Operations

A community foundation’s operating model can vary in several ways based on the context in which it operates. Important factors include the needs and expectations of the community foundation’s donor base, which sectors drive the regional economy and how the community foundation is connected to them, and the community foundation’s own medium- and long-term strategy and the level of financial investment needed to drive that strategy forward.

Revenue mix

While administrative fees assessed on donor funds will nearly always provide most of the revenue needed to support operations, direct fundraising from individual donors, internal distributions from the community foundation’s operating funds, and fee for service revenue provide additional support. The community foundation looking to deepen its investment in efforts of community leadership may seek to diversify its revenue sources to help create the flexibility needed to make that investment, while emerging community foundations may depend more on a combination of donor fees and direct fundraising to support a growing operation looking to reach a level of sustainability before expanding into new areas of work.

Averages were used to total 100%. (n=184)

Asset size range

	$0-$25M	$25-$50M	$50-$100M	$100-$250M	$250-$500M	$500M+
% Administrative fees	72%	80%	70%	79%	81%	69%
% Fees for service	0%	0%	0%	1%	2%	3%
% Transaction fees	0%	1%	1%	2%	1%	1%
% Fundraising: operations	10%	12%	9%	5%	4%	4%
% Fundraising: programmatic	7%	2%	6%	4%	1%	5%
% Distribution from endowment/reserve	10%	4%	11%	6%	7%	8%
% Other revenue	1%	1%	4%	3%	4%	10%

Operational expenses

Operating budgets remained relatively flat in this year’s sample (n=143) with a median increase of 2%. Across all asset size cohorts, roughly two-thirds of the operating budget will go toward staff expenses on average (n=184).

Asset size range

	$0-$25M	$25-$50M	$50-$100M	$100-$250M	$250-$500M	$500M+	All
Personnel expenses	61%	62%	61%	70%	67%	66%	65%
Non-personnel expenses	39%	38%	39%	30%	33%	34%	35%

Surplus vs. subsidy

Slightly fewer than half of all community foundations in the sample ended FY23 with an operating surplus, after two straight years in which two-thirds of the sample carried a surplus at year-end. Typically, administrative fees will be supplemented by other sources of revenue to support operations, with unrestricted dollars covering any remaining shortfall, though this will impact the ability of the community foundation to make or deepen an investment in efforts of community leadership and other mission-aligned initiatives.

The categories in the chart below are calculated as revenues divided by expenses: Significant surplus >125%; Modest surplus = 105%-124%; Breakeven = 95%-104%; Modest subsidy = 75%-94%; Significant subsidy <75% (n=188)

Significant subsidy	Modest subsidy	Breakeven	Modest surplus	Significant surplus
11%	22%	25%	28%	14%

Expense to asset ratio

Larger community foundations will achieve an economy of scale that keeps their expense to asset ratio relatively low compared to smaller peers. This ratio is a shorthand to understand the “leanness” of a community foundation’s operating model but is highly informed by several factors such as the local cost of living and the depth of the foundation’s investment in various forms of community leadership. (n=188)

Funds per full-time equivalent

Larger community foundations tend to hold specialized staff roles to serve large, diverse sets of donors who may require different levels and types of service. For smaller community foundations, staff will often serve multiple roles and are more likely to work directly with a higher number of donors. (n=191)