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Homecollege endowmentsTwo Sides of the Coin in West Harlem: The Mixed Blessing of Multi-Year Funding

Two Sides of the Coin in West Harlem: The Mixed Blessing of Multi-Year Funding

Two Sides of the Coin in West Harlem: The Mixed Blessing of Multi-Year Funding

October 8, 2018; Columbia Spectator
In 2009, Columbia University agreed to provide almost $150 million of direct and in-kind funding to mitigate the impact of campus expansion on the surrounding West Harlem community. The West Harlem Development Corporation (WHDC) emerged from this agreement with a 16-year, $76 million funding commitment to build “collaborations…leveraging resources to enhance the lives of the residents of West Harlem beyond the term of the CBA.” With CU funding set to end in 2024, WHDC and the community it serves must now determine what comes next. This challenge is now becoming more common as some (still too few) major funding sources take a longer-term approach to building nonprofit institutions. As this practice moves forward, there is ever more attention being paid to ensuring that work on sustainability starts early in those relationships.
WHDC has used its funding to support a broader network of service organizations that are improving the lives of West Harlem residents. Since its inception, 159 nonprofits have received funding “to serve West Harlem/Manhattan Community District 9 residents with services in education, housing, workforce development, arts & culture, and more. At least 40,000 participants have been impacted.” Those are the tangible benefits of a large benefactor. But with little funding diversity, the WHDC and the organizations it funds now face the need to figure out how the work will continue after its 16-year pipeline runs dry.
WHDC executive director Kofi Boateng described this reality to the Columbia Spectator, CU’s student newspaper. The university funding stream was never large enough to allow the WHDC to create a significant reserve that could turn it into a traditional foundation after Columbia stepped away.
Columbia never said in the CBA that they were creating a foundation like the Ford Foundation, where they were going to invest a corpus and use the income to do the work so that there would always be money….Instead, it has a built-in end date. If the WHDC were to limit itself to the plan set out in the CBA, money would simply flow into it, flow out of it, and dry up in 2024.
Boateng recognizes that one possibility for WHDC is to celebrate its successes and shut its doors, even if the issues of the struggling West Harlem community will remain. Boateng saw the potential of just recognizing that his organization had done its job, “distributed the money, nice and wide…quieted the community down.”
Columbia has had the peace to build the [Manhattanville] campus without people protesting every day…and the nonprofits have done what they can do with what they’ve got. So, hooray! In 2024, let’s close the door, have a nice party.
Yet the underlying problems of affordable housing, education, crime, and employment remain. WHDC sees this as a reason to continue and has established two long-term strategies it sees as leading to a sustainable future for itself and the organizations it funds.
Rather than closing its doors, WHDC is becoming a direct service provider that can seek its own funding. According to Boateng, there is both opportunity and need. WHDC has begun transferring its resources from grants to other organizations to building its own future strength.
“Why don’t we do what the system failed to do,” he asks, “why don’t we build a little bit of an endowment from [the Benefits Fund]?” For the last few years, the WHDC has been setting aside and investing a portion of Columbia’s annual payments—Boateng projects that it should have around $20 million saved up by 2024. “That’s a healthy amount to start any nonprofit,” he says.
[…]
The WHDC has also been keeping its staff small. “And,” says Boateng, “if we’re able to construct a place so that we’re not paying rent—rent and staff are the two biggest expenses of any nonprofit.”
As one of the few funders narrowly focused on West Harlem, WHDC also wishes to make the organizations it funds attractive to other funders by strengthening their balance sheets as they seek new funding sources.
One of the biggest problems nonprofits grapple with is the vicious cycle of qualifying for grants. Grant making foundations are, in a sense, investors, and so they want as many guarantees as possible that their grants will not be wasted. Often, those guarantees are budgetary; a foundation will only give an organization a grant if it already has a certain amount of money. Thus, nonprofits find themselves in a double bind: They need grants to get money but money to get grants. The WHDC has a different kind of requirement. A WHDC grant can go up to 50 percent of a nonprofit’s budget—a far more generous sum, claims Boateng, than most foundations. “We give you a hand but [then] we force you to look elsewhere,” he explains. The WHDC injects nonprofits with cash in the hopes that they will use their expanded budget to more easily secure funding from other sources and eventually outgrow the WHDC, like birds leaving the nest.
Every organization that has a narrow and time-limited funding base faces the challenge faced by WHDC. Its role as a funder of others makes the question more difficult: focus its resources on building its own capabilities, or use them to build sustainability among those it supports? Here, it has chosen to attempt both paths at once—an ambitious endeavor that will require some very heavy lifting in the coming years when CU steps back.—Martin Levine

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