SPECIAL FOCUS

Has your agency wondered if forming a foundation would be a prudent course of action? Many local government agencies in Illinois need alternative sources of revenue. The tax caps imposed on special districts and other local units of government drive this search. Money is tight at the same time expectations for increased services are at their highest levels.

The Taxing Problem of Finding Revenue Streams

In workshops and seminars, you've probably heard this statement: "Taxpayers expect governing boards to find creative solutions to revenue shortfalls and still meet the demand for additional services, programs and facilities." And you know that that's code for: "People don't want to pay any more taxes, so don't pin all your hopes on a referendum."

Many agencies, particularly park districts and forest preserves, have used fees and charges as a way to complement their revenues from property taxes. This is not always the answer to needed revenues. True, over time, the public has come to accept these fees, partly because only users of programs with an assigned fee or extra charge are impacted by these additional costs. But some taxpayers view user fees as a hidden tax for services rendered.

Grants are another option. In the early 1990s, the State of Illinois created various grant programs to allow for the acquisition of open space, protection of natural resources and the development of recreational improvements. Through the history of the Open Space Land Acquisition and Development (OSLAD) grant program, agencies initiated hundreds of projects, resulting in thousands of acquired acres and millions of dollars invested to develop, improve and enhance outdoor recreation in communities across Illinois.

OSLAD has been a popular and effective grant program that invested considerably in the future with the local match of state funds. However, not all park districts, forest preserve districts and municipalities were able to take advantage of this grant opportunity. Why? They could not provide their match because of revenue shortfalls, tax caps and other revenue restrictions. Agencies' inabilities to provide funding matches resulted in open space — particularly in Northeastern Illinois — disappearing at an alarming rate. Natural areas were destroyed by rapidly advancing residential development. Some districts had to stand by and watch critical open space identified in local master plans disappear due to lack of funds for matching grant programs. The residents of some heavily urbanized areas and newly established neighborhoods cried out for more open space, new parklands, playgrounds, soccer and ball fields, as well as trails for hiking and hiking.

The Friends and Foundations Option

Some agencies responded by facilitating the formation of friends groups and others worked for the establishment of nonprofit, 501 (c) (3) foundations. These foundations and friends groups were formed to support or enhance the mission of several park districts and forest preserve districts.

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This is not a new solution. In Illinois, 65 such organizations exist and have been identified as having the primary mission of supporting local park, recreation and conservation programs.

Several of these foundations were established primarily in support of a specific facility or program. One major example is the Cosley Foundation, established in May 1985, with its primary goal to "foster through financial support and other means the operation and improvement of the Cosley Animal Farm and Museum by the Wheaton Park District." The Cosley Foundation has been enormously successful over the years in fundraising efforts for the farm and museum. Its success has enabled the Wheaton Park District to improve museum facilities and increase services without an added tax burden on residents.

Success Stories of Illinois Foundations

The IAPD conducted surveys of foundations in Illinois that support parks, recreation and conservation. Based on those survey findings, numerous districts reap the benefits of those foundation efforts in supporting local programs and facilities. Select examples of these success stories include:

• The Schaumburg Park District Foundation raised $1 million toward the acquisition of the Volkening Heritage Farm, as well as nearly $250,000 for other facilities and programs.

• The Parkways Foundation's fundraising efforts generated over $1.4 million for the Chicago Park District's Eliz Morse Genius Children Garden at Garfield Park.

• The Rockford Park District Foundation received a bequest of $3.1 million toward the Swedish furniture factory museum and a gift of $3.5 million toward the district's botanical center.

• Friends of Indian Mound Pool raised $400,000 to assist the Quincy Park District in building a new swimming pool.

The levels of success of these 65 foundations surveyed varied greatly. Some foundation boards, for example, are active while others are only called to action for special projects or campaigns. Twenty-five foundations are very active, prosperous and have achieved considerable success. Each of the successful foundations has employed a range of strategies and techniques to accomplish its goals. The organizational structures vary considerably as to the number of directors on the board, use of advisors, governance roles, by-laws, accountability, appointments, responsibilities and missions. Most have held special events and raised considerable funds. Annual campaigns and direct mail campaigns have not been as successful and hence are not very popular. Many have sought outside grant assistance from private foundations with mixed success.

Foundations and Special Event Fundraising

Special events are generally viewed as an effective tool to generate funds and friends for an organization. While these events require enormous commitment from staff and volunteers, the activities provide significant exposure, result in good public relations, are excellent opportunities for sponsorships and underwriting and effectively promote organizational goals. One foundation reported that the media 'loves' to cover special events and, as a result, the organization's profile in the community is increased.

Foundations and Gift Solicitation

A majority of the reporting foundations did not have major gift solicitation or planned gift programs in place. Even more surprising is that very few foundations had developed a fundraising plan for their long-term goals. A select few foundations reported holding a capital campaign, while those with formal campaigns usually had staff dedicated to that purpose and were from larger organizations. Only a handful of agencies employed staff trained and experienced in philanthropy.

Fundraising in most agencies is in the category of "other duties as assigned."

Advice From Foundations For Foundations

During the course of our inquiries, the IAPD sought the advice of existing foundations for those communities, organizations or individuals considering the formation of a foundation or friends group. The suggestions and recommendations that follow should be useful in your considerations:

• Select a solid project to garner community support.

• Develop a clearly stated mission.

• At the outset, define the relationship between the foundation and the district, and establish a clear understanding of the respective missions and goals of each organization.

• Seek out committed and passionate advocates for foundation board membership

• Attract quality, hard working volunteers.

• Be patient. Success comes over time with a great deal of hard work.

• Attract recognized and respected community leaders for both the board of directors and for the trustees or advisors.

• Cultivate good relations with the local media.

• Make sure the organization becomes a force in the community that is able to respond to opportunities as they arise.

• Secure the services of influential people within your community, including local political leaders, bankers, attorneys, highly respected individuals and those with wealth.

• Encourage and celebrate passionate leadership. It is imperative for success.

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• Carefully consider the organizational structure to maximize benefits to the community.

• Establish specific goals for the organization.

• Begin with an end in mind.

Knowing When to Start a Foundation or Friends Group

As the successes of established foundations come to light, more and more community leaders and locally elected officials are seeking information on how their programs could benefit from forming similar organizations.

When is it prudent to start a friends affiliate group or a nonprofit 501(c)(3) organization? This is a difficult question to answer. Each agency needs to consider the climate and conditions in its community.

Here, as in life, timing is everything. In your community, circumstances may be right when a strong need exists for improved facilities, or a critical parcel of open space must be acquired, or the community swimming pool requires vital repairs. Some need exists that cannot be addressed without added dollars. And if there is little or no support for raising taxes and user fees are already at the maximum tolerance level, you might consider the potential of a foundation for funding opportunities.

At a recent focus group meeting to secure public input on a park district's comprehensive master plan update, numerous participants expressed their interests in future improvements. These individuals had a narrow, specialized interest. In reply to the facilitator's question as to how to finance this initiative (in this case a new indoor pool and community center complex) several suggested it could be financed through private donations.

The district was being urged to solicit private donations from individuals, families, businesses and corporations to achieve the community goal. This is not the normal purview of a park district, especially on a large-scale capital improvement. A foundation in support of the park district's mission could be the vehicle to address the need for more funds and to accept private donations for such an initiative. Generally, donors are not willing to donate to a unit of government. But they might very well be interested in giving to a foundation capital campaign for a badly needed community project. The donors tax deduction also makes this an attractive alternative. According to Giving USA Foundation's latest findings, Americans gave $241 billion to charity in 2003 and individual giving comprised 74.5 percent of all philanthropy in the United States, surpassing donations from corporations, foundations and bequests.

Beyond the advantages of increased giving, a foundation can benefit an agency in other ways. It can increase awareness of important programs and services in need of support. It can involve volunteers on meaningful initiatives to improve the quality of life in the community. It can develop alliances or partnerships with area businesses and corporations. It can apply for grants from private foundations that restrict their giving to 501(c)(3) nonprofit organizations.

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Foundation Fund. The fund will be managed by Geneseo is for Tomorrow (or GIFT) foundation, a community foundation. We work closely with the community foundation; in fact one of our board members serves on the GIFT's board. The advantages to us are many. First, we do not incur the expenses or the responsibilities associated with managing funds. Second, this pre-established organization draws potential donors to the district. Geneseo citizens- and their tax attorneys and estate planners- already understand and trustthe mission of the GIFT foundation. When potential benefactors approach the foundation, te foundation presents park district initiatives as a worthy cause. Third, the GIFT foundation has staff who understand how best to accept and use a wide range of gifts, including cash donations; donations of stocks, bonds and other financial instruments; and real estate donations. Our Park District Foundation Fund is an organizational endowed fund that will be able to contributemoney into our annual budget as well as grow equity over the next ten years. Growing the fund will provide resources for future generations to enjoy and cherish for years to come. A 501(c)(3) structure doesn not a foundation make. The key to replication- or surpassing- the success we've had in Geneseo is great community relations. Once you have made the commitment to have a positve profile in your community, then you are in position to present yourself as a worthy cause. And once the donors come to you, only then do you need to figure out how best to manage the gifts that will surely come your way. Robert A. Orsi, CPRP is director of parks and recreation at the Geneseo Community Park District Geneseo Fast Facts The Geneseo Community Park District County: Henry Organized: 1953 Population served: 10,700 Boundaries: 144 square miles EAV: $190,142,918 Employees: Full-time:13 Part-time:26 Seasonal:110 Acres owned: 51 Acres leased: 105 Buildings owned: 3 Buildings leased: 1 Park sites: 7

When - Perhaps - Not to Form a Foundation

In your early consideration of whether or not to press for the formation of a 501(c)(3), you should consider whether this is the best option and the right time.

If the community is saturated with other pressing demands and competing interests, such as school funding, medical facilities or other public works priorities, such as water and sewage treatment or transportation, you need to consider carefully the likelihood of success in advancing a nonprofit, fundraising organization for local park and recreation needs.

If you lack the support of community leaders for this initiative, step back and reconsider your alternatives. If the media fails to recognize the value and benefit of the proposal, it is not likely to garner broad-based support from residents. If you are the only passionate advocate for developing a foundation, reevaluate your goals and objectives. Enlist the support of select community leaders to review the purpose, goals, objectives and mission of the nonprofit. If they remain unconvinced, then do not continue to advance your idea without some shift in emphasis or priorities.

How Much Does Forming a 501(c)(3) Cost?

Some agencies provide their foundations with an annual subsidy. That financial investment can vary widely, depending on the size of the agency and the foundation's level of operations. In select cases, where the foundation has two or three staff members and the foundation's annual budget is in the $200,000

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to $300,000 range, the agency could support as much as 50 percent of the foundation's total annual budget.

However, more typical are foundations with minimal budgets. In Illinois, friends foundations receive little financial support from the agency: perhaps the agency picks up the foundation's rent or utilities, for example. In most cases, the foundations must rely on their ability to secure unrestricted funds for general operating purposes. Even so, agencies often provide direct support functions, e.g., letter writing, maintaining the database, sending thank you notes, record keeping, auditing, etc. In some situations, the district executive also wears the hat as foundation director.

Do You Need Outside Help?

Outside technical assistance is available to assist your agency in determining the appropriateness of — and its readiness for — forming a 501(c)(3) foundation. There are firms that can provide a wide range of services including planning, researching other successful foundations with similar missions, conducting a feasibility study on community readiness and support, examining the mission, conducting focus group meetings and recommending a course of action in the initial assessment phase. This planning process could take 12 to 16 weeks or more and, depending on the level of services required, could cost $13,000 to $18,000.

If it is determined that support exists and it is appropriate to move to the development phase, other services could be required. The range of these services might include developing articles of incorporation, by-laws, board policies and applying for tax-exempt status as a 501(c)(3); identifying criteria for board membership; providing board member recruitment and training; developing a fundraising plan and more. Again, depending on the level of services and the extent of involvement required of a consultant, the cost could range from $25,000 to $70,000.

The Internet is a great resource and material is available from various organizations to assist in many of the steps identified above. If you elect to tackle all of these activities on your own, you need to at least consult with an attorney to help you finalize some steps in the process.

Other Options Are Available

You will note that planning, establishing and maintaining a nonprofit, 501(c)(3) foundation can be time consuming, sometimes frustrating and costly in terms of record keeping, auditing and accounting.

Yet there may be other viable options in your community. Some agencies have realized success with fundraising without a separate stand-alone nonprofit aligned with their mission. In these select cases, the district has enjoyed a record of success over a long period and has sustained community support for numerous initiatives. When these particular agencies enlist resident support, they have realized significant levels of donations as a unit of local government.

Some communities across Illinois have a community foundation. In your planning process, by all means contact any pre-existing community foundation or similar organization to determine whether a relationship with that group is a viable alternative to establishing a foundation unique to your agency. Community foundations generally have a broad-based mission and assist various organizations in the area by managing donations designated for parks and recreation.

At Bottom, Foundations are About People

As you can see, the decision to establish a foundation or 501 (c) (3) nonprofit can be complex and challenging. Foundations have been successful in many types of communities and under varied circumstances. I firmly believe the deciding factor for success is having passionate leaders who are committed to sharing their rime, talents and resources. Do you have a cadre of volunteers and staff in your community eager and willing to pursue the goal of a foundation in support of parks, recreation and conservation?

John Comerio, CPRP, CFRM is development director for the IAPD. He is a Certified Fundraising Manager.

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Authenticity Consulting
www.authenticityconsulting.com

This is the site for a consulting company specializing in:
-Nonprofit capacity building,
-Nonprofit businuess development, and
-Training and learning programs.

The Center for Philanthropy Indiana University
www.philanthropy.iupui.edu

The Center on Philanthropy is a comprehensive, university-based resource dedicated to serving philanthropic and nonprofit clients. It is involved in every facet from practice to research, whith its clients benefiting from its experience and kowledge in the philanthropic sector. It offers such services as:
-Fundraising schools and other courses
-Research
-Assistance with the donor discernment process
-Information and classes on planned giving, capital campaigns, annual giving and major gift development

Community Foundations of Illinois
www.communityfoundationsofillinois.org

Community foundations provide opportunities to pool individual gifts into permanent local endowment funds for the benefit of the community. They provide maximum tax benefits, flexibility and efficiency for donors. Community foundations can help establish and manage funds that benefit local park, recreation and conservation agencies. This site lists all the community foundations in Illinois.

The Donors Forum of Chicago
www.donorsforum.org

The Donors Forum of Chicago is a resource for leadership, education, research and action on behalf of philanthropy and nonprofits. The Donors Forum enables the philanthropic and nonprofit sector to address community concerns with comprehensive information, skilled leadership and the resources necessary to build institutions and affect change. The Donors Forum Library houses the Midwest's largest collection on philanthropy, and Philanthropy Centers bring similar information to the suburbs. The Forum Partner program offers nonprofit groups and consultants to nonprofits the chance to join the Donors Forum community and receive special benefits.

Foundation Center
www.foundationcenter.org

The Foundation Center's mission is to strengthen the nonprofit sector by advancing knowledge about U.S. philanthropy. Founded in 1956, the center is a leading authority on philanthropy and serves grant seekers, grant makers, researcers, policymakers, the media and the general public.

To achieve its purposes the center:
-Collects, organizes and disseminates information on U.S. philanthropy.
-Conducts research on trends in the field.
-Provides training on the grantseeking process.
-Ensures public access to information and services through its Web site, print and electronic publications, five library/ learning centers and a national network of cooperating collections.

Free Management Library
www.managementhelp.org

This "library"is a free community resource to be shared and contributed to by users and readers across the world. The overall goal of the library is to provide leaders and managers (especially those whith very limited resources) basic and practical information about personal, professional and organizational development. The library links users to information on all facets of organizational planning and advancement.

IAPD Guide to Grants
www.ILparks.org

Go to the IAPD Website and, on the right-hand side of the home page, click the "Grants" option to access a listing of grant programs available to 501(c)(3)s and friends groups.

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