In my more than 30 years of chamber work, I have not heard as much talk of foundations as I have since 2020.
When the Paycheck Protection Program (PPP) first rolled out, chambers were not eligible to apply for the program that provided loans to provide economic relief to small businesses and certain non-profit entities that had been adversely affected by Covid-19. Chambers did not qualify because of their 501(c)(6) status unless they already had a 501(c)(3) foundation in place.
Eventually, after significant lobbying efforts by chambers and association, that ruling changed and chambers were cleared to apply. I’ve heard more than a handful of chamber professionals admit “we wouldn’t have been able to keep the doors open had it not been for that funding.”
There has been a remarkable increase in the number of chamber foundations that have been created since the beginning of the pandemic. Many chambers realized that not only could having a foundation open access to some types of federal funding – as with the case of PPP – but it could provide access to grant funding and philanthropic donations to support their work. Much of this funding is not typically dedicated to 501(c)(6) organizations.
Chamber foundations are an important tool that can be used by chambers to facilitate and support change for important purposes such as economic development, leadership education, workforce development and community revitalization, and many more transformational programs.
Benefits of a Foundation
The creation of a 501(c)(3) public charitable foundation will enable a chamber to secure philanthropic support from individuals, corporations, and other foundations to fund certain qualified programs and services which can benefit the organization. Thus, the chamber will be able to effectively create a philanthropic arm that complements its existing mission and program of work.
Points to Consider
If your chamber is exploring the feasibility of a foundation, you will need to consider and address the following items:
- Incorporating the foundation and applying for IRS 501(c)(3) tax status
- Drafting the foundation’s by-laws addressing governance, officers, and board member responsibilities, etc.
- Recruiting the foundation board (with a focus on individuals interested and experienced in fundraises and with the ability to lead by their philanthropic example while also providing for some “shared” seats from the chamber’s board
- Developing a foundation mission statement different from the chamber’s own mission statement
- Creating an operating agreement with the chamber outlining staffing, office space, etc.
- Establishing the foundation’s ongoing program focus
- Determining staffing and management structure, including details on compensating the chamber for any staff use or plans for hiring a separate foundation employee
- Completing administrative details, including office set-up, securing a Federal I.D. number, mailing permits, bank and other vendor accounts, D/O insurance, etc.
Above all else, the chamber needs to do the following two steps in considering a foundation:
- Ensure key stakeholder buy-in for the foundation’s Case for Support, through a process of interviews, focus groups, surveys, and research.
- Create a Comprehensive Development Program Action Plan which addresses board development, marketing/communications rollout, annual giving, top prospect cultivation, planned giving, donor stewardship, and staffing.
Get Others in On It
My final piece of advice is to not go it alone. Talk with an accountant or tax professional; consult with an attorney well-versed in incorporating 501(c)(3) organizations; and meet with other chamber professionals who have walked this path before. Ask questions about how they started their foundations and learn from them.
There are so many great chambers using their foundations to support mission-driven work that is changing the trajectory of their communities.
If this is something that excites you, I challenge you to consider creating a foundation. If you already have a foundation in place, keep up the great work and let us know how you are using it to advance your mission.