Lessons from Living Cities on the Challenges and Opportunities of Collaboration in Philanthropy
There are roughly 100,000 private foundations in the United States, the vast majority with assets under $10 million. Total annual grantmaking, for all but he largest of these institutions is under half a million dollars a year each. Even among the 5,000 to 6,000 institutions with more than $10 million in assets, the average grant is generally estimated at less than $50,000. The most dramatic, eight-figure grants–the kinds that draw coverage from major news outlets–number in the dozens, at most, in any given year.
By contrast, redeveloping a single distressed neighborhood in any of the 25 poorest American cities would cost billions of dollars. The work would take two to three decades, probably longer. Doing it well–without simply displacing lower-income residents, but widening their opportunities to raise incomes, upgrade their housing, acquire skills, raise healthy families, and move only when they choose–would cost even more. And it would require forms of expertise (workforce, education, real estate development and finance, health, community organizing, child development) that are difficult and costly to build, perfect, and sustain over time.
Broaden the target from a single neighborhood to dozens, spread across many distressed cities and the bill mounts geometrically. Even assuming major investment by the private sector and sizable support from the government (both of which wax and wane over time), the cost to foundations alone–for seeding new projects, strengthening local organizations, inducing private and public investment, and disseminating lessons on methods and tactics would climb into the billions over several years.
Why, then, would any funder, even comparatively large ones, attempt to navigate such vast fiscal oceans by itself? The question isn’t limited to urban development. It would be just as relevant for any number of other missions–cultivating the arts, advancing scholarship and research, improving education, curing or preventing disease, promoting religion, or a dozen other purposes. But when the goal is to improve the lives of low-income people in distressed urban neighborhoods, the math is particularly obvious and unforgiving: No funder has enough money to make a wide-reaching difference in multiple places, over many years, on a scale that anyone would describe as solving the problem.
Not surprisingly, most leaders of major foundations–especially those concerned about urban neighborhoods–have done the math and acknowledge the logic of joint effort. Collaboration is a virtue, says Douglas W. Nelson, President of the Annie E. Casey Foundation, that is prized “not just because collaboration is courteous or fashionable or more attractive than competition or isolation or whatever the alternative is. It’s the need for scale that makes the logic of collaboration so compelling. What we want to do is much greater than anything we can achieve on our own.”
A rare form of philanthropic collaboration, though arguably the purest, is when many funders deposit their resources in a common pool for a common undertaking, and make grants by consensus from the collective fund.
For nearly 20 years, the largest and longest-lasting version of this kind of collaboration has been Living Cities: The National Community Development Initiative. This paper attempts, with a close look at the evolution of Living Cities, to understand how the funders' group has stayed together so long, with remarkable stability and growth in its membership, and with a core mission that has endured despite several phases of revision and reinvigoration over the years.