Operations

Staff and financial resources are important to monitor for smaller foundations who are looking to grow, and for larger foundations who are looking for the flexibility to diversify their offerings.

Revenue mix

Administrative fees continue to serve as the main source of operating revenues for community foundations across the field. Larger community foundations will be more likely to maintain somewhat diversified earned revenue streams that include fee for service offerings, while smaller community foundations tend to do more direct fundraising to support operations. Community foundations often seek to generate surplus revenues that could be reinvested into mission-aligned, community leadership efforts that might include policy advocacy and the commissioning of research initiatives to better understand evolving community needs.

Averages were used to total 100%. (n=125)

Asset size range

	$0-$25M	$25-$50M	$50-$100M	$100-$250M	$250-$500M	$500M+	All
% Administrative fees	65%	82%	65%	81%	77%	81%	76%
% Fees for service	1%	0%	0%	1%	1%	4%	2%
% Transaction fees	0%	0%	0%	1%	1%	3%	1%
% Fundraising: operations	24%	7%	10%	7%	3%	4%	8%
% Fundraising: programmatic	2%	0%	4%	1%	1%	3%	2%
% Distribution from endowment/reserve	6%	9%	14%	8%	11%	5%	9%
% Other revenue	2%	2%	7%	1%	5%	0%	2%

Operational expenses

The median community foundation reporting for both 2021 and 2022 increased their operating budget by nine percent (n=130), up from seven percent the year before. Across all asset size cohorts, the majority of operating budget dollars go toward staff expenses (n=225).

Asset size range

	$0-$25M	$25-$50M	$50-$100M	$100-$250M	$250-$500M	$500M+	All
Personnel expenses	58%	61%	66%	66%	70%	66%	64%
Non-personnel expenses	42%	39%	34%	34%	30%	34%	36%

Surplus vs. subsidy

For the second straight year, roughly two-thirds of all reporting community foundations ended their fiscal year with an overall operating surplus, which provides some level of flexibility to invest in special initiatives and community leadership efforts. Although administrative fees make up the vast majority of earned revenues across the field, it is often the case that these alone are not enough to cover operating expenses; community foundations rely on other forms of revenue from fee for service offerings, internal distributions from operating funds, and direct fundraising from individuals and other funders to support operations. Community foundations with an operating deficit, once all other revenue sources are accounted for, will commonly take a distribution from their unrestricted fund to cover the shortfall, impacting their ability to make or deepen investments in other areas.

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=179)

Significant subsidy	Modest subsidy	Breakeven	Modest surplus	Significant surplus
7%	13%	20%	40%	20%

Expense to asset ratio

The median expense to asset ratio increased slightly across all size cohorts from 2021, unsurprising given the number of foundations whose assets decreased over that time while operating expenses increased. 75 percent of all survey respondents that reported for both years reported increasing their expenses in 2022. (n=184)

Funds per full-time equivalent

Larger community foundations tend to maintain relatively complex operating models that require a higher number of specialized staff. For smaller community foundations, staff will often serve multiple roles, and are more likely to each service a higher number of donors on average. (n=179)