Mega-donations don’t end up helping the parts of the city that need it most. Is there a better way to spread giving dollars around?
Take a stroll through iconic public spaces like New York’s High Line and Central Park or Chicago’s Millennium Park. They are stunning. They are also enormously expensive, enormously well-gifted, and seldom surrounded by lower-income neighborhoods. They are “signature” parks that the super-rich love to support. We are entering a new golden age of parks philanthropy. Tulsa just received a $350 million gift to create its own signature park—the biggest gift to a city public park in history. When Wall Street financier Paul Johnson gave $100 million to the already-well-heeled Central Park Conservancy, a media firestorm erupted. What about the city’s 1,700 other parks that get no such gifts? A state bill was soon floated that would slice off some portion of rich-park donations to go to cash-strapped parks.
The bill didn’t end up going anywhere, but it raised an important question: In this age of mega-donations, what can cities do to encourage philanthropic gifts that can be more broadly shared with communities that need them most?
This isn’t just a problem for parks. Sure there are the Bill Gates examples—giving to causes like education research that helps poor students the most, or to the fight against malaria, benefiting the world’s poorest countries. There are folks like Eli Broad who have devoted considerable sums to improving education in the most distressed communities. But in general, the mega rich (like most of us) give to causes that are near and dear to their own hearts and experiences. They tend to give a lot to their university, and for the rich, this often means already well-endowed Ivy League schools. They also give a lot to the arts, which is wonderful. But they tend not to give much to local human services NGOs that tackle problems associated with poverty.
Cities probably don’t want to force philanthropy into certain directions via mandate. There are a few forced donation-sharing schemes that exist. The National Park Service mandates some donation sharing, for example, from parks like Yosemite to lesser-visited and gifted parks. The Santa Monica school system requires rich PTAs share what they raise with poorer schools. But cities need not go down the road of compulsion. They risk drying up philanthropy if they layer taxes on top of gifts. The whole reason why philanthropy is tax-exempt is because the government wants to encourage more of it. And donors have a right to voluntarily give as they wish.
But cities could work harder at enticing donors to voluntarily give in a way that helps their entire city. Beginning with Michael Bloomberg’s recruitment of Caroline Kennedy to spearhead funding for public schools, cities are getting savvier about philanthropy. There are more philanthropic dollars sloshing around the country—a fat $50 billion—than ever before, and cities are keen on getting their share. City officials are creating nonprofit arms to government agencies and are teaching staff how to write competitive grant applications. Many cities now have an “Education Fund” or a “Parks Fund” to augment citywide spending. Nor is it uncommon for mayors to set up “Mayor’s Funds” to support a mayor’s initiatives. Most of these funds have been created in the last ten to fifteen years and are still relatively small operations of a few million dollars, although they are expanding rapidly. A handful of cities are even toying with the idea of creating Chief Philanthropic Officers to lead the effort.
A recent gift in Philadelphia could be the beginning of a hopeful trend in citywide, city-coordinated philanthropy. In 2016, the William Penn Foundation committed $100 million to the city’s “Rebuild” initiative, which would go toward revamping neighborhood public spaces across the city. What’s interesting about this gift is that the effort was led by Mayor Jim Kenney. He provided the framework, inspiration, and strategic goals, and then went out and got the nonprofit on board. It shows Kenney’s savviness. It also shows that foundations might increasingly trust city governments to control how their donations are spent, and incidentally, a sign that they see urban governance improving.
This may indicate another hopeful trend where foundations and the well-to-do make a stronger commitment to help their hometown. Local-based giving runs up against some philanthropic orthodoxies—that dollars should go where they make the greatest impact, which tends to be in the developing world more than in center cities. And a lot of new wealth today comes from technology, where money flows from global sales and the workforce is untethered to a specific place. But there may be a countervailing trend. Detroit’s many foundations, such as Ford and Kresge, stepped up in a big way to save the city when it faced bankruptcy, as did local foundations for cash-strapped Oklahoma City. Silicon Valley’s own SalesForce, Google, and Facebook have pledged to do more for their local community.
This is not to say that philanthropy should replace the essential role of taxes or be an excuse for cutting back on public spending. Studies have shown that when private funding steps in on public projects, city halls tend to cut back on public spending. This isn’t the purpose of philanthropy. Parks, libraries, and rec centers are public goods and public dollars should always make up the vast majority of their funding. There isn’t enough philanthropy to replicate Detroit’s experience. Most giving—even mega-donations—are a drop in the bucket for multi-billion-dollar government budgets.
But big donations can offer advantages. The money can be spent faster without a bureaucracy to work through, and can be used to take visionary risks. NYC’s Compstat, which was one of the first attempts at using big data to smarten up crime prevention techniques in the 1990s, was initially funded through the Fund for the City of New York.
Mega-donations can leverage public excitement for underfunded public goods. This is exactly what the innovative Reimagining the Civic Commons initiative is trying to do in five cities. It’s funded with $40 million, half of it from four big-time foundations, like JPB and Rockefeller. It’s prototyping creative ways to revitalize public spaces like ballparks, libraries and community centers in low-income communities. Quite the opposite of signature parks, these local projects were selected precisely because they are often at the bottom of the budget priority list. The hope is that cities will fund and replicate the prototypes in needier neighborhoods. And foundation gifts can be used to stimulate public funding. Philly’s Mayor Kenney was able to leverage $400 million in public funds off of the William Penn Foundation’s initial $100 million commitment.
Working hand-in-hand, cities and philanthropists can work toward more democratically sanctioned goals, too. A common critique of million-dollar philanthropy is that it gives too much power to rich people to fashion public goods to their liking—without any say from the public or democratically elected leaders.
The age of mega-donations is dovetailing with the age of mega-inequality. Now is a good time to make sure vehicles are in place for citywide giving and that cities take a proactive approach to coordinating and managing big gifts. We may have not yet found the perfect way to spread around philanthropy, but cities are taking a healthy stab at it, and their first steps are in the right direction.