Remarks by Jonathan Fanton at the City Club of Chicago on “Deep Roots, Deep Commitment: MacArthur Investments in Chicago”
May 3, 2006 | Speech | Housing, Digital Media & Learning, Arts & Culture in Chicago, Community & Economic Development

It is a great pleasure to be here today and I look forward to a conversation after I set the stage with a few comments about MacArthur and its work in Chicago.

John MacArthur’s will gave no guidance to future trustees about programs or place.  He told one of the Foundation’s first directors, “I made the money.  It will be up to you fellows to figure out how to spend it.”   So the first Directors had to think about both program and place.  As they scanned the large foundation scene in 1978 there were few, if any, examples of international foundations that also embraced their hometowns.

MacArthur may be the best example of a Foundation that blends seamlessly its global, national, and local programs.  We have an unshakable commitment to the Chicago region, which receives about a third of our grants in the United States.  That commitment is not a matter of law or sentimental hometown attachment.  It reflects a rational judgment that we are a better foundation in all that we do around the world because we are rooted in a place – a place where we deal with real issues and real people on a continuous basis. 

The world of philanthropy can be very abstract, very theoretical and hard to evaluate.  We think our work in Chicago makes us more savvy about how to make things happen, more sensitive to people and the organizations we support, more humble about how hard it is to make a difference, and how long it can take.

Let me now give a quick overview of MacArthur and then talk about our work in Chicago.

We award about $225 million a year in grants and low interest loans related to programs.  And there is more to come if the endowment continues to outperform the market.  Our endowment is up almost 60 percent (58.9 percent) over the last three years and is now worth over $5.5 billion. 

The general public knows MacArthur  best through its Fellows program –the genius grants – and our support for public radio and television.  But these are actually a rather small share of our annual grantmaking.

We work in 65 countries and have offices in Nigeria, Russia, Mexico, and India.  Biodiversity conservation, international peace and security, population, human rights and international justice: these are the four pillars of our international program.

In our domestic work, we are interested in the relationship of people, place, and systems.  We are making some big bets: (1) on community and economic development; (2) on affordable rental housing; (3) on juvenile justice reform; and (4) on education, with a new focus on the effects of digital media on how young people learn -- in and outside of school. 

Our Chicago program comes in four parts:

  • We provide unrestricted general support to arts and cultural organizations of all sizes – city-wide institutions and neighborhood groups, 178 in all.  So we support the Chicago Symphony, the Lyric Opera, and Ravinia, but also the Mexican Fine Arts Museum and the Redmoon Theatre.
  • Chicago is home to world class universities and museums with which we partner in programs around the globe.  For example, our biodiversity program works closely with Field Museum scientists in seventeen countries on four continents. Places like Madagascar and Uganda, Cambodia and Vietnam, Peru, Cuba and Ecuador
  • Chicago is also a good place to test work we support nationwide: public education reform, community development, juvenile justice, and affordable housing preservation.
  • We are deeply committed to helping the city build strong urban neighborhoods of opportunity and hope.  In partnership with LISC, MacArthur is working in sixteen neighborhoods, about half of Chicago’s high-poverty communities.  In each place, we fund what the residents themselves have identified as their priorities:  schools, housing, jobs, crime reduction, economic development.  We believe that by working on all these issues at once over a ten-year period, these neighborhoods can become healthy on a sustainable basis.

There are also moments of opportunity here with national significance. 

Let me describe one of particular interest to me.

As everyone here knows, Chicago is transforming its huge and much maligned public housing system. Mayor Daley’s Plan is bold and ambitious: tear down the high-rise ghettos of isolation and replace them with mixed-income neighborhoods of opportunity.

Think of the scale of this project: 500 acres redeveloped – a significant portion of some the city’s poorest neighborhoods. 

Think of the opportunity to build healthy, well-designed mixed income neighborhoods that end the isolation and despair that traps poor families. 

But also think of the challenge – the decades of mistrust between the Housing Authority and the residents, the interim movement of thousands of people, the good design necessary to attract a mix of incomes, the social services necessary to help public housing families get jobs, healthcare, and all the rest. 

Finally, think of the verdict of history if the leadership of the city – government, business, not-for-profit groups, and foundations – fails to take full advantage of this once in a century opportunity.  It is on our watch – all of us in this room – that the outcome will be determined.

MacArthur has committed more than $50 million and has taken the lead in forming a partnership of civic leaders for additional contributions, including jobs and employer assisted housing grants and loans.  The organization is called the Partnership for New Communities.  It includes the CEOs of universities, corporations, and foundations; the Civic Committee; and representatives of faith communities.

MacArthur is helping in five ways:

  • First: strengthening the management of the CHA -- for example, we helped it build a computer system to track the original public housing residents throughout the transition. 
  • Second: supporting resident groups plan their new neighborhoods -- for instance, Ujima on the near south side has worked with every resident at Ida B. Wells to help them meet the strict work and credit requirements of the new communities.
  • Third: helping families on the path to self-sufficiency -- for example, the Center for Working Families at the Abraham Lincoln Center train residents to use the Internet to file for government programs like the Earned Income Tax Credit.  Since its creation in January, the Center has helped local families access more than $1.4 million in additional income.
  • Fourth: supporting market research to help promote economic development in the new neighborhoods.  For instance, a recent study by the Chicago-based MetroEdge calculated the untapped potential of the Cottage Grove trade area. It demonstrated that this commercial corridor has $675 million in buying power. It also found that some $450 million leaves the surrounding community each year due to a lack of retailers. There are ample commercial opportunities in these neighborhoods for those willing to look at the evidence.
  • Fifth: investing in research about the Transformation process – where there is progress and where there are challenges. Good information is critical for this endeavor.

    The CHA needs it to make mid-course corrections. Resident groups need it to protect their interests. The business community needs it to consider retail and other investment. And the general public deserves it to assess the progress of this giant undertaking.     

    This research has looked at how residents experience the relocation process, what moving to integrated neighborhoods has meant for families, whether people are better off in their new homes, and how social and support networks have been strained by residents undergoing change. A survey by Chicago's National Opinion Research Center found that two-thirds of those who have moved feel they are living in better housing and that they prefer their new neighborhoods to their old ones.

Now at its mid-point, the transformation process is going well. 75 percent of the 55 high-rise buildings are down. Attractive new neighborhoods called Roosevelt Square, Oakwood Shores, West Haven Park, and Jazz on the Boulevard are taking shape. The market rate units are selling well and the mix of incomes is producing vibrant communities.

But not all former residents of the high rises want to move back to these new neighborhoods.  Perhaps half or more will move to different parts of the city using vouchers.  And there is a waiting list of more than 20,000 other families who need housing assistance.  That is why as leaders, all of us need to take an interest in Chicago's entire housing system: public, private market, and especially the need for affordable rental housing.

Chicago's overall rate of homeownership is just 48 percent – almost 20 points below the national average. This is typical of large urban centers, but the fact remains that there are more renters in our city than owners. Affordable apartments for people of modest means are vital to Chicago's overall social and economic health.
There are about 700,000 rental units in Cook County; 400,000 of them are affordable for families that make about $30,000 a year. But during the last decade, the county lost 80,000 affordable units. If current trends continue, at least another 80,000 will be lost over the next decade.  That is housing for more than a quarter of a million people.

This is a challenging, but solvable, problem. To address it, MacArthur has taken the lead in forming The Preservation Compact, a partnership of government, business, foundation and civic leaders committed to preserving existing rental housing in Cook County.  There will be a formal announcement of this partnership in the summer, but rest assured: the goal is not to produce yet another set of recommendations. We are bringing this group together for fast action to preserve every unit of affordable housing that is worth saving. 

Think about it. The current situation defies common sense. It costs about half as much to acquire and improve an existing rental apartment than to build a new one.  And because many of these units were originally financed by taxpayer subsidies, we have an obligation to protect that investment – billions of dollars-worth nation-wide.

So these efforts in Chicago will have significance for the rest of the country.  The Preservation Compact is part of a national MacArthur program called Window of Opportunity, whose goal is to demonstrate that preservation is feasible and cost-effective, and to encourage  federal and state policies that will make it possible to save at least one million units nation-wide over 10 years. Altogether, MacArthur is investing more than $200 million in affordable housing during this decade.

Given this commitment, we are fortunate that our US grantmaking program is led by Julia Stasch, who is a member of this Club. She is a former real estate development executive, housing commissioner for the city, and chief of staff to the Mayor when the Plan for Transformation was designed and implementation got underway.

You might ask: why housing? What makes it so important?

Although education, health care, and workforce development often receive more attention, there is mounting evidence that housing is the critical factor in opening opportunity to individuals and improving communities.  Housing matters.

Recent studies have found evidence that decent, stable housing improves the ability of individuals to get and keep jobs, increases psychological and physical health, and leads to better social behavior and school achievement among children.  Other studies link the availability of affordable housing to the economic vitality of cities and regions.

Let’s spend a minute on one relationship – housing and education.  I know Arne Duncan was here in January, so the City Club has been thinking about the changes happening in the school system.  Right now, there is an historic opportunity in Chicago to draw the link between housing and schools.  You really cannot fix one without the other.

Last year, 18 percent of Chicago’s elementary school children changed schools.  While there are lots of reasons for mobility, one of primary causes is a change in where a family lives.  Think back to your own school days – you may remember how traumatic it was to change homeroom teachers, let alone go to an entirely different school.

MacArthur is supporting the Chicago Consortium on School Research at the University of Chicago to do a comprehensive study of school mobility. Earlier research on mobility by University of Chicago professor David Kerbow indicates that students who move have more absences, lower test scores, and are more likely to be held back a grade.

So we need to recognize that the current rate of mobility may be too high and take steps to reduce it.  The Plan for Transformation, Renaissance 2010, and No Child Left Behind could make up a perfect storm that accelerates mobility above a healthy level. A stable housing system is a critical defense. 

More residential stability is bound to help schools as well as students.  Imagine how frustrating it is for a teacher to have 5 to 10 percent of her class change during the year.  And think about how hard it is to measure a particular school’s improvement if, over a three-year period, only half the students are the same students.  How can No Child Left Behind work in this environment?  Do the test scores show real student improvement or just a different student population?

Housing stability matters, but so does housing affordability. Research by Sandra Newman at Johns Hopkins University suggests that children whose parents lived in affordable housing were better off as adults: less likely to depend on welfare, more likely to hold jobs, and earned more annually.  Struggling families face more overcrowding, more deferred maintenance, more lease terminations, and excessive rents. It is no wonder that children living under those conditions are distracted at school.

The virtuous circle of education and housing is well illustrated by the way good schools are helping attract a mix of incomes to the new communities rising on the footprints of the demolished high-rise ghettos on the south side.  The University of Chicago is starting five charter schools in these neighborhoods.  MacArthur is helping the University’s Center for Urban School Improvement form a network of charter and regular schools – all committed to employing best practices in professional development, technology, and parent engagement.

In Oakwood Shores, a new community replacing Ida B. Wells, the Donoghue School opened last fall with 240 students in grades K - 4. It will grow to 500 students, K through 8.  Pat Clancy, CEO of the Community Builders, the developer for Oakwood Shores, tells me that the new school was a major attraction to families of all incomes who have already moved into the first 162 units of that new mixed-income community.

* * *

Mayor Daley has a vision for Chicago as a city that capitalizes on diversity as a competitive advantage, where people of different economic status and racial and ethnic backgrounds can live together and forge a community that represents the best of the American dream.  This is not the top-down social engineering of 20th Century reform movements, which claimed to know what is best for people. This is a more authentic, American belief that when given a fair chance and decent choices, people will spot and follow paths of opportunity.

It will take a few years before we will have the full evidence proving this proposition – but I am optimistic that the research will bear out our assumptions.  I believe decent housing and good schools are the critical ingredients for both individual and community improvement.  Replacing housing that isolates with housing that connects; schools that stifle with schools that stimulate – that is Chicago’s bold vision.  If it works, it has the potential to transform not just the lives of thousands of our fellow citizens, but show the way to communities across our country.

MacArthur is privileged to play a small part in housing transformation, school improvement, and neighborhood revival across our city.  I only wish every national foundation cared as much about their home cities, because the benefit we derive from working with all of you raises the quality of everything we do across the globe from Bhutan to Nigeria, from New York to New Mexico. Chicago’s influence is truly world-wide.

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