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Detroit, Cleveland philanthropic initiatives to shift focus toward inclusion

April 26, 2018
By: Jonathan Dworin

After more than a decade of supporting regional economic development efforts, philanthropic communities in Southeastern Michigan and Northeastern Ohio are changing course to focus on economic inclusion and broader prosperity efforts. In the wake of the Great Recession, the Cleveland region’s Fund for Our Economic Future (The Fund) and Metro Detroit’s New Economy Initiative (NEI) became notable examples of philanthropic partnerships that emphasize economic diversification through innovation, entrepreneurship, and workforce development. Both initiatives recently unveiled plans for their next phases.

Housed within the Community Foundation of Southeast Michigan, the New Economy Initiative began in 2007 with support from 12 local and national foundations, such as Kresge and Ford Foundations. For the past 10 years, the initiative has mainly funded programs that support inclusive innovation and entrepreneurship to establish a more diverse regional economy. Since 2007, NEI’s investments have helped launch more than 2,500 companies, which employ 24,610 people in the region and have leveraged more than $1.2 billion in additional capital, according to their recently released 2017 Annual Report.

In the report, the New Economy Initiative announced that they raised $26.1 million from 10 funders to implement a new, five-pronged strategy dubbed NEI 3.0. The new strategy focuses on:

  • Developing and scaling high-growth businesses across the region, with an emphasis on ventures led by women, people of color, and immigrants;
  • Supporting social innovators who are addressing neighborhood challenges;
  • Growing neighborhood businesses in Detroit (as well as in Hamtramck and Highland Park, two municipalities that are completely surrounded by the city);
  • Sharing stories to make entrepreneurship accessible to more Metro Detroit residents; and,
  • Ensuring the sustainability of the region’s entrepreneurial ecosystem.

In Northeast Ohio, the Fund for Our Economic Future began in 2004 with a consortium of local foundations and a focus on improving economic outcomes in the region. The Fund’s main activities have been to sponsor research and engagement projects in the region, while also providing significant funds to economic development initiatives like JumpStart, Team NEO, MAGNET, and BioEnterprise. From 2004 to 2016, the year of its most recent annual report, the Fund for Our Economic Future grantees targeting job creation have helped retain or create more than 24,400 jobs, added nearly $1.1 billion in payroll, and attracted just over $6 billion in capital.

Last month, The Fund released a guiding report that describes a potential new direction for the initiative, and in turn, the regional economy of Northeast Ohio. Two Tomorrows presents two potential path for the regions: one where poverty and decline persist or one where the region has a skilled workforce and growth in good-paying jobs. 

The report includes strategies for The Fund across three priorities: job creation, job preparation and job access. The job creation strategy emphasizes entrepreneurship of all types, committing to new industry clusters, providing better economic development services, and increasing emphasis on the region’s bioscience and production economies. The job preparation strategy focuses on promoting in-demand skills, improving job quality, and reducing barriers to employment. The job access strategy looks at connectivity between job hubs, the importance of mass transit, the potential for anti-poaching agreements and regional revenue sharing, and supporting systemic racial inclusion.

Taken together, Detroit’s New Economy Initiative and Cleveland’s Fund for Our Economic Future have had comparable paths, and their current pivots offer many additional similarities. Both initiatives have emphasized economic diversification, though NEI has focused more on entrepreneurship while The Fund has targeted traditional and technology-based economic development activities. These initiatives are also changing course to focus more on economic inclusion and broader prosperity efforts.

In the coming years, it may be interesting to track how these initiatives are making impacts on inclusion and shared prosperity alongside their continued support for innovation and entrepreneurship. Ultimately, these new courses could prove to be important for these initiatives, their communities, and the economic development field as a whole.