Community foundations are specialized non-profit organizations designed to serve the local community as the mechanism for establishing endowment funds - a method of ensuring a steady source of income for community support - while offering the benefits of achieving excellent investment yields through pooling of funds. Community foundations are the fastest growing sector of American philanthropy. There are over 400 across the United States, and several in Canada, Great Britain and Australia.

Community foundations provide local donors with an opportunity to engage in philanthropy in various ways and offer a variety of services. They help existing organizations build endowments; hold funds designated by donors for specific agencies; and make grants to charitable organizations for operations, special projects and capital campaigns. Community foundations also establish and increase flexible permanent funds that can be used at the discretion of the foundation board of directors to meet needs within the community. At times, a community foundation may initiate research to identify needs and convene community leaders to design new solutions to problems.