How Community Foundations Are Showing Up Right Now

Trends, Tensions, and Strategic Considerations for the Philanthropic Sector

Across the United States, many community foundations are asking a practical and urgent question:

What does it mean to show up well when community need is increasing, public funding is unstable, and nonprofit partners are under serious pressure?

In our conversations with community foundation leaders, we hear both urgency and caution: a desire to move resources faster and more flexibly, alongside real questions about how to do so sustainably. Leaders are also considering how near-term responses can reinforce longer-term strategies that address the conditions driving community need. Those conversations are shaping how we think about what effective community foundation strategy looks like right now.

Our view is that flexibility and discipline are not competing priorities. The strongest community foundations are designing structures that allow them to act quickly while staying clear about purpose, sustainability, and accountability.

We are seeing a range of responses among the community foundations we work with and talk to. Some foundations are increasing grantmaking or payout for a defined period, providing more flexible and unrestricted support, simplifying application and reporting requirements, creating rapid-response funds, collaborating with other funders, and using foundation voice and relationships to advocate for the nonprofit sector. Others are experimenting with approaches that go beyond traditional grantmaking by treating flexible dollars as “risk capital” that can help nonprofits respond quickly, protect essential services, and adapt to changing conditions. We are also seeing more interest in pooled funds, emergency grantmaking, participatory or community-informed funding processes, mission-aligned investing, guarantees, recoverable grants, and deeper regional partnerships.

Taken together, these responses point to a broader shift:

Community foundations are moving from episodic responsiveness toward more intentional operating models for flexibility, learning, and impact.

What connects the strongest approaches is a disciplined form of responsiveness that includes moving resources more quickly and with fewer restrictions, while also building the structures, policies, and strategies needed to sustain that responsiveness over time.

Flexibility Is Becoming a Strategic Imperative

One of the clearest shifts we continue to observe is the growing importance of flexible revenue. Community foundations that want to respond quickly often need dollars that are not tightly restricted by issue, geography, donor preference, or time frame. Without that flexibility, leaders may see the need clearly but lack the resources to act when timing matters. Flexible resources also create room to address both immediate hardship and systems that produce or sustain that hardship. This means community foundations should be more explicit with donors, boards, and staff about why flexible resources matter. Flexible revenue should not be treated as a reserve for exceptional or unprecedented moments alone; for many community foundations, it is becoming core strategic infrastructure.

At the same time, ambitious strategic priorities require clarity about how they will be resourced. Depending on a foundation’s strategy, implementation may draw on the annual operating or grantmaking budget, board-designated reserves, campaigns or special initiatives, pooled funds, investment earnings, or some combination of these tools. Making these choices visible early helps ensure that strategy implementation does not depend on ad hoc fundraising or informal workarounds.

For many community foundations, the next question is whether increasing flexible and unrestricted revenue should become an explicit strategic priority. Flexible funds can support organizational capacity, emerging needs, and important work that may not fit neatly into restricted fund categories.

If a community foundation chooses to prioritize flexible revenue, several considerations can help translate that goal into practice:

• Set revenue goals that are broad enough to support strategy but specific enough to guide board and staff action
• Make donor fund options easier to understand — including which funds are restricted, flexible, or fully unrestricted — and explain in plain language how general-use dollars advance mission
• Improve revenue tracking so leaders can see when dollars are expected, how restricted they are, and how they connect to strategy implementation

Collaborative Funds Can Turn Shared Interest into Coordinated Action

Community foundations are increasingly considering pooled funds and other collaborative funding vehicles when the scale or urgency of a need exceeds what one institution or donor can easily address alone. A pooled fund can aggregate donor interest, fill critical gaps, move resources toward urgent or emerging issues, and create a shared platform for action and learning. Depending on its design, pooled dollars may support grants, pilots, advocacy, learning, rapid response, capacity building, systems-change efforts, or aligned investments.

These collaborative vehicles work best when their funding purpose and operating model are clear. Foundations considering a pooled fund should ask:

• What problem is the fund intended to address?
• How will community input shape priorities and funding decisions?
• Who has authority to make decisions?
• What role will donors, grantees, and community partners play?
• What kind of reporting or learning will be useful without creating unnecessary burden?

It is also important to consider whether a pooled fund is intended as a temporary response to a particular need, a renewable initiative, or part of the foundation’s ongoing platform. Answering these questions early can help ensure that collaborative funding adds value rather than creating another layer of complexity.

Looking Beyond Traditional Grants

Some community foundations are also asking whether more of their assets can be used in service of mission, beyond just the dollars they give away through grants. Impact investing and place-based investment can complement traditional grantmaking by using financial resources in ways intended to support both community impact and financial return. Examples include low-interest loans, piloting a universal income program, recoverable grants, guarantees, deposits, and partnerships with community finance organizations.

These tools can help move more capital into communities and support priorities such as affordable housing, nonprofit facilities, small business stability, community ownership, climate resilience, or economic security. Some foundation investments may also be repaid and used again, allowing the same dollars to support more than one community need over time.

For donors and board members, mission-aligned investment can broaden the conversation about how all community foundation assets, not only grant dollars, can advance mission. At the same time, these tools require clear decisions about risk, liquidity, due diligence, staff capacity, and impact measurement.

For community foundations considering these tools, the best starting point is a clear purpose and set of intended outcomes. Leaders should define the outcomes they hope to achieve; test whether the approach fits the foundation’s strategy, financial policies, values, risk tolerance, and capacity; and establish guardrails around risk, decision-making authority, and measurement.

Measuring Impact Without Increasing Grantee Burden

A real tension for many community foundations is how to understand and communicate impact without adding more work for grantees. This is especially challenging for foundations using trust-based approaches, which often emphasize multi-year flexible funding, streamlined applications, reduced reporting requirements, transparent relationships, community-centered decision making, and greater overall respect for grantee expertise.

These practices strengthen trust and effectiveness, but they also require foundations to rethink how they gather evidence, learn from partners, and tell a credible story about what their resources make possible. The opportunity is to move from compliance-oriented reporting to learning-oriented measurement and storytelling.

Instead of requiring custom reports that primarily serve the foundation, community foundations can define a small number of shared learning questions, draw on data grantees already collect, listen to communities and partners, and supplement quantitative indicators with qualitative evidence. This helps boards, donors, and staff understand progress without recreating the reporting burden that trust-based practices are intended to reduce. It also makes room to ask whether resources are only easing immediate pressure or also helping shift the underlying conditions, policies, relationships, and infrastructure that shape communities.

Impact storytelling also needs to shift. Community foundations can tell stronger and more honest stories when they describe their role as one contributor within a broader ecosystem, rather than claiming sole credit for community change. Stories can show how flexible funding helped organizations respond, adapt, retain staff, strengthen infrastructure, build relationships, sustain advocacy, or act on community priorities. Strengthening organizational resilience is a worthy cause to fund. Community foundations can also highlight patterns across grantees and communities while protecting confidentiality and avoiding unnecessary storytelling labor for nonprofit partners.

For many community foundations, the practical question is not whether to measure impact, but how to right-size measurement so it supports learning, accountability, and communication.

A strong approach might:

• Define a small number of learning questions that reflect what the foundation most needs to understand
• Use information grantees already collect whenever possible, including existing evaluation reports, dashboards, annual reports, community data, or stories developed for their own audiences
• Offer multiple ways for grantees to share learnings, such as short conversations, written reflections, learning sessions, site visits, or existing materials
• Center contribution rather than attribution, explaining how foundation resources supported conditions for change without overstating causality
• Create regular opportunities for staff and board members to reflect on data, ask questions, and identify patterns over time
• Use ethical storytelling principles, including ongoing consent, confidentiality, holistic representation, trauma-informed practice, and respect for how people and communities want their experiences described
• Share learning back with grantees and communities so measurement becomes reciprocal

From Responsiveness to Resilience

The throughline across these approaches is intentionality. Community foundations do not need to adopt every tool at once, and not every tool will fit every institution. The deeper question is whether the foundation has named the role it wants to play, the resources it can bring to that role, and the practices that will help it learn and adjust over time.

The most effective community foundations are building the structures that allow them to respond well without creating confusion or unsustainable expectations, including:

• Clear donor strategies that explain why flexible dollars matter
• Decision rules that clarify when and how responsive resources are used
• Governance practices that support urgency while maintaining accountability
• Learning practices that help boards and staff adjust strategy over time

In this moment, community foundations have an opportunity to pair responsiveness with strategy. Flexible resources, collaborative funding, mission-aligned investment, and learning-oriented measurement can all play a role. The work ahead is not only to choose the right tools, but to align those tools around a clear understanding of the foundation’s role, strategy, and relationship to the communities it serves. This includes distinguishing between support that helps people navigate immediate barriers and investments that change the systems creating those barriers in the first place. This also means making intentional choices about where flexibility is most valuable, how resources will be sustained, how decisions will be made, and what the foundation needs to learn along the way.

The community foundations best positioned for this moment will not be those that adopt the most tools. They will be those that make the clearest choices about the role they intend to play — and align their resources, relationships, and learning practices accordingly. Done well, this approach can help community foundations move beyond reacting to immediate pressures and toward building the capacity, relationships, and habits of learning needed to support long-term change.