In 1989, the Festival of Arts with a $1.5 million donation established the Laguna Beach Festival of Arts Foundation, a California nonprofit public benefit corporation, in order to guarantee annual financial support for the arts in Laguna Beach.
The Foundation, co-founded by John Rayment and David Young, was designed to hold these funds in a permanent endowment. The earnings and income from this endowment would be distributed annually in the form of scholarships to graduates of Laguna Beach High School and as grants to nonprofit art organizations and educational institutions in and about the city of Laguna Beach.
The Foundation operates independently from the Festival of Arts. In 2007, the Festival of Arts assumed the financial responsibility of the art scholarships, enabling The Foundation to focus on its grant program for local non-profit art organizations. To date, the Festival of Arts along with the Foundation cumulatively has awarded nearly $2.6 million in grants to the art community in Laguna Beach and over $3 million in scholarships.