100 Years of Experts Armed with Money...

Community foundations at a milestone.

Frederick Goff—father of the first community foundation, the Cleveland Foundation, whose centenary we observe in 2014—railed so fervently and frequently against the evils of the “dead hand” that his daughter came to fear the dark staircase in her home, certain that the “dead hand would reach out and grab her,” reports historian Nathaniel Howard.

Goff’s fear was that, left to their own devices, wealthy individuals tended to bind their accumulated fortunes in unbreakable trusts to institutions or causes that were self-serving, narrow, transitory, and peripheral to the public interest. Better to bequeath their fortunes to a publicly governed trust broadly committed to the interests of the entire community, he concluded. Its trustees would construe shortsighted donors’ intentions as generously as possible, and would even “disregard the originally expressed preference regarding the purposes to which income might be devoted, if in the course of years those purposes become obsolete or harmful.”

Although community foundations now offer donor-advised funds that adhere to their creators’ wishes, it’s clear that their original purpose was to substitute for donor intent a flexible, forward-looking view of the community interest, which could be discerned only by enlightened civic elites. Goff “was the first to expound the idea that the wealth of a community belonged to all of its people, not just to a chosen few,” former Cleveland Foundation staffer Bruce Newman once observed. Frederick Goff might have seemed an unlikely champion of this rather collectivist view of wealth. He was, after all, an attorney at the Cleveland firm that handled the interests of John Rockefeller (whose career as oil magnate also began in Cleveland), and later a banker.

Saving the world

At the turn of the twentieth century, Goff’s hometown was booming with steel manufacturing, oil refining, shipping, and other heavy industries. It faced all the challenges of the era’s industrial cities—inadequate housing, a swollen population, pollution, and a corrupt political system. But Cleveland was a hotbed of progressive ideas for facing these challenges.

Theodore Roosevelt was then promoting a “new nationalism” that envisioned a blend of public-private problem-solving. Roosevelt believed that concentrated corporate interests, properly harnessed by a powerful central government, could transcend narrow profit motives and pursue a broader public interest. Historian Peter Dobkin Hall suggests that businessmen in the Midwest at that time tended to be “willing to work with or through private-sector entities such as the Chamber of Commerce to define the public interest, and through municipal government to implement their goals.”

Goff’s community foundation idea “constituted a nearly perfect expression” of this ethos, Hall says. The Cleveland Foundation was created to receive charitable trusts, either designated by donors for a particular purpose or left to the discretion of the foundation. The funds would be left in private banks. Disbursement would be managed by a distribution committee with both private and public representatives.

Goff shared with the larger progressive movement the desire to stop merely treating the symptoms of public problems and get to their root causes. This could be accomplished by professional experts systematically applying the newly developing social sciences to festering urban problems. Well before his foundation had even begun to produce income, Goff proposed “a great social and economic survey of Cleveland, to uncover the causes of poverty and crime and point out the cure,” modeled on the social surveys the Russell Sage Foundation had sponsored in Pittsburgh.

Although that grand survey was never undertaken, Goff’s foundation tackled major issues during its first decade, including reforms of Cleveland’s justice system, systems of charity, public education, recreation, local universities, and use of the Lake Erie waterfront. With what Hall describes as the “curious tendency of [the] Cleveland elite to look beyond itself for expertise to advise its social experiments,” a parade of prominent national progressive scholars and activists were brought in to study these problems.

Raymond Moley, later a key New Deal adviser, was recruited to be the first full-time director of the Cleveland Foundation; Leonard Ayres from Russell Sage worked on the education survey; and progressive legal giants Roscoe Pound and Felix Frankfurter conducted the work on the criminal justice system, along with future Rockefeller Foundation president Raymond Fosdick.

The surveys invariably condemned the confusion, redundancy, corruption, waste, and inefficiency of existing systems, which could only be remedied by centralization, rationalization, professionalization, and the replacement of self-interested partisan administration by experts. While some of these reports were well received, others provoked a hostile reaction from the allegedly mistaken, wasteful, and corrupt. The survey of the courts notably led a local judge to condemn it as a “criminal waste of money,” and to threaten to jail the foundation’s distribution committee for contempt. But Goff, according to Moley, was so “flushed by the results of the crime survey that he wanted to commit the Foundation to a completely crusading future.”

Nonetheless, the foundation’s zeal began to wane after the legal survey, notes journalist Diana Tittle. When Frederick Goff died in 1923, the foundation entered “a period of relative invisibility and reticence.” Only in the 1960s would it “resume the practice of critically examining the performance of civic institutions.”

Unwilling to preside over a trust that would simply “dole out money to worthy and qualified charities,” Moley left the foundation en route to bigger powers inside the New Deal. Imbued with the progressive’s preference for large abstractions over smaller human interests, Moley could not bear the thought that “my days would be occupied with interviews with hopeful donees, hour after hour, day after day, interminably…. This surely was not the way I intended to spend the prime years of my life.”

The ’60s: politics and remedial reading

When the ’60s arrived, the Cleveland Foundation returned to pot-stirring with a vengeance. As part of its national plan to stimulate low-income “community action” against poverty, the Ford Foundation provided $1.25 million for a new, quasi-independent account, the Greater Cleveland Associated Foundation (GCAF). Ford’s legendary poverty fighter Paul Ylvisaker saw to it that his former Harvard classmate, James Adolphus Norton, would be its director. Ford hoped such substantial block grants would galvanize quiescent foundations like Cleveland’s into working for “social change,” as Ylvisaker put it.

With generous funding from other Cleveland foundations in addition to this Ford money, along with the first gush of dollars from the federal anti-poverty programs, GCAF was designed to be a massive, comprehensive attack on the city’s problems, thereby returning to Goff’s original vision of the community foundation as a city’s pre-eminent civic innovator.

GCAF’s education component produced efforts like Community Action for Youth, which would expand social services around a middle school in Cleveland’s troubled Hough neighborhood. Fannie Lewis, later a member of the city council, was deeply involved in the effort, and ultimately deeply disappointed. “When my son entered college, I had to spend $5,000 on remedial reading courses.” This mobilization “disintegrated into a squabble over turf and a scramble for federal dollars,” according to Tittle. As anyone familiar with Cleveland knows, it did not succeed at “making our schools second to none in the country by 1970,” as promised.

By the time GCAF merged with the Cleveland Foundation in 1967, the program had largely fizzled. But Norton assumed the presidency of the larger foundation, and continued to work with Ford to gin up progressive philanthropy in the city. At Norton’s suggestion, Ford provided funding for a major voter registration effort in several Cleveland neighborhoods that helped elect Carl Stokes as the first African-American mayor of a major American city.

Convinced that “we cannot afford to have this mayor fail,” the Cleveland Foundation quietly funded a private media adviser for Stokes. He helped the new mayor design the program “Cleveland: NOW!” This $1.5 billion spending initiative was yet another comprehensive program to end poverty.

Echoing Chicago’s problem with poverty funding going to inner-city gangs like the East Side Disciples and the Blackstone Rangers, some of Stokes’s dollars found their way to an astrological cult, the Black Nationalists of New Libya, which used them to purchase guns. A police shoot-out with the group in 1968 resulted in seven deaths (including three officers) and five days of riots. Tittle writes that this event “also fatally wounded Cleveland: NOW!” and tainted the work of the community foundation.

The Ford Foundation was ultimately summoned before the House Committee on Ways and Means by Representative Wright Patman (D–TX) to explain, among other controversial acts, its involvement in Cleveland mayoral politics. Patman also took a look at the Cleveland Foundation’s political activities, prompting Norton and representatives of ten other community foundations to hire attorneys.

Although community foundations emerged from the Tax Reform Act of 1969 without the strictures applied to private foundations, and although Norton refused to “fall back into an old-fashioned kind of philanthropy in which we aren’t able to explore the causes of urban problems,” Tittle notes that Patman’s investigations clearly slowed the activist inclinations of the foundation’s board.

Looking back and looking forward

As the Cleveland Foundation celebrates its centenary, it can be proud of many things. Throughout a century it distributed $1.7 billion of donated money across the
community. It helped create the city’s system of parks known as the “Emerald Necklaces;” prompted the merger that produced Case Western Reserve University; launched Cuyahoga Community College; preserved one of the largest performing arts centers in the country; sustained the Cleveland Orchestra, the Cleveland Museum of Art, the Rock and Roll Hall of Fame, and other arts and cultural institutions; supported the city’s growing network of charter schools; and developed the idea of Cleveland as a center for medical technology.

And yet, Cleveland was named America’s “most miserable city” by Forbes in 2010. Visiting in 2012, education expert Diane Ravitch observed that “what struck me was that it is a sad, sad city. Except for sports stadiums, it feels abandoned. The downtown is small and has many empty commercial buildings. Neighborhoods have boarded up buildings and empty lots where buildings used to be. I was struck by how impoverished the city is, how disheartened the teachers are, and how inadequate is the response of state and city leaders to the collapse of this once-proud city.”

Ravitch had come to town to critique mayor Frank Jackson’s Plan for Transforming Schools—the latest in a century-long string of sweeping reform efforts driven by “public-private” alliances. The Cleveland Foundation is fully behind this effort, with current president Ronald Richard proclaiming it had made “$22.3 million in grants for the reinvention of our public schools,” which “must allow for a total culture change in our anachronistic school system.” Tittle’s book Rebuilding Cleveland, written more than 20 years ago, opens with an eerily similar episode: the Cleveland Foundation announcing at its 1987 annual meeting “the most intensive, comprehensive campaign ever undertaken by a major American city to improve the quality of public education.” It included, among other things, a “scholarship-in-escrow” program, filling bank accounts for inner-city kids earning good grades.

By the 1990s, the foundation had quietly abandoned the scholarship program. It had demonstrated minimal effects on grades, even as its downstream costs accumulated. In pursuit of education and poverty revolutions, the Cleveland Foundation has designed, coordinated, and funded wave after wave of “intensive, comprehensive campaigns” throughout many decades. And yet the city seems only to lose ground.

Is there an alternative to the foundation’s faltering collectivism? In 2010, comedian and proud Clevelander Drew Carey asked the libertarian Reason Foundation to help him come up with fresh ideas to regenerate his hometown. A six-part video production, “Reason Saves Cleveland,” urged thoroughgoing decentralization and deregulation—the reverse of the Cleveland Foundation’s century-long approach. Open up education with full school choice, sell off municipal assets like the public market and two golf courses, remove red tape from permitting and zoning, lower taxes to attract small businesses, forget about big-ticket silver bullets like stadiums and convention centers, permit bottom-up economic development to revive the neighborhoods.

In other words, no more cumbersome, expensive, intrusive plans—just get out of the way of ambitious individuals and neighborhoods eager to create their own solutions to community needs. Urban expert Joel Kotkin agreed this decentralized approach was preferable to the bureaucratic “concentrated decision-making process” that has characterized Cleveland in the past. The results would be uneven, disorderly, unplanned, and idiosyncratic, but they would have an energy and vibrancy and economic sustainability missing from the “planned” city.

This alternative approach to thinking about Cleveland’s challenges fundamentally questions Frederick Goff’s premise that there is an enlightened elite that knows better than everyday citizens what’s best for a city. In modern urban America, Goff’s “dead hand” is far more likely to be attached to a long bureaucratic arm than a businessperson or donor with personal passions. The Cleveland Foundation’s donor-advised funds, with their uncoordinated purposes and many small disbursements, may be more likely to incubate tomorrow’s social and economic solutions than the foundation’s staff-directed funding.

The inspiration for this fresh vision is much likelier to come from community groups, small businesses, and neighborhood interests than from a self-appointed convener, coordinator, and consolidator at the center of civic action. In the Internet era of dispersed authority and organic growth, civic renewal is best characterized by the precept to “let a thousand flowers bloom.”

The notion that the community foundation’s days might “be occupied with interviews with hopeful donees, hour after hour, day after day” ought not appall. That might actually be the best way to glean the full array of thoughtful ideas embedded in the everyday citizens and civic groups of Cleveland. Perhaps there is no grand, monolithic, systemic, root-cause solution to the city’s problems, but rather a countless number of smaller, partial answers.

These are today’s new insights on urban “progress,” and they deserve the attention and support of all concerned with reviving our struggling communities.

William Schambra, a contributing editor to Philanthropy, is the director of the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal.