Rancho Palos Verdes City Council
   

TO: HONORABLE MAYOR & CITY COUNCIL

FROM: CITY MANAGER

DATE: APRIL 20, 2004

SUBJECT: CITY FOUNDATION

RECOMMENDATION:

Consider conceptual approval and directing staff to investigate formation of a City non-profit Foundation to receive donations.

BACKGROUND:

Councilman Wolowicz has asked that the City Council consider the advantages of forming a non-profit City Foundation for the purpose of generating funds for the City. This matter was continued from the April 6, 2004 City Council meeting.

DISCUSSION:

In a recent survey of California Cities staff was somewhat surprised to learn how many cities had formed foundations for the purpose of raising funds for various activities and facilities. Locally, the City of Rolling Hills Estates created the Pepper Tree Foundation in 1981 "to help support City owned parks, trails, open space, recreation and facilities." In a typical year the Pepper Tree Foundation generates about $10,000 in donations. The City of Hawthorne has a Parks and Recreation Foundation that raises money to support parks and recreation programs, activities and facilities. The Foundation is independent of the City although all funds raised go to City Parks and Recreation. Last year they raised about $20,000. Torrance has a Fire Department Trust and a Police Foundation. The City of Rancho Palos Verdes has traditionally accepted "Gifts for Parks" donations that are utilized to support City-sponsored events as well as provide funds for specific improvements such as exhibits at the Point Vicente Interpretive Center. In 2003, these donations totaled $10,796. The City does not, however, have a Foundation to accept these gifts.

Over forty responses (through the League of California Cities) were submitted addressing our inquiry about formation of a foundation. In addition to information on how to set up and manage a foundation there were other insightful comments from various cities including:

  • It is difficult to communicate to the community that this is not just a "shell " for the City to get "extra money. Especially since there are some City staff members associated with the Foundation and the City holds the Foundation’s money.
  • Why create another organization? The City could accept land or dollars directly and the donor could still claim a deduction.
  • Ours is a separate 501c.3 organization organized for the community’s needs, but is located in City Hall and does not have separate staffing. It gives us a mechanism to apply for private foundation funding. The Board is comprised of our City Council.
  • "The Friends of _______" is a way of instituting a non-profit that can apply for grant funds limited to organizations with 501c.3 status.

These four comments, as simple as they seem, are a good summary of all forty comments, suggestions and tips generated by our research.

A Foundation is not difficult to set up. The Foundation must have a stated purpose, a Board of Directors, bylaws and regular meetings. A 501c.3 corporation must be set up through the State. The most successful Foundations have a dedicated group of volunteers, who organize fundraising events, apply for grants, solicit private and corporate donors and keep a high profile in the community. On the Peninsula, a good example of a successful foundation is the Peninsula Education Foundation.

Based on our research so far, staff has some doubt about the potential success of a City Foundation. However, we are prepared to initiate the process of creation of a Foundation if the Council is interested in proceeding. The Council should decide on a specific purpose of the Foundation before directing staff to begin the process. Attached are the Bylaws of the Pepper Tree Foundation for the Council’s information.

Respectfully Submitted,

Les Evans

City Manager

Attachment: Bylaws of Pepper Tree Foundation