Cleveland Foundation Scales Back Support for Regional Development Fund

The Cleveland Foundation has decided to significantly scale back its future contributions to the Fund for Our Economic Future, a regional development collaborative, and will redirect much of that support to six grantee organizations of the fund, the Cleveland Plain Dealer reports.

Created in 2004, the Fund for Our Economic Future has raised more $60 million from area foundations, universities, and corporations since its inception to support Advance Northeast Ohio, an economic development plan crafted after extensive research and input from Northeast Ohio residents. The plan has four main goals: expanding and attracting businesses to the area; developing local talent; boosting minority-owned companies; and promoting greater cross-sector collaboration. A key player in organizing and launching the fund, the Cleveland Foundation has contributed roughly $22 million to the effort since 2004.

Last fall, the foundation said it would pledge an additional $3 million to $4 million to the fund over the next three years — on the condition the money be earmarked for the fund's six main beneficiaries: NorTech, JumpStart, BioEnterprise, Team NEO, MAGNET, and Minority Business Accelerator 2.5+. In what the Plain Dealer subsequently described as a "pitched power struggle among prestigious foundations," leaders of the fund criticized the stipulation, arguing that it ignored the collaborative spirit of the regional development effort. Stung by the criticism, Cleveland Foundation officials decided to make only a three-year, $300,000 commitment to the fund and instead will award millions of dollars in grants directly to the six development organizations in question.

Although the move has surprised some civic leaders, Cleveland Foundation representatives point out that the foundation first raised concerns about the fund's direction in the fall of 2007. Those concerns include the fund's efforts to expand its regional footprint beyond the Greater Cleveland area, its decision to spend less on building businesses in the area, and its rising operating costs.

Though disappointed by the decision, officials at the fund hope to raise at least $15 million over the next three years — about half of what they raised over the last three years. And they are encouraged by the fact that more than 90 percent of fund members due to renew their membership have done so, resulting in some $7.7 million raised to date.

Indeed, while the in-fighting may be painful to watch for some, the fund's president, Brad Whitehead, remains upbeat. "We are seeing what it's like to move from an old model, fairly centralized decision making to one that is more distributed," said Whitehead. "It's fascinating to watch."

Tom Breckenridge. "Why the Cleveland Foundation Cut Its Contribution to the Fund for Our Economic Future." Cleveland Plain Dealer 01/31/2010.