Remarks by Jonathan Fanton at the Local Initiatives Support Corporation (LISC) National Leadership Conference
October 3, 2007 | Speech | Community & Economic Development

It is a special privilege for me to be at your national leadership conference because I owe so much to LISC and Mike Sviridoff, your national founder.  I first met Mike when I was a Yale undergraduate running a tutoring program and he was Director of Community Progress Incorporated in New Haven.  My very first grant came from Mike -- and he must be smiling down on us now as he realizes that LISC is the single largest recipient of MacArthur Foundation funds, closing in on $100 million over the 30 years of the Foundation’s life.

Mike and I reunited in New York after his Ford career, when he came to the New School for Social Research to establish a Community Development Research Center.  I recall a dinner meeting in the President’s House at which he made the case for the Center.  “We have learned a lot about community development since the Great Society,” he told us, “it can’t be top-down; it must respect and harness the tremendous resources in the community.  And it must enlist the private sector.”  Mike infused the New School’s research and training programs with a lifetime of learning and I was one of his most attentive students.

So here we are, forty-five years after that first meeting with Mike, talking about our common passion: revitalizing cities, restoring their historic role as avenues of opportunity and fairness, and realizing their potential to enhance America’s competitiveness in a global economy.

But we know a lot more now as LISC and others have tested Mike’s insights about fusing local initiatives, sensible government policy, and the private market into a powerful force for change.  I want to talk with you tonight about what LISC and MacArthur are doing together in Chicago, identify core principles that might be useful to other cities, and conclude with a call to funders to deploy both their financial and reputational assets.

We meet at a moment in history full of promise.  I am an American historian by training and thus inclined always to ask, “Where are we on the arc of history?”  I think we are on the cusp of another era of domestic reform.  A younger generation is ready to respond to the vision that inspired the founders of the Massachusetts Bay Colony in 1630: “to be a city upon a hill,” a beacon for the highest aspirations of humankind.

Fortunately, the conversation about cities is changing.  Negative perceptions of urban decay, the flight of people and jobs to the suburbs, and skepticism about the possibilities for progress are giving way to a more hopeful reality.  In the past decade, the population of the nation’s 50 largest cities has grown by nearly 10 percent.  This has been accompanied by a rise in city incomes almost double the national average, by an increase in housing units and homeownership, and by a decline in concentrated poverty and crime. 

But we all understand that challenges persist — the loss of affordable housing, the threat to communities from the sub-prime mortgage crisis, the changing nature of the labor market, schools that may not be preparing our young people for a complex and connected world.

Still we are buoyed by the positive trends, the knowledge we have gained about what works, and a sense of an emerging political will to strengthen our cities.

MacArthur’s longstanding concern for cities is most visible in our substantial investment in our home town Chicago.  About 20 percent of our giving world-wide is in the Chicago region.

We are a better foundation in everything we do around the world because of our deep engagement with the people, communities, and institutions of Chicago.  We see how complex problems are.  We appreciate the wisdom of local knowledge, and understand that grand theories take real people willing to challenge and adapt them if they are to work in practice.  And we are more humble about what a foundation can do directly, more respectful of those on the frontlines doing the work, taking the risks.  MacArthur values enduring partnerships with our grantees, none more rewarding than our work with LISC Chicago under Andy Mooney’s superb leadership.  Today that partnership takes the form of the New Communities Program, a ten-year initiative which aims to strengthen sixteen neighborhoods as engines for improving the prospects for all of Chicago’s high-poverty communities, and indeed for the city and region as a whole.

Bruce Katz rightly observes that “(this) Urban Age is happening at a dizzying pace and with a scale, diversity, complexity, and level of connectivity that challenges traditional paradigms and renders many conventional tools and practices obsolete.”

We think NCP responds to that challenge.  And while we are still early in its implementation, lessons are being learned that we want to share.  We have identified two underlying assumptions and seven key elements that create the NCP framework. We were encouraged to undertake this exercise to assist LISC’s national Sustainable Communities Program, under way in ten other cities.

The New Communities Program starts from two profoundly simple assumptions.  First, once-blighted neighborhoods are sources of untapped human and economic potential.  And, second, sustainable neighborhood improvement requires long-term, simultaneous investment in all the issues—schools, housing, health, jobs, economic development, safety, community cohesion, and more—that must improve together in a reinforcing virtuous circle.  Practically speaking, this may mean applying a comprehensive lens and working first on the few interventions with the greatest potential to stimulate further change.

Now for the elements which we think form the essence of what we are trying to do.

• A small group of primary long-term investors that provide adequate, flexible funding for staffing, program grants, and a robust communication effort.

• A hands-on central intermediary (LISC) that channels resources and expertise to neighborhoods, coordinates efforts that span neighborhoods, and actively leverages additional public and private investment.

• A community organization or development corporation (a lead agency like Jim Capraro’s Greater Southwest Development Corporation) in each neighborhood that organizes a broad-based quality of life planning process, which brings together community members with urban planners and other experts to develop data-rich, market-driven plans.

• Comprehensive plans that include economic development, housing, jobs, crime reduction, amenities, in- and after-school programs, and more.  Early action projects are identified so visible successes can fuel confidence and enthusiasm.

• Deep, long-term relationships among lead agency staff, LISC program officers, neighborhood and citywide organizations, providers of supports services and, most important, agencies of local government – all sharing responsibility for implementation. 

• Constant Consultation and Communication among all parties and with potential partners that reinforces commitment, builds trust, and encourages investment.

• Clear goals and benchmarks that enable progress to be measured and mid-course corrections to be made.  Careful documentation and an independent evaluation are essential.

Between 2002 and 2006, MacArthur invested $21 million in the promise of this approach. During that period, LISC completed the quality of life planning processes and made more than 400 grants to lead agencies and other organizations in the neighborhoods.  The first grants went to “early action” projects to launch the plans and demonstrate momentum. These early action projects—a new health clinic, nimble financing to preserve affordable rental homes, a market study for a new commercial district—produced tangible benefits, helped build the capacity of the local groups to attract and manage resources, and began to build the relationships that would be needed to sustain commitment over time. 

The grant money we provided directly leveraged a total of $255 million, including city investment in park district facilities, private financing for an array of projects (from a “green” office building to a new Walgreens store), and new mixed-income housing.  There was philanthropic support for playgrounds and public and private funding for the Centers for Working Families. 

MacArthur reinforces the New Communities Program with additional grants in four issues that span multiple neighborhoods: crime reduction, workforce development, planning for commercial corridors that connect our neighborhoods to a larger market, and a network of 20 schools organized by the University of Chicago.

A defining moment for NCP came in June 2005 when the lead agencies in the 16 neighborhoods presented their quality of life plans to me and Major Daley at an uplifting assembly in the grand ballroom of the Hilton Hotel.  The Mayor was so impressed with the energy and optimism palpable that day that he created a special project team to expedite NCP projects and directed his commissioners to work together to help the plans succeed.

So here we are, five years into a ten-year initiative with community groups mobilized, plans in place and projects underway, MacArthur’s early  investment leveraged ten to one by LISC, the City on board.  The questions before us are straight forward:  will we see these neighborhoods improve on a sustainable basis? and how will we know what works and what does not?

LISC and MacArthur are committed to getting the facts and testing our theory of change.

We are tracking indicators of change in crime, income diversity, labor force participation, public and private investment, business starts, expansions and retention, use of income supports, and educational attainment.  And soon we will add a set of indicators related to health. 

It is too early to have clear results or to claim cause and effect.  But there are some signs of positive progress. 

The Metro Chicago Information Center assembles annually a composite set of indicators called the Community Vitality Index.  At the end of last year, half the NCP neighborhoods had improved while the city as a whole had declined; home prices had increased in all neighborhoods, with most clustering in the 15 to 18 percent range; school achievement was up in about a third of the communities; and graduation rates were up in two thirds of the neighborhoods.  Especially worth noting is that the rate of business growth was up between 2 ½ and 3 percent in all of the NCP neighborhoods, against a citywide decrease of about half a percent per year. 

Those numbers tell an encouraging story, which I see for myself on my quarterly neighborhood visits with Andy Mooney: new stores replacing vacant lots in WestHaven; a new bakery and sit-down restaurant in Auburn Gresham; façade improvements along Commercial Avenue in South Chicago; excitement about a national developer’s plans to build the Shops at 47; a mixed-use development in Bronzeville; parkway beautification projects underway in East Garfield Park; and new mixed-income housing complete and occupied, replacing the Henry Horner public housing project.

We have also engaged New York-based MDRC to do a long-term evaluation to see what works and why.  MDRC has the daunting task of comparing our sixteen neighborhoods to each other, but also to similar Chicago neighborhoods which are not part of NCP.  MDRC also will opine on how larger social, demographic, economic, and technology trends accelerate or retard progress in NCP neighborhoods.

We did not want to burden the long-term MRDC effort with MacArthur’s need for an outside review on the occasion of the LISC renewal application earlier this year.  So, late in 2006, we engaged our former director of evaluation, Tom Dewar, to take a look.  A summary of his review can be found on our website as we begin the practice of making evaluations of MacArthur programs public.

The review found that “overall, while not perfect and still evolving, (the New Communities Program) has worked remarkably well.”  Dewar said that (there is) “ the use of a consistent framework…provision of timely and relevant support in a competent way…persistence around core goals and superb communications work …LISC is doing very well.  It has demonstrated a combination of skills, resources, and learning that bode well for the future of NCP.” 

Dewar also described several challenges, including those related to human and financial resources, and building the organizational capacity of the weaker lead agencies, while maintaining the momentum generated by the stronger groups and NCP overall.  He shares my personal concern about a possible slump in that momentum as the program’s newness fades, as external forces exert their influence in neighborhoods, and as the local agencies confront inevitable setbacks in implementation.

This was a thoughtful, realistic and, in the final analysis, very encouraging review, leading to our decision to invest another $26 million in the New Communities Program last March. 

And it drew our attention to LISC’s Sustainable Communities Program, working in ten other cities, from San Francisco to the Twin Cities to Washington, DC, and points in between.  We are encouraged by the commitment from Mayor Coleman of $25 million for St. Paul and the $1 million pledge from the Lilly Endowment for the effort in Indianapolis.  There are such promising signs in virtually every site, precisely because of LISC’s careful selection process, ensuring that enough of the core elements I described earlier were in place.  These hopeful indicators, our informed optimism about the principles and elements in the NCP model, and our high confidence in LISC are the reasons we are investing $4 million in the Sustainable Communities Program, a grant award I am pleased to announce tonight.

One obvious question is whether the size of MacArthur’s investment is the critical ingredient for success.  We do not think so.  In fact, even with our recent $26 million dollar investment over five years, the actual amount of money per neighborhood or per capita is actually modest.

I know there are foundations and businesses and individuals in this room as deeply committed as we are to making our cities stronger.  Our total resources may differ in size, but we have other assets in common.  I have long felt that the public focuses too much on the size of philanthropy and not enough on how it deploys its reputational assets.

Chapin Hall’s Prudence Brown, in a recent report for the Aspen Institute Roundtable for Community Change, talked about this.  She reminded us that donors can “use their knowledge, networks, credibility, and political capital to exert their influence in the service of community development goals.”

First of all, donors can identify and draw attention to needs and opportunities.  They can raise the visibility and level of civic dialogue about local community development issues through the use of data—through reports, scorecards, market studies, and indicator projects.  They can bring in outside experts whose experience and knowledge can inform local efforts.

Second, donors can convene meetings and organize task forces that bring together the diverse groups of individuals, local organizations, government officials and business leaders that must work together to bring about change.  Behind the scenes, donors can use their personal relationships to mediate, troubleshoot, problem solve, and ensure that all the right voices are at the table. 

Third, donors can often raise funds from others, using their own awards as a demonstration of confidence in the local effort.  We are pleased that the Annie E. Casey Foundation sees NCP as a vehicle for scaling up its Centers for Working Families in Chicago and we are hopeful that the Atlantic Philanthropies will bring its middle school program to Chicago.

Fourth, foundations can be catalysts for building and sharing knowledge.  They can ensure that the work on the ground is well documented, evaluated, and measured for its impact—which increases its appeal to government and other funders.

Finally, they can organize coalitions, whose members take an active role in a political process to address laws and regulations that can advance or retard progress in housing, economic development, social services, and more.

Of course, many of these activities are not new and most foundations and other donors do some of them as a matter of course.  But I think we should increase our efforts to use our reputational assets more fully and to reach out more aggressively to enlist others in our work.

Let me close with a personal comment.  Many of my views were shaped by Mike Sviridoff and the optimism of the Great Society—a sense that poverty could be diminished and cities made healthy again.  Progress has been slow as political will waxed and waned and the buoyant optimism of 40 years ago gave way to a widespread passive acceptance of conditions that are antithetical to America’s founding ideals and highest aspirations. 

But much has been learned since that time, and that learning is captured in the programs that LISC has underway.  We know that the energy must come from the neighborhood, not from Washington; that strong community organizations are the critical drivers; that public programs must stimulate essential private investment; that substantial and stable resources are necessary; that single issue campaigns do not work; that we must address health, jobs, housing, education, crime, economic development and more all at once; and that it takes the concerted effort of all sectors and actors working together for a common goal.  Most of all, we have learned that neighborhoods, once described as “blighted,” are sources of untapped economic and human potential, ready to respond to trusted opportunity. 

Together, we can provide that trusted opportunity.  Those of us here in this room, your local partners, national players with commitment and resources—we can take advantage of this promising moment and help realize this nation’s highest aspirations of a just and humane society where everyone has an opportunity for a secure and decent life.

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