Catalyzing Regional Economic Transformation

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Lessons from funder collaboration in Northeast Ohio
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Northeast Ohio—home to four major metropolitan areas, more than 4 million people and a $180 billion regional economy—faced in 2004 what the Cleveland Plain Dealer dubbed a “Quiet Crisis.” Employment growth in the region had lagged the rest of the nation for the prior two decades and manufacturing’s share of total regional employment had fallen by half. The population was declining and poverty was on the rise, particularly in urban areas.

Community and private foundations were waging an uphill battle responding to the increasing needs for social services that were straining the resources of nonprofits in the region. Philanthropic organizations were quickly coming to the realization that the only way to meaningfully address the challenges of poverty and unemployment would be through a more holistic effort to promote regional economic opportunity.

In response, a set of philanthropic institutions from across Northeast Ohio launched the Fund for Our Economic Future (the “Fund”) in 2004 to promote a regional approach for increasing economic prosperity and opportunity.

The original 28 Fund members committed a total of $30 million over three years to begin restoring regional economic competitiveness through pooled grantmaking, research and convening.

This unprecedented regional collaboration has grown in strength over time. The Fund now includes more than 50 voting members (see Appendix), which now go beyond philanthropic institutions and include businesses, nonprofits, government stakeholders and higher education institutions. Funders have pooled more than $90 million and invested nearly twice that amount through economic development grants made by their individual organizations, including $141 million in grants in 2011 and 2012. Plus, the Fund has helped the region attract more than $100 million in federal and state support for its strategies.

The Fund’s investments and strategic guidance since 2004 have spurred the development of the region’s innovation ecosystem and advanced new industries. In 2011, Northeast Ohio ranked second in the country in job growth and its unemployment rate of 7.4 percent outperformed the national average of 8.5 percent. By the end of 2012, the Fund’s efforts had contributed to more than 12,000 new jobs, nearly $400 million in new payroll generated through new businesses, and almost $2.2 billion in new capital to sustain existing businesses and grow new economic activity. Encouragingly, the results appear to be compounding: More than half of the gains in these metrics occurred between 2010 and 2012.

While there’s clear evidence of initial progress, the region still faces enormous economic challenges. Despite recent decreases in the unemployment rate, it has not returned to prerecession levels and many expect it won’t for several years. Furthermore, household income in the region has declined by 8 percent since the recession began in 2007 and 12 percent over the past decade. Those losses haven’t been distributed equally; while the region’s wealthiest households have seen incomes increase by an average of 22 percent over the past decade, the number of families living in poverty has increased dramatically, especially in the metro areas.

In order to better understand its impact to date and chart its future strategy, the Fund engaged the research and consulting firm FutureWorks to conduct a strategic review. The assessment spotlighted the accomplishments and struggles of the Fund over its first seven years while making several recommendations about adjusting the Fund’s approach to strengthening the regional economy.

The Fund used the lessons identified through the review to shape its strategy as it began Phase 4 of the work in 2013. The Fund has worked closely with the private sector through the Regional Economic Competitiveness Strategy process, advancing a regional strategy owned equally by philanthropy and the private sector. In terms of its internal processes, the Fund has streamlined operations by simplifying committee structures and decision-making processes, extracting funders from more granular discussions and engaging them in conversations about higher level strategy.

Going forward, the Fund continues to view evaluation of its impact as a core ingredient to strengthening its approach. Being transparent about its work and learning from related efforts in other regions will be essential for the Fund as it fosters long-term economic success in Northeast Ohio.

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