Understanding Community Foundations
Community Trust is a permanently endowed charitable organisation that raises money from individuals, corporates, government as well as other funding agencies for enhancing the quality of life of the people in a limited geographical area. It has certain unique features which set it apart from other citizens’ initiatives:

Its mandate is limited to a geographic region but its canvass spans the entire development process.
By definition, it is not an implementing agency. It collects funds and channels them to the most urgent needs of the region and to organisations that have demonstrated capabilities of project implementation.

A Community Trust is also known as a Community Chest or a Community Foundation. The Bombay Community Public Trust (BCPT) is the first Community Foundation in India.

Germination of the Concept
The idea of co-operative collecting for charitable purposes originated in Liverpool, England (1873) and in the United States of America, in Denver (1887). In 1900, the Cleveland Chamber of Commerce assumed responsibility for endorsing the agencies seeking funds; later it brought almost all its welfare organisations together under one Council. The name community chest was coined in Rochester, NY, in 1913.

As per the Community Foundation Global Status Report (2005) there were 1,175community foundations identified in 46 countries, Community foundations are one of the fastest growing forms of philanthropy worldwide and are increasingly becoming players in global civil society.
Unlike in other counties, the concept is yet at a nascent stage in India with less than 6 such Foundations existing today.

Unique Features
A community foundation is a trustworthy and straight forward mechanism to serve the charitable needs of donors; it is not set up as an individual charity. It encourages, enables and empowers by providing a pool of funds and other support services to those who are working for the betterment of the community. They have certain specific features. 

They work in a defined geographic region;.

Build a permanent endowment with contributions from individuals, corporations, government, private-sector funds and other donors such as private foundations;

Use contributions and investment earnings to provide grants to a variety of credible non-profit organisations and community groups;

Encourage public-private partnerships;

Bring together a community's problem-solvers, activists and citizens for important local issues.
Beneficiaries of Community Trusts
Based on the belief that any citizen and community initiative should benefit those that give as well as those that receive, Community Foundations, the world over have tried to play a catalytic role. They are the intermediaries between donors who have the capacity to give, on the one hand, and NGOs on the other, who have demonstrated capacities as delivery mechanisms for reaching out to the most needy. As such, they are ideally placed to serve as a channel to fulfil corporates’ social responsibilities. The objective is always that the whole community should benefit.

Donors and potential donors get an opportunity to channel their charitable impulses toward important local needs. While such organisations may have the funds to donate, they may not have the skills as well as the personnel to implement the projects that they would like to donate for.

Local non-profit and community organisations are able to create and improve networks of those who have the experience, means and capacity to develop local solutions. They can carry out innovative interventions in community building and development work without having to spend time in raising resources which can often become a constraint for their activities.

The local communities are strengthened when their constituents come together to work for common good. A heightened sense of community identity and responsibility emerges from co-operative work.

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Advantages of Intermediation by Community Foundations
Community Foundations provide opportunities for donors to give regularly without worrying about the genuineness of a cause, the credentials of the recipient or whether the money will be properly utilised. They ensure careful assessment of NGO capabilities before processing their requests for grants. Limited reach, in fact, provides them in-depth knowledge of the area and up-to-date knowledge of local needs and patterns of service required. Foundations can also monitor implementing agencies more closely as they have the resources to engage professionally qualified social workers for reviewing the projects. If required the intermediary can maintain anonymity of the donor thereby enhancing NGO acceptance of funds. Community Foundations generally have tax exemptions.

Limitations of Private Trusts
Setting up private trusts to meet the needs of the community is a good way of returning your obligations to the community, acting as a good citizen, teaching your children the joys and responsibilities of charitable giving and maximising tax benefits. However, managing a trust requires managerial skills as well as compliance actions. It involves ensuring the safety of the corpus, proper investment of funds for optimising returns, scrutinising grant applications, ensuring timely disbursement and effective monitoring. All these are specialised tasks that a Community Foundation undertakes.

There are, of course the advantages of aggregation – pooled resources enable larger causes to be addressed. Needs and issues in a geographical area change over time and with their grass root experience and sensitivity to local felt needs, Community Foundations can respond faster and garner the required resources from local donors with whom they have built up relationships.