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Reflecting on the Community Foundation Act, One Year Later

Tomorrow - August 21, 2018 - marks the one-year anniversary of the Michigan Community Foundation Act becoming law.

Tomorrow - August 21, 2018 - marks the one-year anniversary of the Michigan Community Foundation Act becoming law.

As CMF reported last spring, the Community Foundation Act:

  • Allows for the sale of unused assets, such as real estate and closed school buildings, by local government, public schools and public libraries.

  • Invests the income from such a sale in an endowed fund at a community foundation.

  • Creates an ongoing source of financial support for the local donating agency through investment proceeds.

Under the Community Foundation Act, participating community foundations must have assets of at least $5 million, existed for at least a decade and meet the criteria for Community Foundation National Standards.

“This legislation couples the best of nonprofits and local units of government working together to take care their communities,” Senator Wayne Schmidt told CMF at the time. “It allows local units of government to take advantage of the expertise a community foundation offers, especially when establishing a fund to promote civic good.”

House Fiscal Agency Legislative Analysis written in 2017 anticipated the act would “foster positive relationships between local units of government, public libraries, school districts, and community foundations that are all working toward shared goals.”

The Capital Region Community Foundation (CRCF) had testified in support of the bill, calling it a “win-win for communities throughout Michigan.”

CMF asked CRCF president and CEO Dennis W. Fliehman if he would still describe the act as a win-win now, one year after it was made into law. His answer: “Absolutely.”

Under the new legislation, CRCF has already established an endowment fund with the city-owned Board of Water and Light to maintain the city’s “sunken garden” that had to be moved following construction of a new facility.

The fund will be used primarily to pay for contracted services to maintain and improve the garden. The fund can also be used to address service needs at an alternate park and garden identified in the fund agreement, should funding not be needed for the sunken garden.

Fliehman notes that the agreement is for services above and beyond those provided by volunteers.

“They did not want to overstep the volunteers’ labor of love in maintaining the garden. And the goal is to conserve the dollars for improvements like new shrubs or walkways, needs that would be considered more than day-to-day gardening.”

CRCF is also in preliminary discussions with the City of Lansing regarding a fund to hold cemetery memorial funds, and the foundation is awaiting the sale of two abandoned parks that could result in a fund of over $4 million, with sale proceeds supporting parks and recreation activities.

“This act opened up the doors,” Fliehman notes.

When asked what steps he might recommend to foundations interested in supporting a similar partnership in their regions, Fliehman points to the strategy employed by two of his peers.

Mike Goorhouse, president and CEO of the Community Foundation of the Holland / Zeeland Area, says their foundation contacted local municipality leaders to proactively let them know about the act when it passed, highlighting the difference in investment returns the foundation could earn.

The Community of Foundation of St. Clair County did the same.

“We wanted our local municipalities to know that we could be a resource for them should this opportunity arise,” said Jackie Hanton, vice president, Community Foundation of St. Clair County. “I further reached out to the attorneys that we know work with our local municipalities to share the information.”

Fliehman says educating the attorneys involved in his foundation’s collaborations was critical.

“This is still new for them, so we had to educate the attorneys as they conducted their due diligence.”

Foundations engaging with municipal leaders are encouraged to be aware of the opportunities the Community Foundation Act provides, to help communicate the mutual benefits of this type of collaboration.

Want more?

Read the Community Foundation Act.

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