Foundations Find Themselves Filling Gaps for Strapped Cities

Foundations Find Themselves Filling Gaps for Strapped Cities

While it may be too early to call it a trend, a growing number of private foundations are stepping up to help underwrite the cost of infrastructure, public safety services, and social safety nets in cities that have seen a shrinking of their tax bases and cuts in state assistance, Bloomberg Business reports.

In 2014, as part of the City of Detroit's plan to exit bankruptcy, for example, twelve foundations pledged to contribute $366 million over twenty years to shore up the city's employee pension plan. Elsewhere, cities like Madison, Alabama, which received $320,000 from the Alpha Foundation, Inc., and Flint, Michigan, home of the Charles Stewart Mott Foundation, are relying on foundation support funds to purchase patrol cars and police equipment. In Flint, the Mott Foundation also stepped in to cover a third of the $12 million cost of reconnecting the city to the Great Lakes Water Authority as a stopgap measure after the city's water system was found to be contaminated with lead.

"When we saw [lead] levels in children exceeded safety standards, we just said we have to come to the table," said the foundation's president, Ridgway White. "Some of the traditional role that philanthropy is trying to play has been to stay out of government. But when you look at some hard-hit communities, it's a challenge to stay out of it."

Indeed, since 2010, thirty states have cut their funding to local governments at least once, the National Association of State Budget Officers finds. "Government gridlock has left many communities looking for solutions to some of the big challenges they face," said Council on Foundations president and CEO Vikki Spruill. "The limitations of political leaders to address the pressing needs of communities have increased pressure on foundations to assume roles that government has historically taken."

Responding to that pressure is not without risks, Bloomberg Business reports. The philanthropic investments in Flint and Detroit, for example, could raise expectations of imminent foundation support for other financially strapped municipalities. There's also a risk that cities receiving foundation assistance will become dependent on that support instead of the taxpayers they are supposed to serve. And, because municipalities can't assume foundations will continue to provide support indefinitely, that creates a "huge problem of sustainability," said Council of Michigan Foundations president and CEO Rob Collier.

Or, as Spruill says, "America's foundations and charities can complement the work of government, not replace it."

Tim Jones. "Philanthropies Rise as Source of Revenue for Pressed U.S. Cities." Bloomberg Business 11/13/2015.