June 1 , 2010

Adding Up Detroit’s Support
Foundations give city billions of reasons to recover

By Kate Rogers

Detroit has become the convenient poster image of all that is ailing the U.S. economy, the nation’s inner cities and the idled American workforce. It’s the place where everything from home foreclosures to obesity to unemployment is playing out. 

Tim Thorland, executive director of Southwest Housing Solutions Corporation in Detroit, admitted the obvious: There is critical work to be done. “There have been serious deficiencies for many, many years within the context of intermediary relationships at the philanthropic level, and certainly at the city government level,” said Thorland. “But, I firmly believe in that level of honesty and admission to all of the good things we did in those silos over the years É we were also part of the problem.”

Foundations and other nonprofits are pouring hundreds of millions, and probably billions of dollars into trying to repair the city and surrounding southeastern Michigan. The word probably is used because nobody is keeping count nor is there any real compilation of results between organizations that are trying to save the city.

According to the Michigan Nonprofit Association in Lansing, Mich., approximately 60 community development organizations are doing work in the city. The Council of Michigan Foundations in Grand Haven, Mich., reports $107,724,884 in grants has been paid out for the metro-Detroit area during the past year.

From bettering schools, to eating right, to developing new businesses, nonprofits throughout Detroit and across the region are betting the city can come back, albeit a smaller version of its prior self.
“There is a real belief in this city,” Thorland said. “Detroit offers a unique opportunity to create a blueprint of how the urban context can change for the better. This is the paradigm for the new American city.”

Creating jobs in a down economy

The Community Foundation for Southeast Michigan (CFSEM) in Detroit has focused some of its more recent efforts on strengthening the east side neighborhoods along the riverfront, which will be one of the longest developed riverfronts in the country, according to CFSEM President Mariam C. Noland. Along with the Kresge Foundation in Troy, Mich., the CFSEM has put forth more than $17 million in grants on this GreenWays Initiative.

“It’s a huge asset to the city,” Noland said of the riverfront. “We want people to take pride in it, and it will be a huge economic development driver. For the region to thrive, the city must thrive. It’s not an either or, it’s a both.”

According to Sandra van Meek, director of programming and external affairs at the Detroit Riverfront Conservancy, more than 500 construction jobs were created for the east Riverfront building, which was, at presstime, 80 percent complete. Job projections for the west Riverfront project are not yet available.
Detroit will soon be hosting “River Days” with food and cultural activities, which hopefully will attract thousands of people and drive revenue, Noland said.

The initiative will also create 100 miles of greenways in the GreenWay Loop, which will connect more than 80 municipalities across southeast Michigan, and create safe places for Detroit residents to live and work.

The foundation is in the third year of its New Economy Initiative, which seeks to expand opportunity for all residents and communities in the region, and accelerate the transition of metro-Detroit into an innovation-based economy. Some 10 national and local foundations have together committed $100 million to the initiative over eight years, $23 million of which has already been spent, Noland said.

David Egner, president and CEO of the Hudson-Webber Foundation in Detroit, said the New Economy Initiative money has been concentrated on three areas: building a robust entrepreneurial ecosystem; promoting an educated and skilled workforce; and developing area assets to become economic drivers.

In May 2009, the initiative committed a three-year, $5-million grant to an accelerator program in mid-town Detroit called Tech Town, Egner said. Within 90 days, 2,000 people had signed up for training and today 730 people have graduated from the program.

The incubator is the largest operating accelerator in the world, Egner said, with more than 200 businesses on site. It is anticipated that 1,400 new businesses will be launched during the next three years throughout Southeast Michigan. Another $5 million has been approved to start a micro-loan fund in the area to help entrepreneurs get their businesses off the ground.

“Detroit looked like Silicon Valley 70 years ago,” he said. “People behaved in an innovative manner. We are a victim of 70 years of our own success; we began to take on an entitlement mentality and forgot how to be innovative,” said Egner.

A $9-million grant was recently approved for the second focus area, to create a skilled and educated workforce, Egner said. The grant will form collaborations between employers, training providers, community colleges and workforce boards to prime the coming generation of workers.

“This is a very interesting issue that we haven’t had in years,” he said. “We are preparing people for what? There are no jobs. We have to first tap into marketplaces where there is growth.”

The New Economy Initiative has also enlisted, via a $700,000 grant, Michigan State University and the Detroit Regional Chamber to study the Detroit border and transit distribution and evaluate company and job creation. Preliminary results estimated 180,000 jobs could be created, Egner said.

A $150,000 grant was made to the Detroit Economic Growth Association to study alternate energy space, green energy jobs and water. The New Economy Initiative is benchmarking its results against the Fund For Economic Future in Northeast Ohio, Egner said. No grant in the initiative is older than 14 months, so it is too soon to say what is and isn’t working, however the Ohio model is being consulted.

“Its not an apples-to-apples comparison, but we are really trying to learn from each other,” Egner said. “We are stealing liberally from things that have worked there.”

The Skillman Foundation in Detroit has made a 10-year, $100 million commitment to rebuild neighborhoods and schools in six communities throughout the city. Skillman President & CEO Carol Goss said the charity kicked off its Good Neighborhoods program in 2004 with an intense year-long planning process in each of its neighborhoods -- Brightmoor, Chadsey Condon, Cody/Rouge, Northend, Osborn, and Vernor -- which included community meetings of concerned residents, youth and neighborhood leaders. At the meetings, the residents spoke about the kind of environment they envisioned for their community and its children.

After four years of grant-making, planning and preparing, each neighborhood elected a governing council to execute the changes and programs community members proposed. The boards combined have more than 150 members, and youth are full voting members.

“The neighborhoods all have lots of kids living in them,” Goss said. “We want to transform them to make it the best possible place for children. In the past five years, urban communities in this country have really suffered, and I would say that this rebuilding of Detroit will provide a model to other big cities as to how a community can turn itself around.”

The program established a summer youth employment pilot program in 2008, which began with 300 kids in the six communities. This summer, a public-private partnership, the Detroit Summer Youth Employment Consortium, which was created through federal stimulus dollars, has set a goal of 10,000 jobs for Detroit’s youth, based on the initial pilot program.

The program has also committed to leveraging $5 in public, philanthropic and corporate support for every grant dollar it spends, and to date has leveraged nearly $230 million, Goss said.

Brandeis University in Waltham, Mass., is conducting a long-term study of the program’s progress, and a comprehensive report will be available in 2011. The evaluation’s framework will gauge success in developing community capacity; creating a strong neighborhood-based system of supports and opportunities for young people and their families; and ensuring there are high quality schools for all children.

The Skillman Foundation also has contributed $2 million over five years to the New Economy Initiative.

Education keys innovation

The W.K. Kellogg Foundation, in Battle Creek, Mich., is trying to tackle the Detroit school system’s issues, which includes among the worst graduation rates of any big city in the U.S., according to a 2008 America’s Promise Alliance survey of the country’s largest cities. Kellogg Foundation President & CEO Sterling K. Speirn said the foundation has invested $7.5 million in the development of new middle and high schools throughout the city, and will soon begin focusing on children from birth to age 8. The effort is called the Michigan High School Accelerator Project with Michigan Future Schools, and focuses on providing a high quality education to primarily low-income and minority students in Detroit and its inner ring suburbs.

“We believe education is the best way to improve one generation over another,” Speirn said. “It’s really hard to build a strong foundation. Every time you close a failed school, you have to open a new one in its place.”

This past March, the Detroit Public School District announced it would close 44 schools, all struggling with falling enrollment and excess seats, under a $1 billion plan to cut operating and maintenance costs.

The plan includes remodeling, renovations and building new schools, but has been put on hold temporarily, due to a pending lawsuit against Robert Bobb, the city’s emergency financial planner for Detroit Public Schools.

The Detroit Board of Education claims Bobb overstepped his authority by making academic decisions without first consulting the board. Calls to Detroit Public Schools’ representatives for an interview were not returned.

The Kresge Foundation is part of Kellogg’s civic coalition for Excellent Schools, which recently released its first citywide education plan. The plan aggressively seeks to set the necessary conditions for opening 70 new, high-quality schools by 2020. Kresge granted $400,000 to support the work of the coalition and $1.5 million to launch a new high school accelerator, according to Wendy Jackson, senior program officer at Kresge.

Quality food for students is a primary focus area for the Kellogg Foundation, which in November 2009 pledged $32 million over three years to improve school systems, increase access to good food and physical activity environments in its Food in Community Group initiative.

Speirn said the organization has also pledged more than $75 million on a round of grants related to racial healing. “It’s a particular commitment to looking at the causes of structural racism to break free of that,” he said. “It takes important focus and emphasis in looking at health, educational and income disparities.”

The program will take place over the course of five years, he said. The Kellogg foundation has also contributed $25 million to the Community Foundation for Southeast Michigan’s New Economy Initiative.

A place to live

At Southwest Housing Solutions Corporation, Thorland said $72 million of affordable housing and commercial real estate has been developed since 1998, with an additional $33 million in the works. Although its efforts have remained persistent, initiatives have been reworked to better suit the city’s dire needs. Its housing opportunities center was originally focused on educating and creating first-time homeowners, however, since 2007 has shifted its efforts to foreclosure prevention and mitigation.

Thorland said seven full-time counselors work with Detroit residents one-on-one to help them negotiate and dig out of foreclosure. Over the past several years the center has seen between 1,500 and 2,000 people. Since January 2008, the organization has counseled 3,262 households facing foreclosure, helping 1,137 realize a resolution to their problem and 738 maintain occupancy in their homes. The service is free to the public, and is estimated at approximately $500 per client, Thorland said.

At the end of March 2010, there were 47,387 foreclosed homes in the Detroit metro area, according to Irvine, Calif.-based RealtyTrac. There were 34,300 foreclosed homes in that same area in October 2007.

“The program is custom to their situation,” he said. “It’s designed around getting an outcome. It’s intensive, but it works.”

The organization has also created 40,000 square feet of office and retail space in Detroit during the past decade, Thorland said, to offer an opportunity for the neighborhood entrepreneur to take advantage of low rent costs. Bringing in clients like hair salons, insurance agencies and the Detroit Public Library makes the neighborhood a walkable community. Residents no longer have to rely on a difficult public transportation system, he said, and private investments are more likely to occur.

“Folks have the ability to do their daily business without getting in a vehicle,” Thorland said. “This is predominantly a single-family city, and urban community folks have limited resources. The effectiveness just isn’t there.”

To attempt to solve Detroit’s public transportation issues, the Kresge Foundation, along with local business leaders and city government are working to establish the region’s first light rail line, M-1 Rail, to be complete in 2012. Kresge is the largest donor to the project, granting $35 million.

Attracting and retaining talented youth is at the core of the Hudson-Webber Foundation’s 15x15 Strategy, which aims to bring 15,000 young, talented households to Greater Downtown Detroit by 2015, to spark entrepreneurship and opportunity. Katy Locker, program director at the foundation, said two-thirds of the charity’s giving went to this cause last year. The Hudson-Webber Foundation invests solely in Detroit, Locker said, and the of $6 million done in grant making last year, 90 percent or more was used for projects in the city.

The foundation’s trustees believe focusing on the core of the city helps to re-frame the grant making it does in its five mission areas -- physical revitalization, economic development, arts, safe community and the Detroit Medical Center.

N. Charles Anderson, president & CEO of the Detroit Urban League, said the organization has had to stretch its resources during the past year. Funding from United Way was cut from $775,000 yearly to $400,000, Anderson said, and fundraising has decreased by one-third during the past year, to $200,000. The yearly funding from United Way is allotted to serve more than 900 people, however, Anderson said the league has had to help more than 3,500 people -- more than three times the number of people for which the money was meant.

“Our ability to generate dollars is tied to a stronger economy,” he said. “The resources to support us are not available, and we are a nonprofit, so we don’t want to turn anyone away. We have had to lessen our staff and create some programs that are based on income eligibility.”

Darchele Strickland Love, now former executive assistant to the mayor’s Office of Philanthropic Affairs and Special Projects,  said the city’s main issue is its dwindling population. Detroit can accommodate a population twice its current size. In 2000, the city’s population was 951,270 and fell 8.4 percent in 2006 to 871,121, according to census results. Strickland Love said while 2010 census results are pending, the current population is estimated at approximately 800,000. When interviewed for this story, Strickland Love, who was dismissed from her job in April, was still employed with the city.

“When we were a million-plus strong, we didn’t have these issues,” she said. “We have to now redefine what the city is, rethink what government services are offered, and how we deliver these services. And, we have to do it in a way that is high quality, so that people want to stay here. We have to attract people here.”

Bringing new business to the region and filling vacant land is a top priority for the city, Strickland Love said. Detroit’s future will not be in big business, but rather in innovative ventures.

“We have to raise our children to understand that the job they have in the future might be the job they create for themselves,” she said. “It’s got to come from great ideas. In this particular case, government’s role is to foster an environment that is business friendly, I don’t know that it’s our role to fund it. When new companies think about locating here, the city’s role is to come up with a way to help them. We have to do it, we don’t have a choice.”

The city could not provide the exact amount of charitable dollars it has received in support throughout the past year.

Leveraging the charity’s dollars has proven to be a challenge at the Skillman Foundation, Goss said, adding that its lean staff is often stretched in trying to engage fully with all of its focus neighborhoods.
“We have had to learn to work differently,” she said. “There are tremendous challenges. We don’t have enough resources all by ourselves to support all the things that need to happen, so we need to leverage our dollars and bring additional funds to the neighborhoods.”

Thus far, the foundation has spent between $4 million and $11 million in each of the neighborhoods and is leveraging outside dollars from local and national foundations at a ratio of six to one.
Speirn said the Kellogg Foundation struggles leveraging its dollars as well, and is constantly seeking new government partners as well as public dollars.

“We need to find the points of highest leverage so we can be catalytic,” he said. “Government partners and stronger public investments in the future of vulnerable kids and families is what it’s going to take. The challenge is reviving the economy so we’ve got more revenue flowing into public investment.”
Michigan is one of the foundation’s three priority states and will receive 50 to 60 percent of its dollars, Speirn said.

To continue to ensure other nonprofits can continue to work in Detroit, the Community Foundation for Southeast Michigan has been working for the past 18 years to raise permanent endowments for itself and 167 other charities in the area. Keeping money in the region is of high priority to the foundation, which has helped organizations raise more than $410 million in endowment funds through challenge programs, providing technical assistance, training and support.

“We need to help the rest of the country to realize the strength of Detroit and why they should invest in Detroit,” Noland said. “There is a real cash crisis for our nonprofit sector, and we have to help organizations look at new business models. People here are worried about their future and we are helping them market that.”

Charities are pressured to turn out results, Locker said, because the country is watching very closely all of the work being done in the city.

“We want to find a way to demonstrate there is still opportunity to rebuild it as a new city, but respect those who are here, and realize its not going to be the same Detroit as it was,” Locker said. “It’s a lesson for other communities. The world is watching, and we do feel that responsibility.”

So many promises have been made to Detroit residents, she said of new plans and strategies, that actually showing results is always top of mind.

“Detroit is fatigued right now by promises and plans that will dig us out,” Locker said. “As a grant-maker, we have to think about long-term strategies, but make sure they see short-term impact. I have to ensure the community that we make a difference physically on the ground in the day-to-day world of Detroit.”

Although Detroit may now appear to be the national symbol of America’s economic woes, Speirn said it can become a example of the turnaround opportunities available in the U.S., once it is rebuilt.

“We are a comeback country,” he said. “We’ve been through hard times before. Michigan was probably the center of the economic universe 100 years ago, and we want to reclaim some of those roots from our past.”

Likewise, Goss said Detroit’s transformation will have huge implications for the rest of America.

“If Detroit can turn itself around, restore the quality of living, improve and change its educational system, and make neighborhoods safe for children and families, then it can happen anywhere,” she said. “It really can.”