Community Funds See Assets Grow by 28%; More Than $2-Billion Raised in 1996

Gifts to community foundations jumped 14 per cent last year, to more than $2-billion, according to an annual survey by the Columbus Foundation in Ohio.

The amount of money the foundations distributed to charities also went up, rising 13 per cent, to almost $1-billion.

Meanwhile, assets of community foundations, buoyed in part by a strong stock market, grew by 28 per cent, totaling $17-billion.

Because of changes in accounting rules, as well as in the number of community foundations participating in the survey, it is difficult to compare last year’s growth to changes in previous years.

But it appears that the growth of community foundations was less pronounced in 1996 than in previous years. In 1995, for instance, gifts to community foundations, which raise money and distribute grants in a specific geographic area, increased by 51 per cent.

James I. Luck, president of the Columbus Foundation, said that the slower rate of growth is not surprising in light of the unusually large increase in 1995 and the fact that 506 community foundations participated this year, compared with 520 in last year’s survey. He also said that he expected community foundations to continue to see growth. Among the reasons:

* Community foundations are receiving more multimillion-dollar gifts as the World War II generation seeks to pass on its wealth. “Several years ago, a $5-million gift was huge,” Mr. Luck said. “Now we’re seeing people making major eight-figure gifts.”

* More and more non-profit hospitals and Blue Cross and Blue Shield insurance plans are selling their operations or converting to for-profit status, and some of them are turning over their charitable assets to community foundations.

* Many community foundations have hired additional fund raisers in recent years and are now seeing a payoff.

The growth of community foundations, Mr. Luck said, has also been spurred by money from private grant makers, such as the W. K. Kellogg Foundation in Battle Creek, Mich., and the Lilly Endowment in Indianapolis. Last month, the Lilly Endowment, which has committed almost $100-million to set up and strengthen community foundations in Indiana since 1990, pledged an additional $85-million.

Many community foundations, like other charities, have recently made major adjustments in their accounting practices to reflect new policies adopted by the Financial Accounting Standards Board, changes that have made year-to-year comparisons difficult, if not impossible. While non-profit groups do not have to follow the board’s accounting policies, most organizations try to do so.

Under the new rules, pledges and many types of deferred gifts are supposed to be counted as revenue in the year that they are promised, even if the charity does not have the money in hand. Community foundations reported $85-million in such gifts in 1996. Community foundations reported that $548-million of their assets included pledges and deferred gifts.

Among the survey’s other findings:

Assets. As in 1995, the New York Community Trust was the largest fund, with assets of $1.4-billion. The Cleveland Foundation, with assets topping $1-billion, retained its second-place ranking.

Gifts received. Eleven community foundations raised $30-million or more, while three funds raised $100-million or more. The New York Community Trust topped the list of gifts received, raising $165.6-million last year. Second was the Community Foundation Serving Richmond & Central Virginia, which jumped from $30.7-million in gifts in 1995 to $132.4-million last year. The reason for the sharp increase was a $125-million anonymous gift.

To see the full report after October 15, using World-Wide Web software, type http://www.columbusfoundation.com