and consistency. Fund acceptance policies include purpose and use of the fund.
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Gift/fund acceptance policies
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F.
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During the gift planning process, the role and relationships of all parties involved are fully disclosed to the donor.
Explanation: The intent is to disclose any financial benefit that might accrue to a third-party participant in the gift planning process.
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Sample disclosure documents
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IV.
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Stewardship and Accountability
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A.
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A community foundation is a steward of charitable funds, investing and prudently managing funds and maintaining accurate financial records.
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Annual audit with management letter (or financial review)
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Evidence of investment performance review
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B.
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A community foundation is accountable to the community it serves and regularly disseminates information on its programs and finances.
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Annual Report
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Policy on public availability of the most recently filed IRS Form 990
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C.
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A community foundation maintains a written record of the terms and conditions of each component fund and all such records must reference the variance power.
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Sample fund agreements
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D.
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A community foundation honors the charitable intentions of the donors consistent with community needs and applicable laws and regulations.
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Documentation of procedures ensuring that funds are used to meet donor intent
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E.
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A community foundation observes the balance between donor involvement and governing board control and complies with applicable laws and regulations.
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Guidelines for donor advisors and/or sample donor advised fund agreement
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F.
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A community foundation ensures that the foundation's financial resources are used solely in furtherance of its mission.
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Annual audit with management letter (or financial review)
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Most recently filed IRS Form 990
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G.
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An annual audit (financial review when assets total less than $1 million) is performed by an independent public accountant, reviewed and accepted by the governing body and made available to the public upon request.
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Annual audit (or financial review)
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Documented evidence of governing body acceptance
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Documented evidence of public availability of most recent audit (or financial review)
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H.01
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A community foundation has investment policies that include asset allocation guidelines, a spending policy and criteria for measuring investment policies
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Investment policy
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Marketing materials
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H.02
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A community foundation makes available to the public upon request the names of its investment managers, fees charged (including investment and administrative fees), governing body or appointees responsible for investment oversight and investment.
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Marketing materials
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V.
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Grantmaking and Community Leadership
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A.
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A community foundation operates a broad grants program to multiple grantees that is limited neither by a single focus or cause or exclusively to the interests of a particular constituency.
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Grant guidelines
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Grants list for most recently completed fiscal year.
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B.
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A community foundation awards some grants from its discretionary resources through open, competitive processes that address the changing needs of the community.
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Grant guidelines
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Grants list of discretionary awards for most recently completed fiscal year.
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C.
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A community foundation widely disseminates grant guidelines to ensure the fullest possible participation from the community it serves.
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Grant guidelines.
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Documented evidence of public dissemination
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D.
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A community foundation performs due diligence to ensure that grants will be used for charitable purposes.
Explanation: Due diligence applies to all grants made by the foundation, and incudes gathering and evaluation on the grantee and may include the intended use of the grant. Vigilance regarding quid pro quo benefit to a donor advisor would fall within the scope of this item.
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Policy or documented procedure for due diligence
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E.
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A community foundation works to identify community issues and opportunities and acts as a leader and convener, using its human and/or financial resources to address immediate and long term community issues and opportunities.
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Documentation of issue identified and resulting actions.
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VI.
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Donor Relations
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A.
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A community foundation informs and educates donors about community issues and grantmaking opportunities.
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Documented evidence of donor education
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B.
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A community foundation actively involves donors in identifying and responding to community issues and opportunities.
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Documented evidence of donor participation
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C.
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A community foundation promptly and accurately acknowledges gifts.
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Gift acknowledgement procedures
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D.
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A community foundation provides fund statements, at least annually, to those donors who wish to receive them.
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Documented evidence that fund statements were provided.
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E.
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All private information obtained with respect to donors and prospects is kept confidential to the fullest extent possible.
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Confidentiality policy
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VII.
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Communications
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A.
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A community foundation communicates openly and welcomes public scrutiny.
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Press releases and news clippings
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B.
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A community foundation has a communication strategy that includes a report, widely distributed at least annually, which describes the community foundation's mission, activities and financial operations.
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Annual report or equivalent and dissemination plan
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