The city of Flint, Mich., faces a $12 million cost to replace its lead-contaminated water system, and the Charles Stewart Mott Foundation will pay a third of the price.
“When we saw blood levels in children exceeded safety standards, we just said we have to come to the table,” said Ridgway White, president of the foundation, which has for decades supported educational and community development programs in the impoverished birthplace city of General Motors Co.
The aid from the 89-year-old Flint-based philanthropy demonstrates the changing role of nonprofit foundations. Where once they might have spent on a symphony hall or museum, they now pick up the tab for health, safety and infrastructure in U.S. cities that have seen their tax bases erode and state assistance dwindle.
As part of Detroit’s exit from bankruptcy a year ago, foundations pledged to contribute about $360 million over 20 years to shore up public-employee pensions. A growing number of cities are relying on private money for the purchase of police surveillance cameras and other equipment. Madison, Ala., for instance, received $320,000 from the Huntsville-based Alpha Foundation Inc. for eight patrol cars.
New way of business
“It’s the new way of doing business,” said Mayor Zachary Vruwink of Wisconsin Rapids, Wis., where the Incourage Community Foundation bought an abandoned downtown newspaper building with plans to open a microbrewery, a cafe and other shops.
“Government-funded programs will go only so far, and philanthropic support is required,” said Vruwink.
While there’s nothing new about charitable giving to public institutions, such as Facebook founder Mark Zuckerberg’s $100 million gift in 2010 to public schools in Newark, N.J., more recent grants have moved nonprofit foundations into spending that, in more prosperous times, would have been handled by taxpayers.
“Government gridlock has left many communities looking for solutions to some of the big challenges they face,” said Vikki Spruill of the Council on Foundations. “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.”
Municipalities have shown modest improvement in their fiscal conditions, according to a September report from the National League of Cities. Still, the gains have “not been substantial enough to restore revenue declines” from the recession that began in 2007.
Cities are operating at about 90 percent of 2006 revenue levels, the report said. Since 2010, 30 states have reduced aid to local governments.
Dependence on strangers
The risk for cities receiving foundation assistance is that they become reliant on the kindness of strangers rather than the taxpayers they serve. Rob Collier, president of the Council of Michigan Foundations, said there is “a huge problem of sustainability” because municipalities can’t assume support will continue. “Philanthropy cannot replace government,” he said.
In important ways, it already has. In Flint, the Mott Foundation has also provided dollars to hire police officers.
“We’re starting to see more foundations step up and provide government services,” said Jim Ananich, a Democratic state senator who represents Flint. “It’s a trend that’s going, in my opinion, in the wrong direction. It’s supplanting large amounts of what government used to do.”