By Ruthan Brodsky
January/February 2009
Michigan’s charitable foundations were well aware that the state was in the economic doldrums long before it was official that the rest of the country was also in a recession. In fact, several foundations have focused funds for programs that helped institutions, local governments and nonprofits manage some of those economic issues such as retraining the unemployed. Several have also established collaborative efforts with other foundations supporting specific programs such as preventing home foreclosures.
Today, the big question for Michigan communities and charitable organizations is whether these same foundations will show a sharp decline in their future funding.
“Michigan’s foundations are going to face many challenges to maintain their programs,” says Robert Collier, president of the Council of Michigan Foundations in Grand Haven, Mich. “The foundations are struggling with their endowments and it’s doubtful there will be many new initiatives next year. On top of all this, the state is also a victim of the Bernard Madoff scandal. The JEHT Foundation, a New York organization that was wiped out by the Madoff firm, has funded several programs since 2005 for the Michigan Department of Corrections. It’s unlikely that the Department of Corrections, which just cut its budget by $76 million, can make up for the $3 million annual loss.”
Even with these figures, next year’s giving by most institutional foundations should remain somewhat close to this year’s level, the result of foundations typically setting their annual payout rate using a three or four-year rolling average. On that basis, next year’s budgets will most likely reflect two years (2006 and 2007) of solid asset growth. On the other hand, since many foundations have recently experienced declines in their assets, giving may drop in 2010.
Skillman Foundation Focuses on Children, Homes
The Good Schools and Good Neighborhoods programs are a primary focus of The Skillman Foundation’s mission to improve the lives of children living in metropolitan Detroit.
“The bulk of the grant dollars focuses on six neighborhoods in southwest Detroit that have the highest concentration of children in the city,” says Senior Program Officer Ed Egnatios.
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More than 65,000 children live in those six communities, which are about 30 percent of Detroit’s child population. Half of these children live in poverty. Skillman’s goal is to create a safe and healthy neighborhood for them and reduce the level of poverty. The foundation is in year three of the 10-year project. As part of its gift to the Southwest Housing Solution, for example, Skillman has trained several housing counselors and placed them in the six neighborhoods to help homeowners with credit and foreclosure problems.
“The level of engagement and collaborative efforts we have with other foundations helps us focus on some of Detroit’s major issues at the neighborhood level,” reports Egnatios. “For instance, in the planning phase we worked with residents in three of our targeted neighborhoods and with the Detroit Neighborhood Forum on community-centered activities to help plan strategies for neighborhoods.”
He continued, “Now we are thinking about strategies to attract other investments, using our funds to leverage others. It’s our hope that by concentrating our efforts on these specific neighborhoods, we will demonstrate what can be done to transform these neighborhoods and make life better for children.”
Another example of a collaborative effort is that Skillman and several other foundations, including the Kresge Foundation and Community Foundation for Southeast Michigan, helped fund the creation of the Detroit Office of Foreclosure Intervention and Response as a guard against the escalating credit crunch on real estate properties and loans in Detroit.
“Detroit has one of the highest home foreclosure rates in the country,” says Steve Bancroft, executive director, Detroit Office of Foreclosure Intervention and Response. “The goal of our group is to keep people from losing their homes by dealing aggressively with the crisis and keeping neighborhoods stable. We don’t provide direct services to homeowners but we work with the city of Detroit, counseling agencies, Wayne County and local banks and lending institutions, functioning as a resource for accurate information and coordinator for implementing strategies.”
Community Foundation for Southeast Michigan Joins Others to Boost Economy
Two years ago the Community Foundation for Southeast Michigan and nine other national, local and regional foundations launched The New Economy Initiative (NEI) as part of a major regional project to strengthen the economy.
“The foundations committed $100 million for an eight-year program to help Michigan position itself in the new economy,” explains Mariam Noland, Community Foundation president. “We are one of the largest and fastest growing community foundations in the country and we were determined to bring this regional area into the new economy. Grants were awarded for fostering innovation and entrepreneurship in new and existing industries and by preparing the region’s workforce to succeed in an information-based economy.”
John Austin, executive director of the NEI for Southeast Michigan, says NEI seeks to develop talent, innovation and culture.
“Our goal is to attract and retrain skilled workers in Michigan by encouraging innovation and entrepreneurship. One of our strategies for positioning Michigan as a leader in this weak economy is to diversify our efforts so that investments in creative growth such as the arts, music and film are achieved together with business growth and support in new technologies.”
Grand Rapids Community Foundation Focuses on Economic Development
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On a smaller scale but equally important, the Grand Rapids Community Foundation targets Kent County for its support. This October, the foundation approved a grant of $500,000 to be paid over two years in support of the Innovation Works program of The Right Place, Inc., a regional nonprofit economic development organization which promotes economic growth through employment and technology in the greater Grand Rapids area.
Economic development is among the six funding priorities of the Community Foundation.
The W.K. Kellogg Foundation Revives Battle Creek
The Kellogg Foundation’s contribution to the NEI will be $25 million over a five-year period. This November, the foundation approved up to $35 million to support a strategy for redeveloping downtown Battle Creek, the foundation’s hometown.
“It’s a natural fit for us,” said Sterling Speirn, the foundation’s president and CEO. “By building on both our legacy and existing community assets, this project will help position Battle Creek as a world leader in food science research and place innovation at the center of the community’s ongoing downtown revitalization efforts.”
Kresge Foundation Works to Strengthen City
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Collaborating with other foundations, The Detroit Program is one of the Kresge Foundation’s major efforts to help the city strengthen its neighborhoods, expand economic and social opportunity, and develop safe places for children and families. Kresge is also targeting the revitalization of downtown Detroit including the development of the Woodward Corridor.
“We have partnered with the Knight Foundation and United Way in Detroit and the Southeast Michigan Fund for Innovative Workforce Solutions,” says Wendy Jackson, program officer on the Detroit team. “This fund trains the unemployed for careers in the health sector such as nursing assistants and technicians.”
The Kresge Foundation also works with other foundations at the Detroit Office of Foreclosure Intervention and Response, sharing the goal of reducing poverty in Michigan. The Detroit Program is a key part of the Kresge Foundation’s expansion to support individual artists, as well as arts and cultural organizations.
Michigan is Sole Focus of Herbert H. and Grace Dow Foundation
“Since its founding in 1936, a major portion of the Herbert H. and Grace Dow Foundation’s grant making portfolio, about $186 million, has been committed to education projects such as bringing schools up to global standards for math and science and funding new science labs,” explains Executive Director Jenee Velasquez. “We are also supporting new urban learning programs at state colleges and universities. Twenty-five percent or $110 million of this Foundation’s historical giving supported civic and community efforts particularly emphasizing low income housing issues and small business development.”
The Dow Foundation, whose charter limits its efforts to the state of Michigan, has made a contribution to the state’s economic future by investing some 5 percent of its total assets in a variety of Michigan-based venture capital companies, including those by North Coast Technology Investors LLC, which supports early-stage technology in Michigan.
Foundations Have a Role to Play
At the recent 2008 Voices for Action Poverty Summit, held at Cobo Hall in November and attended by representatives from government, education, civic groups, corporations, foundations, religious organizations and community activists, participants repeatedly stated that the three keys to reduce poverty in Michigan and stimulate economic opportunities are to provide residents with a better educational system, more employment opportunities and safe communities.
Participants also agreed that Michigan’s economic problems present enormous challenges, but can be tackled when interest groups, communities, agencies and funding sources formulate common goals and work together to implement programs.
Michigan foundations are already playing an integral role in this effort. Their continued participation is likely to have an even greater impact as their focus to build a viable state economy results in even more collaboration from business and private resources.
