Seeding Community Intermediary Organizations and the Liability of Growth in Obtaining Local Giving

Abstract

Over the past 50 years, philanthropic institutions and governments have invested millions of dollars to support the growth of community intermediary organizations (CIOs) for developing vibrant civic lives. CIOs are community-based nonprofit organizations that do not directly deliver services but support other local nonprofit organizations. The key issue for these investments is how to generate more local giving for CIOs to reduce their dependence on external funders. It is believed that CIOs established in wealthy communities are more likely to attract local giving. However, an investigation into community foundations—a type of CIOs—seeded by a funder shows that foundations in the wealthiest communities did not receive much local giving. Rapid population growth in wealthy communities disrupted conventional, close-knit social relations and undermined the efficacy of foundations’ traditional fundraising model that relied on personal relationship-building, local brokers, and word-of-mouth referrals to attract giving. Community foundations suffered from low visibility and lost competitive advantages over commercial and national competitors. It suggests that funders should pay more attention to increasing volatility in communities and help CIOs transform their fundraising model.