A jaw-dropping $200 million anti-poverty experiment launched in about a dozen communities a decade ago was called a bold innovation by some experts. Others smelled a disaster.

The idea of the Northwest Area Foundation was to tackle a pressing social issue, pour some significant cash into it for 10 years, and explore new -- often untested -- ideas to carry out the mission.

A new report says the trail-blazing venture, watched by philanthropy leaders around the country, "failed to recognize the flaws in its theory.''

The experiment suffered from lack of clear goals, evaluation, and a "learn-as-you-go'' approach to philanthropy, the report said.

"What seemed excellent in theory became thorny in practice,'' acknowledged Foundation President Kevin Walker.

Walker stressed that the experiment sparked some terrific programs in communities that continue today. Plus, because the foundation went public with its evaluation, it might also yield lessons for other philanthropies across the nation.

"We [foundations] are very comfortable trumpeting best practices, but we're not as forthcoming talking about what we found challenging and difficult,'' he said.

Flip back the calender a dozen years. Foundations, which give away more than $1 billion a year in Minnesota, were being criticized. They moved slowly. Their grants were too small to really fix problems. Funding dried up too quickly.

Enter the Northwest Area Foundation of St. Paul. It decided to devote a monstrous 10 years' worth of grantmaking to a single social cause. Heads turned. It also directed its staff members, who typically fund and evaluate projects from their offices in St. Paul, to work directly with communities as "equal partners'' in yet-to-be designed projects.

The foundation eventually selected 10 communities in eight states, including several Indian reservations, to test their strategy. North Minneapolis was one of them. About $150 million was set aside for these communities, plus another $50 million for a rural leadership development program and grants to replicate successful poverty-fighting projects.

Time to get off ground

A look back at north Minneapolis' experience, however, points to the central premise of the report -- namely, that turning a vision into reality was more difficult than expected.

Macey Wheeler, a longtime North Side resident, remembers the early days in north Minneapolis. People were excited that their community could see some real investments, she said. The foundation sponsored "listening sessions'' to hear directly from folks about their priorities. A strategic plan was hammered out to "reduce poverty and create wealth through community investment, resident engagement and business support."

But it wasn't until 2004, several years after the listening sessions started, that the foundation had an organization in place to oversee its efforts and an executive director to run it. Such periods of drift were common in many communities, said Jon Pratt, executive director of the Minnesota Council of Nonprofits.

"A whole lot of nothing happened for a long time,'' Pratt said. "I would get calls from people [at nonprofits] asking, 'What's going on?'''

But the foundation's goal was to blaze new trails and encourage collaboration, said Wheeler.

"We felt that it was new ground and it was learning as we went,'' said Wheeler, now vice president of Northway Community Trust, the organization created by the foundation to coordinate its Minneapolis work. "But sometimes it was a bit much.''

Or as the report put it: "Understanding where you are going, and why, is critical to ensuring all feet are marching in the right direction.''

To complicate matters, when Northway Community Trust was finally created, residents thought it was flush with cash, leading to some unrealistic expectations, said Wesley Walker, its executive director, who was hired in 2004 from Chicago.

Having a new organization leading the charge, with a new executive director, also posed complications, he said. In recent years, the foundation has decided to work with "proven and promising organizations'' as opposed to creating its own, the report said. It beefed up its project evaluations so it can clearly learn from experience. Staffers have returned to their roles as traditional grantmakers. And it has increased "strategic clarity,'' meaning it created clear goals for projects, the report said.

Successes

That's not to say the grand experiment was a bust, said foundation and Northway leaders. On the North Side, for example, it spurred the creation of the Twin Cities Center for Arts and Technology, the Northside Economic Opportunity Network (NEON), and a new business incubator for chefs, caterers and other food industries called Kindred Kitchen.

The North Side Achievement Zone, a collaborative of 60 organizations designed to the educational achievement gap of north Minneapolis students, also received about $500,000 in seed money from Northway to launch the organization. "We wouldn't be where we are without the resources from them,'' said Michelle Martin, chief operating officer of the achievement zone.

Foundation leaders point to other highlights, such as the Rural Learning Center in Miner County, S.D., where foundation dollars leveraged more than $20 million in outside investments to expand industry, housing and community improvements.

They also say they provided leadership training to more than 100,000 people in 283 communities. There are many other successes, said Kevin Walker, and a future study will examine what the programs accomplished, they said.

Bill King, president of the Minnesota Council of Foundations, said he still supports the foundation's attempt to break out of the box.

"I was supportive and still am. But clearly there were things that didn't work," he said.

Pratt has long been more skeptical, stating, "It started with high ideals and ended up largely a disaster.''

Kevin Walker, who did not work at the foundation when the project was launched, said he supports the project's goals. Finding new ways to combat poverty is critical, he said. About one in 10 Minnesotans is considered poor.

"I do think foundations ought to commit to the long haul to things they are committed to,'' said Walker.

"But I think the way the foundation did it was too inflexible. ... It tied up a lot of money in long-term relationships.''

Jean Hopfensperger • 612-673-4511