Operations

A community foundation’s operating model can vary in several ways to reflect the needs of the community and the foundation’s own strategy. 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, including the level of financial investment needed to drive that strategy forward to advance its mission.

Revenue mix

Administrative fees are a near universal driver of operating revenues among community foundations, though there are some variances among and within different asset size cohorts. Many community foundations engage in direct fundraising from individual donors to support operations, take distributions from operating endowments, and bring in additional earned revenues by providing paid services such as philanthropic advising for other local foundations or renting out space for local events or other uses.

Community foundations looking to invest more in community leadership efforts and other special initiatives seek the financial flexibility to do so through the generation of surplus revenues, sometimes diversifying their revenue streams in an effort to keep that work sustainable. Emerging and growing community foundations may depend more on a combination of donor fees and direct fundraising to sustain a maturing operation before expanding into new areas of work.

Averages were used to total 100%. (n=232)

Asset size range

	$0-$25M	$25-$50M	$50-$100M	$100-$250M	$250-$500M	$500M+
% Administrative fees	67%	70%	66%	73%	71%	72%
% Fees for service	0%	0%	1%	1%	2%	3%
% Transaction fees	0%	0%	0%	2%	0%	2%
% Fundraising: operations	10%	7%	9%	6%	3%	4%
% Fundraising: programmatic	2%	1%	2%	3%	2%	3%
% Distribution from endowment/reserve	12%	13%	11%	8%	9%	5%
% Other revenue	9%	9%	11%	7%	13%	11%

Operational expenses

80% of responding community foundations (n=165) grew their operating budgets over the previous year. Across nearly all asset size cohorts, close to two-thirds of the average community foundation’s operating budget go toward its staff (n=184).

Asset size range

	$0-$25M	$25-$50M	$50-$100M	$100-$250M	$250-$500M	$500M+	All
Personnel expenses	56%	59%	65%	64%	67%	67%	63%
Non-personnel expenses	44%	41%	35%	36%	33%	33%	37%

Surplus vs. subsidy

Over two-thirds of responding community foundations carried an operating surplus at the end of FY24. Community foundations rely mainly on administrative fees as their main source of revenue, with other income sources helping to cover operating costs, and unrestricted funds making up for any remaining shortfall. Relying on unrestricted funds for that purpose, however, may have an impact on the extent to which a community foundation can invest in community leadership or other mission-driven initiatives. (n=230)

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%

Significant subsidy	Modest subsidy	Breakeven	Modest surplus	Significant surplus
8%	13%	25%	33%	22%

Expense to asset ratio

This ratio is a shorthand way to refer to 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. Larger community foundations will achieve an economy of scale that keeps their expense to asset ratios low relative to smaller peers. Across all asset size cohorts, the median ratio increased slightly over FY24 levels as operating budgets increased across much of the field. (n=232)

Funds per full-time equivalent

Larger community foundations tend to have specialized staff roles to serve large, diverse portfolios of donors who may require different levels of service, with additional roles in place to advance mission-driven community leadership efforts. Staff at smaller community foundations often serve multiple roles and are more likely to work directly with a larger proportion of that foundation’s donors. (n=234)