Former employee Frances Louise Stewart, 52, of San Carlos, was taken into custody at a friend's residence in Redwood City, said police spokesperson Steve McCoy. There had been a warrant out for her arrest since Dec. 24.
She was booked into the Santa Clara County main jail in San Jose.
Mr. McCoy said Ms. Stewart is the sole focus of the investigation and she is cooperating with authorities. He would not release further details.
On Dec. 28, the foundation announced that it had fired an employee on suspicion of theft.
"Our finance department noticed a discrepancy, and they began trying to figure out what was going on," said Rebecca Salner, vice president of marketing and communications for the nonprofit, located at 2440 West El Camino Real in Mountain View.
An internal investigation was launched, and on Dec. 9 the case was turned over to the Mountain View Police Department.
Ms. Stewart worked in the foundation's human resources department, Ms. Salner said.
"The theft was identified by our finance department as a result of internal controls and we intend to pursue every possible remedy to ensure that restitution is made to the community foundation," said CEO and President Emmett D. Carson in an e-mail.
"The incident remains under investigation by external authorities and the community foundation is engaging a forensic accountant to provide further assistance as needed," said a statement on the organization's Web site.
The statement emphasized that the money taken was from "flexible spending accounts" that are used for employee health care and dependent care expenses. The monies were not budgeted for any philanthropic grants or programs, the statement said.
Any money that is not recovered will be covered by insurance, the statement said.
The Silicon Valley Community Foundation oversees donations to numerous local nonprofit organizations, and in 2008 awarded $264 million in grants.