The Future Of Community Grants
In the municipal budget for 2015, there was a big property tax increase, but the money made available for community grants dropped significantly. This doesn’t really make sense, if you’ve got more money, logically, you should have more money to grant out. That was not the case this year.
There is a solution to this unfortunate situation and that is to create a pool of money that can be invested and then the interest that’s earned on that investment can be granted out without the principal amount ever getting touched. This type of investing and granting is called endowment funds or community funds.
The North Grenville Community Fund is a local community non-profit organization that is presently part of the Community Foundation Of Ottawa. The NGCF is trying to grow and raise money so that it could become a community foundation on its own. According to the national governing body ‘Community Foundations of Canada’ there are a fair number of conditions that need to be met before the NGCF could become its own stand alone foundation. Some of these conditions are: the foundation must be registered as a charity by Revenue Canada, it must have a business number that reflects its charitable status, it must be run by volunteers and it must conduct its grant making and charitable services in a well defined geographic area.
Anyone can start an endowment or community fund. If you set one up, you can also determine where or to whom the money gets granted to. For example, someone could set up an endowment fund that would generate grant money every year for a local theatre group. Or maybe a community organization wanted to set up an endowment fund to be able to grant out money each year in the form of a scholarship for a high school student to help them pay for college or university. Or if a group of parents wanted to set up an endowment fund so that the grant money each year paid for the operation and maintenance of a community splash pad, this might help to encourage the municipality to keep their promise of building a community splash pad. However, all endowment funds must reach a minimum of $5 000 within the first five years of creation before it can start granting money out. Of course, in the initial growth stages after reaching $5 000, the people looking after the endowment fund have the option of re-investing the interest earned to help it grow faster.
Imagine if the municipality started an endowment fund under the North Grenville Community Fund umbrella. If they invested $25 000 each year for 10 years in their endowment fund, they would have at least $250 000 at the end of that ten years. If this money were invested and returned an average interest rate of 7% after service fees, the fund would be able to grant out $17 500 each year without losing any of the $250 000 that was initially invested. Every year the municipality could grant out $17 500 to the local community organizations and charities of its choice without using tax money for community grants like they do now. And, they could even allow the volunteer board of the North Grenville Community Fund to decide who would get the money based on an approval process that would call for applications from interested community organizations. This way, a member of council could sit on the board of the community fund for oversight and there would be no additional cost to residents because no municipal staff would be required to be part of the decision making process unlike the municipality’s current process of deciding community grants. To go a step further, this endowment fund could also accept donations from both residents and the business community as well.
This sounds like a winning formula for the future of community grants to me. What do you think?