Last week I wrote about a jointly funded initiative of some of the country’s largest foundations to help the Detroit overcome its bankruptcy troubles. The Miami-based Knight Foundation, the Community Foundation for Southeast Michigan, the Kresge Foundation, the Ford Foundation, and Kellogg Foundation have now pooled over $370 million in grant funding to the city. The collaborative effort generated national headlines because the grant purposes thrust the participating foundations deep into a no-foundation-land of government-funded services and programs. Foundations want to avoid philanthropy as the default when governments cease to fund community services; and they have little appetite for wading neck-deep into political controversy. The combined-grant to Detroit is unusual because it does both: Its purpose is to ward off creditors lined up to raid the retirement nest egg of public pensioners and force the sale of the city’s art treasures in the aftermath of the city’s bankruptcy. The risk of unintended consequences for foundations is high. Many American cities face financial difficulties every bit as challenging as those of Detroit. The proliferation of philanthropy bailouts is a foundation’s worst nightmare.
How the Detroit grant came to be is controversial, and its downsides may be greater to foundations than initially supposed. An article by The Chronicle of Philanthropy drops the other shoe: A problem bigger than the foundation’s “give” to Detroit may be its “take” —the terms and conditions demanded by foundations as part of the deal. The grant agreement may be more unusual than the gift’s purposes. The foundations pledge to write no checks until a long list of private and public institutions meet certain conditions−conditions negotiated behind closed doors that remain confidential. According to The Chronicle, “This crosses a line between merely seeking and blatantly demanding responses from potential grantees, including public agencies that should be answerable only to the voters. Such philanthropic coercion may not sit well with the American people.”