Philanthropy in extremis

October 29, 2014

Those who doubt foundations’ real appetite for risk make a strong case. But then comes the Kresge Foundation and its efforts to help Detroit survive bankruptcy — a crisis that many people have considered near-hopeless.


Detroit has a long, frequently unhappy history with foundations trying to help solve its problems. Time and again, well-meaning plans for local improvements have unraveled as elements of Detroit’s political and civic establishment resisted what they perceived as paternalistic intrusions from elite do-gooders. One widely publicized episode of this kind was in 2003, when a philanthropist offered to donate $200 million — a substantial share of his personal wealth — to create 15 new charter schools. Despite backing from the former basketball star, entrepreneur, and later mayor, Dave Bing, Thompson ended up having to withdraw the offer amid a firestorm of opposition from teachers.


To be sure, some of Detroit’s wariness of philanthropy has eased in recent years, as donors have become better at working with city leaders and residents, and as desperate times have softened some of the skepticism. Still, it was close to astonishing to hear the president of the Kresge Foundation, Rip Rapson, the other day describing how his $3.5 billion foundation has played a leading role — so far without significant firestorms — in easing the city out of bankruptcy with a vision for a stronger, more resilient local government. (A video of his full presentation is here.)


In many cities, this wouldn’t be all that remarkable. Community foundations like those in Cleveland, Boston, and Miami-Dade County have played major roles in helping their cities through hard times. Several private foundations — MacArthur in Chicago, Pew in Philadelphia, Heinz in Pittsburgh, among many others — have done likewise. But Detroit’s painful history of race and class tensions, combined with its political emasculation under the bankruptcy regimen, has made it a much harder place for big institutions to win the trust of a beleaguered, mistrustful, and demoralized citizenry.


Yet here was the Kresge Foundation, often joined by out-of-town giants like the Ford, Charles Stewart Mott, and W.T. Grant Foundations, investing hundreds of millions of dollars in vast chunks of Detroit civic life, largely with the support — often vocal — of the city’s political and grassroots leaders. The foundations couldn’t (and wouldn’t) bail the city out of its financial troubles. But they could, and did, play a huge role in the fiscal “Grand Bargain” between the city’s state-appointed emergency manager and its pensioners, employees, and bondholders. That included putting up $380 million toward a public-private fund to save the precious Detroit Institute of Arts from the auction block. A long roster of other eight- and nine-figure funds, some including corporate as well as philanthropic capital, are underwriting improvements in transportation, safety, service delivery, health, and neighborhood development.  


Mr. Rapson acknowledges that he doesn’t know whether all of this will work. The great lingering question is whether Detroit’s historically fractious political culture can pull together long enough to repair what he calls the “fragile ecologies” of the city — including not only the literal, natural ecology, but the political, civic, educational, public-management, and grassroots ecosystems on which a fully functioning city depends. If that longer-term effort fails, the near-term fixes won’t last and ultimately won’t matter. Foundations can help with the “fragile ecologies” challenge, but the process will be much harder, slower, and more politically fraught than anything that has come before.


Kresge plans to stay in the game after the bankruptcy settlement is finalized, probably within the next week or two. That perseverance is a testament to the foundation’s exceptional tolerance for risk — and to its importance as an institutional lighthouse for Detroit’s long, unfinished journey out of rough waters.


[Photograph: Flickr user Army Medicine]



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Tony Proscio


Jan 30

Join Professor Joel Fleishman and the President & CEO of Fairfield County's Community Foundation, Juanita James - for the Foundation Impact Res