Community Foundation Takes Heat for Slashing Support of Regional Collaborative Fund

The Cleveland Foundation appears to think the best days are past at the Fund for Our Economic Future, an organization that advocates a regional approach to economic development.

The foundation gave the fund $22-million during its first six years, but in December the Cleveland Foundation cut its annual support to the group by more than 95 percent, to just $100,000 per year. The decision has prompted an unusual war of words among the dozens of regional foundations that support the group.

Ronald B. Richard, the foundation’s president, says it is simply cutting out a middleman, and that the foundation will now directly support a handful of business-development organizations that have always received the majority of the money that passes through the fund. Foundation officials say they decided to make the much-smaller grant—rather than cutting off all support—so that they could continue to have a voice in the fund.

But leaders of Fund for Our Economic Future, which has 69 voting members, say the foundation is giving up on the collaborative approach to decision making that has been the hallmark of the fund since its inception.

“This is very difficult work,” says David Abbott, executive director of the George Gund Foundation, and the chairman of the Fund for Our Economic Future. “You get some elbows, there’s a rough-and-tumble quality to it. That’s part of the value—we in the foundation world don’t get enough of that.”

The Gund Foundation announced a three-year, $4-million grant to the fund in November, making it the fund’s biggest supporter.

One Member, One Vote

The Cleveland Foundation started the fund in 2004 and has put far more money into it than any other grant maker. The foundation willingly embraced a philosophy of “one member, one vote” early on, as a way to encourage foundations in smaller cities and towns in the northeastern Ohio region to join the fund.

Voting members must give the fund at least $100,000 over a three-year period, and in return they have just as much say in its operations as the Cleveland Foundation. The fund currently has members who represent a 16-county area, which includes cities like Akron, Canton, and Youngstown.

Mr. Richard rejects the charge that the foundation is unwilling to collaborate. He says the reduced grant to the Fund for Our Economic Future was simply a business decision. The foundation believes the most-important work is being done by groups designed to attract new businesses to the region, like BioEnterprise, Jumpstart, and Team Neo, which are supported by the fund. On the same day the Cleveland Foundation announced its reduced support for the fund, the foundation gave Team NEO $1-million to court international businesses.

Mr. Richard also disagrees with the fund’s decision to start EfficientGovNow, a program within the fund that provides money to spur collaboration among local governments. Some of those projects, he notes, are in mostly white areas far from Cleveland.

At a time when the foundation’s $1.8-million endowment remains about 15 percent below its 2007 high, the foundation is keenly focused on making every grant count, Mr. Richard says.

“We can’t spend money in Wayne County to merge fire departments, when eight blocks from this office are poor black kids who cannot get to school without worrying about being shot,” Mr. Richard says.

Officials at the Fund for Our Economic Future point out that the vast majority of the coalition’s money is spent in Cleveland. The fund also works with the so-called business-attraction organizations it supports to “rebuild a system of economic competitiveness” in the region, says Brad Whitehead, the fund’s president. “We’re much more than a pass-through organization,” he says.

The fund’s work was featured in The Chronicle in May 2009, and its approach has been studied by charities and grant makers in other struggling regions, including northern Indiana and southeast Michigan.

Although the fund expects its budget for the next three years to drop nearly in half—from $30-million to about $16-million—most supporters are expected to stick with it.

“The fund isn’t going to fall apart,” says Robert W. Briggs, president of the GAR Foundation, in Akron, Ohio, which has given the fund $3.2-million over the past six years. “Virtually everybody else is now even more determined to stay in.”