Big Bet on a New Economy

Rip Rapson knows that $100 million is not a magic bullet. "The problem is that it's a lot of money, but then it isn't a lot of money," says the president of the Troy-based Kresge Foundation.

Yet, he says, that same $100 million, put in a single pot by 10 foundations, and strategically spread out to key nonprofits, could well be the catalyst for significant change in Southeast Michigan.

"This is the single biggest pooled investment that a consortium of foundations has ever made in urban America," he says. "It's a very big deal on the national scene in terms of the scope of the commitment by these foundations and the NEI's level of ambition."

The money pot is called the New Economy Initiative (NEI). The new regional initiative will dole out grants of up to $1 million to nonprofits that are working to:
•    Attract, retain and train talented people in Southeast Michigan;
•    Promote entrepreneurs;
•    And change the overall culture of work, learning and innovation here.

The 10 participating foundations are:
•    Community Foundation for Southeast Michigan
•    Max M. and Marjorie S. Fisher Foundation
•    Ford Foundation
•    Hudson-Webber Foundation
•    W.K. Kellogg Foundation
•    John S. and James L. Knight Foundation
•    The Kresge Foundation
•    McGregor Fund
•    C.S. Mott Foundation
•    Skillman Foundation

They started taking applications this week, and will spend the money over the next 5-8 years. (Click here for more info and to apply.)

Rapson knows the goals are lofty. He knows the collaborating foundations' reputations are on the line. He knows, as well, that for the people of Southeast Michigan, when it comes to reinventing the economy here, the stakes are high.

So is this just more money tossed into a sinking ship? No way, he says.

Rapson says the whole thing may seem "fuzzy" — a big pool of money, very few guidelines for how to pass it out, and a lot of organizations lording over it — but this money truly has the power to foster change.

All that fuzziness gives them a lot of latitude, after all. The NEI, Rapson says, offers an opportunity to take chances, get risky, and make things happen here that will surprise the odds-makers and wow the pundits.

Rapson sat down with Model D editor Clare Pfeiffer Ramsey this week to talk about the $100 million bet, and why he's willing to take it.

You moved here a year and half ago from Minneapolis. What are your impressions of our assets here? What does this region have working for it?

Rip Rapson:
The calling card of this economy is creativity. Certain economies are based on brawn. Other economies are based on some quirk of nature, either the location or the existence of one particular company that drives the whole economy — Silicon Valley, or Seattle. What seems so clear to an outsider is there is an extraordinary amount of innovation that drives this part of the world.

That innovation has primarily existed in a monoculture, automobiles, auto technology. … My sense is that if you combine the creative, innovative talent pool that Southeast Michigan has with the clear need to break out of the monoculture, there you have your solution. There are ways of helping retool, recalibrate, redirect, reinvest some of that creativity and innovative talent into other venues. I think we have plenty to work with — absolutely.

We're in such an industrial sector that I think it's going to take a real leap to imagine what different sectors look like, what market realities are … You almost need an external catalytic force, in the classic sense of that word. A catalytic force is an outside agent that can create a chemical reaction that in turn helps create unintended results, and I think that's a little bit what we're talking about (with the NEI fund).

MM: When we think about Seattle, where would it be without Microsoft? Can we build a Seattle here? Can we do something to lay the groundwork to make it fertile to come in here with a great idea?

RR: It's a profoundly interesting question.

You can just invest in a proposition or one or two or 50 and hope that one of those will succeed. Or, you can invest on the infrastructure or the climate that can drive those entrepreneurs.

It's easier, I think, for foundations used to making grants to nonprofits to underwrite a proposal, a single thing. It is more complicated; it seems to me, for them to make a series of grants that over time creates a different receptivity to or an ability to capitalize on the kinds of trends you want to encourage.

So, for instance, one of the goals of this initiative is entrepreneurship. You could invest in entrepreneurs, right? Or you could say, "What do entrepreneurs need in order to succeed?" We probably need a different way of training, we probably need a way to form networks among them, and we probably need a different way to underwrite their work to different funding intermediaries. There are a whole series of gestures you could make if you were interested in promoting a culture of entrepreneurship.

I think it's probably too much to ask a group of foundations to figure out whether we do one of those things or another, so I think what you'll see is we do both.

MM: One of the things we do in Model D and metromode is talk about the importance of place, of having a livable, vibrant environment for people to live work and play. Is creating that kind of place part of your initiative?

RR: Building a sense of place, or livability, is something that I think is going to be difficult for this initiative to get its arms around. And it may not. As principal as quality of life is in a place, my sense is this initiative will tend to focus on the infrastructure of economic development, or investible propositions.

These foundations, however, have to pay attention to that, because you don't build up the economy without it. We can do this with a billion dollars and it won't work if you have a place that is not tolerant of different lifestyles, that is not conducive for creative people to be able to act out their dreams, that is not walkable, that does not have public transit of the highest order, that does not have environmental quality. That is my bias, that's probably not the bias of everybody at the table.

I am hoping that what emerges is a NEI that doesn't try do everything, but is in line with what its constituent members are doing (to address livability issues).

MM: When you talk about talent, and retention of talent and attract of talent, it seems that livability and economic opportunity go hand in hand.

RR: Absolutely. People keep talking about "oh, you've got to have jobs," but the research is crystal clear. Talent is figuring out if this is a place where they want to live and then they try to find jobs there. That's what young people are doing. When you look at Carol Coletta's work and the CEOs for Cities' Young and the Restless study, all of that indicates place, place, place.

The New Economy Initiative will create an economic opportunity structure that will go hand in hand with the efforts of Kresge, Hudson-Webber, Skillman, and the Community Foundation, and all these other folks who are trying to build neighborhoods, downtown revitalization, and broader regional viability.

MM: It does go back to the chicken and the egg thing. Those efforts are great, but without an economic driver they won't go anywhere, and the economic driver needs arts, culture and viable neighborhoods to go with it.

RR: One of the things this whole initiative raises in my eye is whether these foundations can play a role an important lead role in helping shape the future of the region. The nice thing about this coming out of a consortium is that it forces us into a different way of working. We have to be work more publicly, more accountably, and a little more in concert with the private sector and public sector.

This is a bold effort and we've but ourselves on the line. We're banking a lot of money and a lot of our legitimacy on whether we can actually have an impact on these issues.

MM: Locally we've seen these kinds of partnerships do great things. The Detroit RiverWalk is a product of public, private and foundation partnerships. It's a bricks and mortar example, but it's an example of a great success where everybody works together and crosses old boundaries. …

If we look at it as building up a product, a Southeast Michigan product, the NEI seems to address an important part of that, and that's developing economic opportunities.

RR: It brings me back to the question of whether the product is Southeast Michigan, or is it Detroit? The NEI will focus on Southeast Michigan because it has to. There's too much talent in Ann Arbor or in the other counties. There's too much potential to diversify for it just to be Detroit.

But, at the end of the day, this region rises or falls with Detroit. Our ability to come at both sides of the question, the economic opportunity side and the livability side, those two have to meet in Detroit.

Clare Pfeiffer Ramsey is editor of Model D.  This piece originally appeared in the Jan. 10 edition of metromode.


Kresge Foundation Headquarters

Rip Rapson

Campus Martius


Kresge Headquarters, Campus Martius and Riverwalk Copyright Dave Krieger

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