Urban Experiment’s Next Phase

George Soros is challenging donors to pick up tab for project

“Pure exhilaration.” That was how Joseph T. Jones Jr. says he felt when George Soros offered $10-million

to continue an innovative experiment to help fight social ills in this city, which has one of the highest poverty and crime rates among this country’s major urban areas.

But Mr. Jones — a board member of the Baltimore affiliate of Mr. Soros’s foundation, the Open Society Institute — says his excitement ebbed when he realized that Mr. Soros’s gift was contingent on the group raising twice that amount from other donors.

“My second thought was, That’s a lot of money,” he says.

Like Mr. Jones, nonprofit leaders here are divided on Open Society’s future in this city after Mr. Soros announced that the $10-million matching gift, if the terms are met, would most likely be his last.

Open Society-Baltimore has spent $50-million since it began operating in 1998. Mr. Soros decided Baltimore would be a good place to test new approaches to solving urban problems. “There was a lively community of people with civic interests,” he says.

During its seven-year experiment, Open Society has been credited with linking poor people with jobs in high-growth industries, increasing drug-treatment opportunities for addicts, and helping create programs for troubled youths and ex-convicts. It has tried approaches that are controversial, including an effort that trains heroin addicts to help revive victims of drug overdose through mouth-to-mouth resuscitation and other means.

Risky Strategy

While Baltimore officials, foundation executives, and nonprofit leaders laud Open Society’s track record, some are skeptical that donors will support an organization that was founded by another wealthy donor who is now moving on to new issues.

What’s more, they fear that the key ingredient that has made Open Society Institute-Baltimore effective — its courage to explore innovative, if unusual, practices to solve social ills — will be jeopardized once more supporters bring their donations, and their opinions, to the table.

“How do you make the leap from a leadership position to one where you’re asking, You like what we do? Please support us?” asks Betsy F. Ringel, executive director of the Blaustein Philanthropic Group, in Baltimore. “It will be a real challenge.”

Mr. Soros’s insistence on matching funds has also raised a broader question for philanthropy: Is this a good way for wealthy donors to end major commitments to a city?

Many foundation observers praise Mr. Soros for offering the additional dollars, instead of just walking away.

But other experts in grant making criticize his decision, saying it shifts local charitable funds toward his priorities, not the city’s. Others contend that cash-strapped Baltimore, the site of another major philanthropic fund-raising effort that aims to garner $30-million, may not have enough donors who can provide the money needed to keep Open Society going. The Reason to Believe campaign, a fund-raising effort spearheaded by the Baltimore Community Foundation, is designed to improve living conditions for the city’s poorest families.

Mr. Soros defends his request for Baltimore to provide $20-million before he provides any more money, describing it as a “market test” for Open Society’s programs. “We are biased in favor of what we are doing,” he says. “It’s much more interesting to see whether other people buy into it.”

Mr. Soros says it will be difficult to persuade Baltimore donors to support his project. “Honestly, I don’t know. It’s not easy,” he says. “People like to originate things, they like to have sense of ownership. It’s much harder to get people to buy in.”

Yet by filling its board of directors with local residents, the group has tried to be a Baltimore program, not a George Soros program, he says. “It didn’t seek to build its own identity,” he said. “It was more concerned with doing the right things for Baltimore. That may help.”

Diana Morris, director of Open Society Institute-Baltimore, says her organization has already garnered $1.7-million in donations from foundations and individuals. She plans to raise $4-million per year for each of the next five years by appealing to small local foundations, large national grant makers, and wealthy people.

“There are a lot of small family foundations that have small staffs that could take advantage of our manpower,” Ms. Morris says, adding that such a marriage could be made when the missions and program interests of Open Society dovetailed with those of a smaller grant maker. “We’re hoping that national foundations will see that Baltimore is a good laboratory, as we have.”

Looking for Benefactors

Wealthy people with a willingness to give have traditionally been hard to find in Baltimore, but Ms. Morris says she is hopeful she can persuade more of them to donate to Open Society’s causes. She is tapping individuals who regularly give to the arts or education, as well as people who have moved from Baltimore but who remain concerned about the city.

Although Open Society’s approach in Baltimore is seen as unusual, the organization has succeeded when it has sought money from local grant makers, Ms. Morris says.

It provided $5-million to start the Baltimore Fund, a program designed to aid fledgling high-growth industries and find ways to link poor people with jobs in those industries, in July 2002. The Baltimore office of Open Society was able to raise $10-million from banks, 14 foundations, and several individuals to support that effort.

“It certainly gave me some practice at raising money,” says Ms. Morris. “It showed me that Open Society could extend its role in the Baltimore community. We could have called it ‘the OSI Fund,’ but we wanted everyone to feel that it was theirs. We’ve shown we can organize that kind of work.”

One national foundation has already agreed to support Open Society Institute-Baltimore’s extension plan (as have two individuals who do not want their names released to the public). The Annie E. Casey Foundation, in Baltimore, will spend at least $2-million to help low-wage workers and unemployed people get higher-paying jobs over the next five years, says Ralph R. Smith, senior vice president at Casey.

But some Baltimore foundation leaders say they are unlikely to support Mr. Soros’s efforts until several important questions are answered. “How much flexibility is there? How willing are Soros and his people to have other perspectives at the table?” asks Timothy D. Armbruster, president of the Morris Goldseker Foundation, of Baltimore.

Although Goldseker made a $500,000 donation to the Baltimore Fund, Mr. Armbruster says the foundation has not yet decided whether it will help match Mr. Soros’s contribution.

Robert C. Embry Jr., president of the Abell Foundation, says the grant maker’s board has a policy of not giving money to groups that then distribute it to other charities, such as United Ways.

“We’re not interested in giving people money so they can give other people money — that’s our job,” says Mr. Embry.

He echoed other foundation leaders in Baltimore who said they are swamped with grant requests but don’t have the money to support all of the worthy proposals that cross their desks.

“We get requests for 9 to 10 times the amount of money we give out each year,” says Shale D. Stiller, president of the Harry and Jeanette Weinberg Foundation, which awards $100-million to charities each year. Nevertheless, Weinberg will consider making some contributions to Open Society’s program to help prisoners adjust after they are released, as well as to its jobs programs, areas in which Weinberg already has experience, Mr. Stiller says.

Cuts Feared

If other donors do not step forward to support the Open Society Institute, some grantees say the loss of donations will hurt their programs.

You Are Never Alone, or Yana, a charity that provides social services to prostitutes in Baltimore, laid off three employees last year because Open Society stopped supporting the group. “It has been an incredible resource for us,” says Sid Ford, Yana’s executive director and founder. “We hope it will be around.”

But more important than the money, Ms. Ford says, is the Open Society’s leadership and its enthusiasm for helping prostitutes, drug addicts, former convicts, and other people that many donors ignore. “It goes out on a limb and funds programs that other foundations just don’t get,” she says.

Open Society’s ability to gather experts, grant makers, nonprofit leaders, and others together to come up with sometimes controversial solutions has also been praised — and would be missed if the foundation were to stop operating in Baltimore, says Hathaway C. Ferebee, executive director of the Safe and Sound Campaign, an organization that devises strategies for helping poor children.

“They put themselves on the line regarding outcomes,” says Ms. Ferebee, whose group received $6-million in Open Society grants five years ago to create a citywide after-school program. “They’re very accountable and base everything they do on sound research and in engaging as many aspects of the community as they can. They’re rare in the foundation world.”

For William A. Schambra, director of the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal, in Washington, the degree to which the board and Mr. Soros are willing to yield control to local contributors is crucial to whether his offer to match money raised in Baltimore is a wise approach.

Mr. Soros’s matching requirement “skews local funding toward his own priorities, at the precise moment he no longer has to live with the consequences,” says Mr. Schambra. “If a funder thinks he has a good idea, then he should fund it — period.”

Other foundation observers take a different view.

“He’s telling donors: If you like my philanthropic track record, let me manage your charitable efforts to improve society,” says Adam Meyerson, president of the Philanthropy Roundtable, an association of grant makers in Washington.

He added: “The market will tell us if Soros inspires as much confidence among philanthropic investors as he does among financial ones.”