Community foundations: getting in on the ground floor: developing these philanthropic organizations can be a smart way for a bank to serve its home town. Involvement also can be a plus when it comes to improving name recognition and bolstering business for your institution.

• Author: Monroe, Helen
• Position: Community Relations

A community foundation is an organization that collects money, places that money in endowments, and then uses the earnings from those endowments for the favorite charities of local donors--hopefully forever.

For financial institutions, there are several benefits involved in helping establish such foundations. These rewards include: helping to build the wealth and stability of the communities they serve, building relationships with leaders and affluent members of the community, increasing name recognition and awareness of bank services throughout the community, and managing the funds of the foundation.

The Bank of Fayetteville in Fayetteville, Ark., (assets: $276 million) was instrumental in launching the Fayetteville Community Foundation, the idea for which started with a bank trust officer. The bank supported the idea for several years before the foundation was officially launched in 2004.

Fayetteville is one of those communities that residents care about deeply. As bank president John Lewis explains, "We came to realize that our clients feel more comfortable giving their money to a local foundation--with a local board of directors--so they are assured that their giving goes directly to the community they love, in the way that they direct it."

In addition, says Lewis, banks are ideal partners for helping launch a community foundation because:

* They have the technical and legal expertise to advise the foundation on topics such as how to set up the foundation, how to invest and how to make grants.

* They have the experience and contacts in the community to know who the right candidates are for the positions of executive director and board of directors.

* They have the clout and contacts in the community To advise foundations on how to best market themselves and raise funds.

* They can provide much-needed office space and equipment to the foundation.

* They can provide administrative and bookkeeping support.

* They may be able to convert old trusts into funds for the foundation.

Getting started

As with most new ventures, it takes someone with a passion to start a community foundation. This often is someone who loves the community, or who has lived there a long time and wants to make a difference in a way that has a lasting impact. Such an individual often becomes the foundation's catalyst. Once that person is identified, the next steps are to:

Form an organizing committee. The success of a new community foundation is facilitated by the...