Q: I am fascinated by the contribution of Community Foundations, in the U.S. and Europe. However, I wonder if there is a universal model for replicating their success especially in the developing and under-developed countries. My apprehensions arise mainly from the following:

Responses provided by Patrick O'Heffernan

• Who will provide the seed capital for start ups and under what terms and conditions?

Community foundations by nature begin with the community. Often one or a few wealthy individuals provide the seed capital as investments, requiring that the funds be invested in stocks or bank instruments and the interest be used to grow the foundation and to funds its programs. After the seed investment, the foundation markets itself to more modest-income people who see that their smaller amounts, when combined with the seed funds, can make a difference.

• Do these Foundations necessarily require the backing and patronage of the rich and thriving philanthropists/foundations?

No. Many have no connections to other foundations.

• Are there foundations/funding organizations which help with grants and seed capital and may be, fund the start-up costs of community foundations in the developing/under-developed countries?

Yes. The Ford Foundation, the Aga Kahn Foundation (for the Asmali people) are two that come to mind. A better strategy is to go to international funding foundations with a proposal to underwrite a community foundation. Have some other donors ready to match the foundations funds when you go.

• Is there an ideal percentage-figure for operational costs in the annual finance statement, say in the initial years and for subsequent years? Should there be one at all?

That varies with the country. I have seen a range of 5% to 20%. I would try to stay at 10% or under.

• Should there be an ideal cost of funding and what should not be included in its computing?

No, it depends on your country and what you want to do. Determine what you want to accomplish, and how much investment that will require. If the interest rate in your country (paid on savings or investments ) is 10% and you would like to distribute $1000 in micro grants and your overhead is 5%, you will need $15,000 to begin.

• How should the aspects of inflation, erosion of interest incomes and rising staff-costs be overcome?

That question needs to go to a local economist because it varies so much from one country to another - there is no rule that fits every one.

• In my view, unless the staff-costs are near what they are in developed world, the long-term sustainability of Community Foundations as professionally run and managed entities will be in doubt?

Why? It is not the cost of the staff that is important, it is their effectiveness. Running a community foundation in India will be much different than running it in California or New York. Look at the staffing of community foundations in the developed world as rough guides, but don't assume their model is best for you. You might need more staff because you have less access to technology (not likely in Bangalore!!)

Incidently, you may want to approach the economics department at ITT to work with you on this. You might find some allies there.

Q: I am interested in knowing about the working aspects of city-based Community Foundations that are created exclusively to address local issues through mobilisation of funds from the community members themselves. Can you help? Are there success stories or papers researching on their efficacy aspects?

Ruth Norris, Senior Program Officer with the Skoll Foundation, responds:

You may want to start with two websites with information and research about community foundations:

• Community Foundations of America

• The Monitor Institute and Blueprint's site on emerging philanthropy