Following the Money, a report from the Federal Reserve Banks of Philadelphia and Atlanta, digs into donations.
Over the past few years, in the economic development world, there has been some whispering.
Researchers at the Federal Reserve Bank caught wind of a growing suspicion that donations and grants from foundations were being funneled into just the largest, most well-off cities in the country. Small and mid-sized cities, as well as those deemed economically distressed, were getting ignored by these large, national money-givers.
The Federal Reserve Banks of Philadelphia and Atlanta decided to go beyond the anecdotes and find out how true this was. In their report, Following the Money, researchers looked at 169,000 grants of at least $10,000, distributed between 2008 and 2013, from the 1,000 largest foundations in the country.
The hypothesis was half right
Economic development funding is centered in the larger cities in the country, leaving behind small and mid-sized cities.
“It’s not surprising that big places receive more grants and small places receive fewer, but when you divide by population, we thought we might see more of an even distribution across places,” said Keith Wardrip, Federal Reserve Bank of Philadelphia’s Community Development Research Manager and co-author of the report. “But we found that the variation was pretty extreme.”
Out of the 366 places that the report includes, 18 cities received more than $100 per capita of foundation funding . But another 18 cities received less than $1per capita of foundation funding. The recipient that received the most was Battle Creek, Mi., with nearly $400 per capita. The lowest was Lake Havasu, Az., with just 17 cents per capita.
But even more surprising than this disparity was the economic outlook of the cities that received the grants. The more economically distressed the city, the more likely it was to attract these development dollars. The top 10 cities include places that have struggled over the past few decades: Flint, Mi., Memphis, Tenn., New Orleans, La., and yes, Pittsburgh.
The data indicated five commonalities of cities that attract foundation funding. Yes, they tended to be large — at least 250,000 residents — and more impoverished. But also, they tended to be home to a large foundation, have a dense non-profit sector and be located closer to the West coast.
Obviously, cities can’t change which side of the Mississippi River they sit on, and small cities can’t expect to blossom to large metropolises overnight. But Wardrip says there are other factors that a city can influence.
“One of the factors that we feel like leaders in a place can affect is the size and strength and capacity of the non-profit sector,” which might help attract more interest from national foundations.
Winners and not-such-losers
Pennsylvania cities came out on both ends of the list.
Pittsburgh is the fifth highest recipient of foundation funding in the nation, receiving $157.13 per capita.
It makes sense: The city is home to more than 250,000 residents, is in Act 47, the state’s distressed cities recovery program, and is home to a number of large foundations. The Heinz Endowments and The Pittsburgh Foundation are just two of the many large foundations based in Pittsburgh that distribute grants in the area.
Smaller cities in Pennsylvania don’t do so well, with both Lebanon and Williamsport ranked in the bottom 10. Lebanon receives just 47 cents per capita, and Williamsport receives even less at 18 cents. But Wardrip says this might not mean the cities are lacking — they just may not be going after grants from large foundations.
In this data set, Wardrip says, “We don’t include small grants or grants from small foundations like community foundations.”
Williamsport received a little over $20,000 in large foundation grants between 2008 and 2013, which likely means the city only received one or two grants in that time. But groups like the First Community Foundation Partnership of Pennsylvania, a grant-making group that serves North-Central Pennsylvania, wouldn’t show up in the data.
In 2015, FCFP received over $2.5 million in donations, and distributed $3.2 million to over 550 groups. While that wouldn’t put them on the list of the top 1000 largest foundations, it makes a large impact in the area, according to Erin Ruhl, director of Community Relations.
“As a community foundation, the money we receive from our donors is designated to go only within Lycoming County, Union County, Synder County, Northumberland County and Montour County,” said Ruhl. “But we’re able to grant to the United Way, health organizations, youth organizations, the arts. We’re able to have an impact on a broad scale in the region.”
Ruhl says she knows of some local non-profits that have sought national grants in the past, but FCFP is generally able to meet the needs of the community. They fufill over 50 percent of all grant requests they receive, which she considers high for a grant-making foundation.