catalyzing regional economic transformation lessons from funder collaboration in northeast ohio

8/13/2019 Catalyzing Regional Economic Transformation Lessons From Funder Collaboration in Northeast Ohio

1/27

October 2013

Catalyzing RegionalEconomic Transformation Lessons from funder collaborationin Northeast Ohio
http://www.thefundneo.org/


2/27

2

This work is licensed under the Creative Commons Attribution 3.0 United States License.To view a copy of this license, visit http://creativecommons.org/licenses/by/3.0/us/ or send a letter toCreative Commons, 444 Castro Street, Suite 900, Mountain View, California, 94041, USA.

John S. and James L. Knight Foundation

Knight Foundation is an independent, national foundation founded in Akron in 1950. Although itsheadquarters are now in Miami, the foundation has invested more than $150 million in Northeast Ohio,including its support for the Fund for Our Economic Future.

Knight believes that strategic assessments provide useful insights about the direction of its grantprograms and the work of its grantees, generating lessons that can be shared among organizationswith similar goals. This strategic review of the Funds work, funded by Knight Foundation, is part of thateffort. The foundation supports transformational ideas that promote quality journalism, advance media

innovation, engage communities and foster the arts. Knight Foundation believes that democracythrives when people and communities are informed and engaged.

knightfoundation.org

FutureWorks

In 2012 the Fund for Our Economic Future hired FutureWorks, a consulting and policy developmentrm, to conduct a strategic review of its work. The assessment spotlighted the accomplishments andchallenges the Fund faced during its rst seven years, from 2004-2011, and recommended changes

the Fund could make in its approach to strengthening the economy of Northeast Ohio. This reportdistills some of the key observations from that assessment.

About the Report
http://www.knightfoundation.org/http://futureworks-web.com/http://www.knightfoundation.org/http://futureworks-web.com/http://www.knightfoundation.org/


3/27

3Catalyzing Regional Economic Transformation | Lessons from funder collaboration in Northeast Ohio

Table of Contents

Foreword 4

Executive Summary 5

Impact of the Fund 8

Lessons about Regional Collaboration 11

Conclusion 26

Appendix 27


4/27

4

Regions across the United States face economic and societal challenges too large to be solvedby any single organization. Collaboration across all sectorsbusiness, government, nonprot,philanthropy will be vital for addressing these issues meaningfully. But as attractive and promisingas the premise of collaboration may be, its equally demanding and difficult to do effectively.

The Fund for Our Economic Future knows the promises and pitfalls of collaboration quite well. TheFund was formed in 2004 to address the long-term economic trajectory of Northeast Ohio, a regionthat has faced great challenges precipitated by the decline of its traditional manufacturing industries.The philanthropic organizations which formed this funder collaborative were concerned with howthe struggling economy was fueling rising levels of poverty, income inequality and other negative

consequences that if left unaddressed would debilitate the region for generations to come.

Nearly a decade later, the Fund can point to important accomplishments through its work to date aswell as challenges that remain ahead. Business growth efforts supported by the Fund have createdthousands of new jobs and attracted hundreds of millions of dollars to companies in the region.However, the Fund hasnt made as much progress addressing other strategic goals in NortheastOhio, including talent development, economic inclusion and government efficiency.

The Fund concluded a strategic review of its work last year that examined its impact to date andthe implications for its strategy. Amid the strengths and weaknesses identied in this assessment,an important message stood out: Members of the Fund consistently referred to the meaningfulcollaboration fostered between regional stakeholders as being the special sauce of the Fund.

We believe the lessons learned from the Funds experience promoting regional collaboration willbe valuable to civic leaders elsewhere seeking to partner with others in their regions to develop,implement and sustain strategies for addressing systemic issues. In this report, weve aimed tocandidly discuss the collaboration in Northeast Ohio to date and spotlight whats worked and whathasnt, and why. Ultimately, we believe that cross-sector collaboration, done effectively, will be vitalfor transforming the economic outlook of Northeast Ohio and regions around the country.

Ever onward,

Foreword

Brad WhiteheadPresident, Fund for OurEconomic Future

Deborah HooverChief Executive Officer/ Fund ChairThe Burton D. Morgan Foundation

Jonathan SotskyDirector, Strategy and AssessmentJohn S. and James L. Knight Foundation


5/27


In response, a set of philanthropic institutions

from across Northeast Ohio launched theFund for Our Economic Future (the Fund)in 2004 to promote a regional approach forincreasing economic prosperity and opportunity.The original 28 Fund members committed a totalof $30 million over three years to begin restoring

regional economic competitiveness through

pooled grantmaking, research and convening.

This unprecedented regional collaboration hasgrown in strength over time. The Fund nowincludes more than 50 voting members (seeAppendix), which now go beyond philanthropic

Northeast Ohiohome to four major metropolitan areas, more than 4 million people anda $180 billion regional economyfaced in 2004 what the Cleveland Plain Dealer dubbed aQuiet Crisis. Employment growth in the region had lagged the rest of the nation for theprior two decades and manufacturings share of total regional employment had fallen byhalf. 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 theincreasing needs for social services that were straining the resources of nonprots in theregion. Philanthropic organizations were quickly coming to the realization that the only wayto meaningfully address the challenges of poverty and unemployment would be through amore holistic effort to promote regional economic opportunity.

Courtesy Akron Marathon

Executive Summary
http://www.thefundneo.org/http://www.thefundneo.org/


6/27

6

institutions and include businesses, nonprots,government stakeholders and higher educationinstitutions. Funders have pooled more than$90 million and invested nearly twice thatamount 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 morethan $100 million in federal and state supportfor its strategies.

The Funds investments and strategic guidancesince 2004 have spurred the development of theregions innovation ecosystem and advancednew industries. In 2011, Northeast Ohio rankedsecond in the country in job growth and itsunemployment rate of 7.4 percent outperformedthe national average of 8.5 percent. By the end of2012, the Funds efforts had contributed to morethan 12,000 new jobs, nearly $400 million innew payroll generated through new businesses,and almost $2.2 billion in new capital to sustainexisting businesses and grow new economicactivity. Encouragingly, the results appear to be

compounding: More than half of the gains inthese metrics occurred between 2010 and 2012.

While theres clear evidence of initial progress,the region still faces enormous economicchallenges. Despite recent decreases in theunemployment rate, it has not returned to pre-recession levels and many expect it wont forseveral years. Furthermore, household incomein the region has declined by 8 percent sincethe recession began in 2007 and 12 percentover the past decade. Those losses havent beendistributed equally; while the regions wealthiest

households have seen incomes increase by anaverage of 22 percent over the past decade, thenumber of families living in poverty has increaseddramatically, especially in the metro areas 1.

In order to better understand its impact to dateand chart its future strategy, the Fund engagedthe research and consulting rm FutureWorksto conduct a strategic review. The assessmentspotlighted the accomplishments and strugglesof the Fund over its rst seven years whilemaking several recommendations aboutadjusting the Funds approach to strengtheningthe regional economy.

The Fund used the lessons identied through thereview to shape its strategy as it began Phase 4of the work in 2013. The Fund has worked closelywith the private sector through the RegionalEconomic Competitiveness Strategy process,advancing a regional strategy owned equally byphilanthropy and the private sector. In terms ofits internal processes, the Fund has streamlinedoperations by simplifying committee structures

and decision-making processes, extractingfunders from more granular discussions andengaging them in conversations about higher-level strategy.

Going forward, the Fund continues to viewevaluation of its impact as a core ingredient tostrengthening its approach. Being transparentabout its work and learning from related effortsin other regions will be essential for the Fundas it fosters long-term economic success inNortheast Ohio.

1 Robert L. Smith, Census Report Shows Greater Cleveland Families Are Feeling the Sting of a Lost Decade, The Plain Dealer, September 22, 2011;Center for Community Solutions, Indicator Report: Social & Economic Conditions in Northeast Ohio, November 2011.


7/27


Advance research to forge consensus about priorities and approaches. Identifying which issues to address and how best to address them can be difficultwithout compelling data. Research and analysis galvanize support for priorities and helpstakeholders gauge success.

Incentivize collaboration through the promise of outside funding. Encouraging multiple institutions to work together on developing proposals for federaland state grants helps form new relationships and shared strategies. Partners frequentlydeepen and sustain relationships after coming together through their initial mutualinterest in applying for grant funding.

Build a public mandate for change. An important part of creating momentum and political will in the region for economicreforms is informing citizens about challenges and enlisting their support for newapproaches. Philanthropy can play a critical role providing offline and online forums forcitizen engagement around critical interactions.

Attract private sector partners to execute, not just inform, the strategy. Those with inuence over a regions economic competitiveness need to be committedto a common approach. Philanthropy must engage with businesses in the region to aligntheir actions and pledge resources over the long term toward achieving a shared vision.

Capitalize and shape the work of regional intermediaries. A way to quickly gain traction can be funding existing intermediary organizations, whichhave buy-in from regional stakeholders. Philanthropy can play an important role inshaping the ongoing strategies of economic intermediaries to ensure they address socialissues, not simply economic growth.

Sta the collaborative with core strategic competencies. Involve funders in performing key elements of the work related to setting strategy andgrantmaking, while supporting full-time professional staff who can promote thoughtleadership, convening, and research and analysis.

Lessons OverviewThe Funds experience produced several lessons about fostering effective collaborationthat apply to business, nonprot and government leaders partnering in any region to

address systemic issues. The report provides details in each of these areas.


8/27


Since launching in 2004, the Funds evaluation committee has collected key metricspertaining to business growth on a semi-annual basis from the economic intermediaryorganizations it has funded. Reported impact to date on these metrics is as follows:

* Estimated 2013 performance based on outcomes through June 30, 2013.** Jobs created and retained.

Phase 1

2004 - 2006 2007 - 2009 2010 - 2012 2013 - 2015*

Phase 2 Phase 3 Phase 4 Total

487 **

Not available

$156 million

4,416 **

$97 million

$1 billion

7,544

$301 million

$1.14 billion

2,096

$120 million

$575 million

14,543

$518 million

$2.87 billion

Jobs

Payroll

CapitalRaised

Impact of the Fund

Aerial view of Cleveland


9/27

9

To gather deeper insights about its impact, theFund hired the research and consulting rmFutureWorks to assess the strengths, challengesand emerging opportunities for the next phase ofwork. The review examined the Funds progress

advancing a common economic competitiveness

strategy in the region, the level of regionalcooperation promoted, the value added throughthe Funds leadership and research functions,and nally issues with organizational structure.Key ndings include:

Business Growth There was broad cross-sector agreement that the Fund has been most successful

promoting business growth. The Fund supported new business development through itsinvestments in six regional economic development intermediaries. Nearly 3,000 of the jobs were created in 2011 itself, at an average salary of $40K.

Capital Attracted The six economic intermediaries that the Fund supported have attracted $1.14 billionto the region. All intermediaries cited the importance of the Funds brand in securingadditional investment. The Fund also helped secured $19.2 million in federal and nationalgrants to support its work and an additional $117 million in state money to fund regionaleconomic development initiatives aligned with its agenda ($74 million of which isgrantee related).

Philanthropic Coordination Funders have used the Fund to learn about economic policy issues and support analigned approach to regional economic competitiveness. Annual philanthropic givingfor economic development in Northeast Ohio had increased by more than 150 percentin 2011 since the Funds inception. In 2011 and 2012, Fund members contributedmore than $141 million to economic development strategies across the region, with$23 million invested directly in efforts aligned with Fund grantees. Many funders statedthey had never previously invested in economic development and only decided to doso because of the Fund.

Strengths


10/27


Challenges

Regional Strategy Few felt the Funds Advanced Northeast Ohio (ANEO) framework effectively served as acommon framework to collectively guide the regions approach to advancing economiccompetitiveness, citing a lack of actionable and prioritized approaches. Even within theFund, opinions vary about the relative importance of different components of the ANEOagenda. The Fund has concentrated its efforts overwhelmingly on business growth, thepart of the agenda with the most consistent approach across funders, but has achievedless progress advancing other core priorities including talent development, racial andeconomic inclusion, and government collaboration and efficiency.

Business Retention and ExpansionThe Fund has focused mainly on attracting new technology-based industries. Whilesuccessful, opportunities exist to complement this tactic with efforts to expand andretain existing small- and mid-sized companies, which generally fuel more job growththan new businesses (research shows business attraction efforts account for around5 to 15 percent of new jobs, entrepreneurial ventures for 3 to 9 percent and existingbusinesses for 76 to 92 percent). 2

Organizational Structure IssuesThe Fund employs limited staff and relies heavily on active funder engagement throughmultiple working committees. As the Funds work has expanded, this process has

become increasingly cumbersome and prevented the Fund from speaking with a uniedvoice. It appears that the collective decision-making processes and structures thatseemed appropriate and effective during the Funds early work increasingly made itdifficult for the Fund to move quickly and decisively on important issues.

2 John Haltiwanger, Job Creation and Firm Dynamics in the U.S. National Bureau of Economic Research, Conference on Innovation Policy and theEconomy, April 12, 2011; Eric P. Canada, A Communitys Best Companies Are Your Competitors Best Prospects, Blane, Canada Ltd.


11/27


All that said, collaboration can be quite messyin practice. Partners do not always agree onpriorities and in some cases may possesscompeting interests. Funders can struggle withrelinquishing control and their ability to supportpet projects when grantmaking funds are pooledand allocated collectively. Finally, collaboration

requires long-term commitments to be mosteffective, and this precludes funders from quicklyshifting their priorities.

Through a decade of experiencing the upsand downs of collaboration, the Fund for OurEconomic Future believes more than ever in thevalue of partnering to achieve regional economictransformation. The following lessons, insightsand tips about collaboration based on the Fundsexperience are meant to serve others seeking

to maximize the value of collaboration whileavoiding common pitfalls in the process.

Ask anyone in the social sector about keys to success and it wont take long until theymention the importance of collaboration. Funders and institutions extol the virtuesof close coordination to achieve greater impact. Certainly, theres great potential thatcomes from designing shared strategies and pooling funds to address issues that no singleorganization could address on its own.

Lessons About Regional Collaboration

Voices & Choices


12/27

12

People are entitled to their own opinions but notto their own facts. Philanthropy can unite peoplearound common issues and approaches bysupporting economic research and assessments.Conversely, a lack of critical information can

preclude stakeholders from coming together toaddress key issues.

The Fund has had a few notable successesgalvanizing momentum through its support ofresearch and analysis. A primary example hasbeen What Matters to Metros (formerly titledDashboard of Economic Indicators ), an annualreport by the Fund proling key economic

indicators in the region. The report is developedin partnership between Cleveland StateUniversity, which performs the statistical analysis;the Fund, which interprets results and trends and

disseminates results; and the Federal ReserveBank, which provides guidance and counsel.The dashboard helped inform the businesscommunitys involvement in the current RegionalEconomic Competitiveness Strategy, and the

inclusion of indicators related to educationalattainment, land use and government efficiencyhas served to expand the denition of economicprosperity. The dashboard is also a way theFund keeps score, tracking performance oncritical outcome measures that hold institutionsaccountable for their results.

Alternatively, conducting more research and

analysis related to talent development in theregion early on could have allowed the Fund toattract more support for the issue. There was nocomprehensive analysis showing trends relatedto talent in the region (e.g., levels of educationalattainment, number of workers in high skilloccupations). The absence of this informationlimited the Funds ability to demonstratethe economic returns of education and skilldevelopment and to promote a more market-

driven talent development system. There has alsobeen a lack of actionable information related tothe Funds goal of promoting more racial andeconomic inclusion; little data exists in the regionabout labor force participation levels and trends,the number of minority-owned enterprises,

Advance research to forge consensus about

priorities and approaches

Lesson 1

Lorain County Community College
http://www.thefundneo.org/what-matters/what-matters-metroshttp://www.thefundneo.org/what-matters/what-matters-metroshttp://www.thefundneo.org/what-matters/what-matters-metroshttp://www.thefundneo.org/what-matters/what-matters-metros


13/27


access by minority groups to education and skilldevelopment opportunities. The lack of datadocumented and analyzed regionally has made

it difficult to demonstrate the business case forracial and economic inclusion and form supportaround public policy changes (such as regionalland use planning).

Well-applied research can unify stakeholderswhen limited data and experience has previouslyobscured the need for new developmentstrategies. The Fund learned that lesson throughits work promoting regional strategies for landuse and zoning for communities. Achievingthat objective requires overcoming decades ofdevelopment patterns, but the consequencesof continuing past practices had never beenadequately articulated until recently. The Fundconvened a group of key stakeholders to formthe Northeast Ohio Sustainable CommunitiesConsortium (NEOSCC) which received aHUD Sustainable Communities federal grant

to increase the regions capacity to integrateeconomic, transportation, environmental and

housing planning across the four metropolitanareas of Northeast Ohio. In 2013, NEOSCCunveiled a scenario detailing how 30 more years

of business as usual will result in the richestcounty in Northeast Ohio being even poorer thanthe poorest county today. That dire predictionhas begun to galvanize stakeholders.

Though research in itself can be quite powerful,it must ultimately be paired with a plannedapproach for taking action. The Fund identiedan early opportunity for collaboration with thebusiness sector that resulted in a comprehensiveanalysis of the cost of local government inNortheast Ohio. This analysis was valued bysome of the regions leading metropolitanchambers of commerce, which shared theFunds perspective that government structuresand spending had a meaningful inuence on theregions economic competitiveness. However,neither the chambers nor the Fund developed abroadly shared perspective on what should be

done with the research to catalyze change.

Key Takeaways

Research can show the urgency to act around vital issues that were not beingaddressed collaboratively because they were not clearly quantied.

Analyzing data not only drives consensus among institutions but can be an importantway to engage the public on important priorities and needs in the region.
http://vibrantneo.org/neoscc/missionvaluesoutcome/http://vibrantneo.org/neoscc/missionvaluesoutcome/http://vibrantneo.org/neoscc/missionvaluesoutcome/http://vibrantneo.org/neoscc/missionvaluesoutcome/


14/27

14

Fostering regional collaboration to addresssystemic issues can be quite daunting, especiallywhen lacking a compelling way to kick off theconversation. However, the Fund has learnedthat the prospect of federal and state grant

funding can catalyze partnerships and begindeveloping trust.

Federal or national philanthropic grants canprovide the spark needed to bring disparategroups from across geographies and sectorsto the table. An example from the Fundsexperience is the group it convened to applyfor a HUD Sustainable Communities Initiative

grant to tackle land use and infrastructureplanning. The Fund made a small grant forfacilitation support that enabled a wide rangeof stakeholders across 12 countieslocal andcounty governments, housing authorities,metropolitan planning organizations, businessleadershipto apply for and win a grant of$4.25 million. More progress was made in threemonths to develop the proposal and set upthe initiative than in the previous three years

of working on a similar initiative without acompelling nancial incentive.

The Fund has played a key role in bothconvening and aligning partners during theprocess of applying for grant funding. It pulled

together social service organizations, workforceinvestment boards, community colleges andindustry associations across two metropolitan

areas to compete for and win a $4.3 milliongrant from the White House Social InnovationFund with additional support from the SurdnaFoundation to connect low-skilled workersto middle-skill career pathways in the healthcare and manufacturing sectors. In the leadup, the Fund worked to ensure that partnerswere prepared to perform key components ofthe work in the event they received the grant.In another instance, the Fund helped pull

together commercialization and workforcesupport services across multiple institutionsand 12 counties to win a federal grant of $2.06million for a Speed-to-Market Accelerator thatsupports companies in the exible electronicsand advanced energy industries. In the lead up to

Incentivize collaboration through the promise

of outside funding

Lesson 2
http://www.whitehouse.gov/administration/eop/sicp/initiatives/social-innovation-fundhttp://www.whitehouse.gov/administration/eop/sicp/initiatives/social-innovation-fundhttp://www.surdna.org/http://www.surdna.org/http://www.nortech.org/speed-to-market-acceleratorhttp://www.nortech.org/speed-to-market-acceleratorhttp://www.surdna.org/http://www.surdna.org/http://www.whitehouse.gov/administration/eop/sicp/initiatives/social-innovation-fundhttp://www.whitehouse.gov/administration/eop/sicp/initiatives/social-innovation-fund


15/27


this grant, several economic intermediaries in theregion were considering submitting individualapplications but the Fund was able to facilitate

their collaboration through a single proposal.

The ideal scenario is that coalitions andpartnerships formed through the process ofapplying for grant funding continue to paydividends over time. This has been the casewith a multi-region initiative supported by the

Fund involving morethan 24 higher educationinstitutions, businesses

and civic intermediaries inNortheast Ohio and Pennsylvania that won aninitial National Additive Manufacturing InnovationInstitute award of $40 million. In addition tocreating signicant local buzz, this coalition wenton to apply for and receive additional funding.

Key Takeaways

Fund the process of convening multiple institutions to develop proposals for grants.

Determine opportunities where the region would benet from multiple organizationscollaborating on a single proposal for funding instead of each submitting individualproposals.


16/27

16

Foundations can often achieve the greatestimpact by transcending their traditional role asgrantmakers and serving as a strategic convenerin the region. Foundations are particularly well-suited to engage residents in efforts to transform

regional economies because they are generallytrusted by the public and removed from manypolitical and economic sensitivities faced bygovernment and business officials.

The Fund has played the role of strategicconvener on numerous occasions over the pastdecade in Northeast Ohio. A primary instanceof this was the Voices & Choices initiative, an

effort launched by the Fund in 2005 to develop apublic mandate for changes that would increaseeconomic opportunity in the region. The effortengaged 21,000 residents through interviewsand workshops where they provided input aboutopportunities and challenges, while hundredsof thousands more residents were reachedwith information about important priorities forovercoming economic challenges in NortheastOhio. The feedback gathered from residents

played a big part in shaping the AdvanceNortheast Ohio economic competitivenessagenda developed by the Fund while also serving

to increase the sense of regional identity amongresidents in Northeast Ohio 3. Furthermore, out ofthis effort the Fund launched the Civic Commons

[Figure 1] to use online and in-person tools tocontinue to engage residents in shaping issues inthe region, such as waterfront development andstate budget allocations.

Another example of the Funds conveningpower was EfficientGovNow , an effort to fostergovernment collaboration by providing grantsto the regions most promising governmentcollaboration projects. The Fund empowered

residents to decide which projects deserved thegrants through a public vote. The public votingprocess generated signicant public attention

Build a public mandate for change

Lesson 3

3 Kathryn Wertheim Hexter and Molly Schnoke, 2008 Northeast Ohio Barometer of Economic Attitudes, Maxine Goodman Levin College of UrbanAffairs Cleveland State University and Wright State University Center for Urban and Public Affairs, 2008.

Northeast Ohio Sustainable Communities Consortium
http://americaspeaks.org/wp-content/uploads/2010/05/VC_FinalReport.pdfhttp://theciviccommons.com/http://www.efficientgovnetwork.org/OurStory/AboutContest/http://www.efficientgovnetwork.org/OurStory/AboutContest/http://theciviccommons.com/http://americaspeaks.org/wp-content/uploads/2010/05/VC_FinalReport.pdf


17/27


and interest. Editorial pages encouraged theirreaders to participate in the voting and calledon government officials to implement morecollaboration. In addition to building strongerpublic in the region for greater governmentcollaboration, the effort led to the creation ofthe EfficientGovNetwork, a network of NortheastOhio government officials that serves to promotefurther partnerships and share best practices.The effort also led to the creation of the LocalGovernment Innovation Fund, a state program

that has supported government collaborationefforts around the state through several roundsof funding.

The Fund for Our Economic Future launched the Civic Commons, a civic engagementutility and consultancy, in 2010 with the support of a $3 million grant from the KnightFoundation. The initiative builds conversations and connections that fuel civic action.

The Civic Commons has worked with 15 large organizations to involve the publicin important community issues. Through activities on the ground and online tools,citizens have been able to weigh in on issues from raising taxes to fund schools tourban redevelopment in blighted areas. Kent State University, for example, hired CivicCommons to engage students and faculty in creating a strategic plan that covers eightcampuses and 40,000 students.

In 2013 Knight Foundation awarded Civic Commons an additional $600,000 toexpand its reach and support a merger with ideastream, a multiple media publicservice organization.

Figure 1 | Civic Commons: an Example of Strategic Leadership


18/27

18

Key Takeaways

The independence of philanthropic organizations positions them as trusted communityleaders who can convene diverse stakeholders around a common agenda.

Citizen engagement tactics that help form strategy and encourage input on anongoing basis help form a public mandate for important changes needed to addresssystemic challenges.

Not all convening has been successful. TheFund has convened stakeholders in meaningfuldiscussions of important community needs

ranging from workforce development toeducational attainment to land use, but therewas no sustained action or commitment. It hasalso organized ad hoc meetings of stakeholdersacross metro areas in the region to make sure

it was being geographically inclusive as well asto spot opportunities where it may be able totake the lead in advancing an issue; however,

this approach, in the absence of a well-denedproblem that needs solving, has receivedmixed reviews and generally has not resulted insustained actions.


19/27

19

An overarching lesson from the Fundsexperience in Northeast Ohio is the criticalimportance of cross-sector ownership of acommon approach to strengthening the regionseconomic competitiveness. Beyond aligningphilanthropic efforts, the strategy must be fullysupported by the private sector.

The Fund strived to forge consensus ona common vision and approach in 2007through the launch of a regional economiccompetitiveness agenda called AdvanceNortheast Ohio (ANEO). Though privatesector stakeholders played a considerablerole informing and shaping the creation of

ANEO, they were not devoted to co-owning itsimplementation and making long-term resourcecommitments; rather, business stakeholderspreferred to engage on a project-by-projectbasis where they felt their interests intersected.So while ANEO had a powerful impact on thebehavior of philanthropy, its inuence on thepriorities and efforts of organizations outside theFund was fairly limited.

Furthermore, the Fund faced issues with makingANEO actionable. Many leaders in the regionnoted that while there was general agreementon the priorities identied, the issues beingaddressed were too complex. There was no

clear understanding of how stakeholders shouldprioritize efforts and align resources to havea meaningful impact. Nor did the Fund createan organizational or operational structure tofacilitate the implementation of ANEO.

Based on these lessons, the Fund has pursueda new approach for working with the privatesector to dene and adopt a common strategy.Over the past year, the Fund has partnered withthe business sector on the Regional EconomicCompetitiveness Strategy (RECS), a process toform the strategy, align resources for the workand measure impact over time. The RegionalCompetitiveness Council consisting of seven

business leaders and seven philanthropicleaders directs the RECS effort, while theStrategy Coordinating Committee made up ofkey intermediary organizations in the regioncoordinates between different RECS stakeholdersand sources potential funding opportunities.Staff has been hired to facilitate and coordinatethe work of the council and committee, withbusinesses and philanthropy agreeing to evenlysplit the costs associated with planning andmanaging RECS (which has been nearly $1million to date).

As of the summer of 2013, the Fund and itsprivate sector partners had used the RECS

Attract private sector partners to execute,

not just inform, the strategy

Lesson 4


20/27


process to form a common set of priorities[Figure 2]. The work of RECS had turned towarddesigning and implementing strategies to

address the RECS priorities through nearly $65million per year of investments being made byRECS partners in the regional system.

Key Takeaways

Business stakeholders informing the strategy is not enough; private sector leaders needto play a central role in the long-term management of the strategy.

Broad frameworks do not foster long-term commitment; prioritize issues and securespecic commitments to promote a strategy truly owned across sectors.

Figure 2 | Regional Economic Intermediary Priorities

1. Grow and strengthen the regions driver industries and companies.2. Accelerate growth of target emerging industries.3. Strengthen the regions innovation, research and commercialization capacity

and effectiveness.4. Foster and grow the regions entrepreneurial environment.5. Prepare and attract workers to ll short- and mid-term employment demand

for driver and emerging industries, and other high-demand occupations.6. Increase the educational attainment, readiness, and resilience of the

regions residents.7. Improve Quality of Place to appeal to growing companies and talented people.8. Maintain and strengthen transportation and communications assets that

connect people, products and information to U.S. and global markets.9. Foster efficient and effective public policies, infrastructure investments, and

governmental services and structures.10. Improve the e ciency, e ectiveness, alignment and nancial sustainability of

the system of economic competitiveness intermediaries .

Bold = Near-term priorities


21/27

21

Funders seeking to address systemic challengeswould be well served considering how theycan build upon existing assets and momentumin the region. For the Funds work in NortheastOhio, a network of recently formed economic

intermediary organizations proved to be criticalin shaping the Funds strategy and approachto supporting business growth. Alternatively,the lack of sufficiently scaled intermediaryorganizations addressing other Fund prioritiesincluding talent development, economicinclusion and government efficiency has limitedthe Funds abilities to make as much progress inthese areas.

A study of Northeast Ohios economyconducted by McKinsey & Company in 2001recommended approaching business growth byfocusing heavily on the regions entrepreneurialcapacity. That strategy led to the creation orrepositioning of several important intermediaryorganizations [Figure 3] including: Team NEO,NorTech, JumpStart, BioEnterprise and MAGNET.The Fund was able to produce early wins inbusiness growth by supporting these existingorganizations, helping them broaden and elevatetheir effectiveness.

The Fund has added value by being an activistinvestor, unlike traditional philanthropic funderswhich tend to be hands-off with their grantees.A vital function served by the Fund has been

encouraging these economic intermediariesto adopt a more expansive view of economicopportunity which embraces goals aroundeconomic and racial inclusion. JumpStart hasinclusion advisors embedded in their work,

NorTech has a chief inclusion officer and TeamNEO has explicit goals around attracting minority-owned businesses to the region. Furthermore,the Fund has played a central role in strategicplanning processes at all of these organizationsand helped guide them in ways such as ensuringthey provided services throughout the entireregion and not just select metro areas.

The Fund has achieved signicant results

through this network-based approach. Sustainedinvestments from the Fund to JumpStart,BioEnterprise and NorTech have helped form amore robust ecosystem of technology-basedbusinesses and industries in the region. Thesethree intermediaries have worked closelywith one another and the leaders of theseorganizations work well together and have beenactively involved in shaping policy at the stateand federal levels. BioEnterprise and NorTechwere among six organizations to receive theState Science and Technology Institutes 2011Excellence in Technology-Based EconomicDevelopment Award. JumpStart received thissame award the two previous years and hasbeen nationally recognized for its work as anentrepreneurial support organization.

Capitalize and shape the work of

regional intermediaries

Lesson 5


22/27


Meanwhile, the Fund worked closely with businessleaders to strengthen and shape Team NEO intoa well-regarded business attraction organization.MAGNET helps small- to mid-sized manufacturerscapture opportunities in higher growth, highervalue added markets through innovation services.High-growth entrepreneurs from elsewhereare now encouraged to move to the region byJumpStart, BioEnterprise and NorTech. NortheastOhio entrepreneurs are helped by a diverse,interconnected group of advisors, mentors andintermediaries who help them identify promisingtechnologies, connect them to potential

Figure 3 | Regional Economic Intermediaries

BioEnterpriseFounded: 2002Fund Support: $11.75 millionA business formation,recruitment and accelerationinitiative designed togrow the health care andbioscience industry inNortheast Ohio.

JumpStartFounded: 2003Fund Support: $12.8 millionA nonprot that nurturesand strengthens NortheastOhios entrepreneurialecosystem by helping raisecapital and advocatingpolicies that support anetwork of incubators,

accelerators and investors.

MAGNETFounded: 1984Fund Support: $4.3 millionManufacturing Advocacy &Growth Network assistsmanufacturers with newproduct innovation, plantexpansions, productivityinitiatives and regulatory issues.

Minority Business Accelerate 2.5+Founded: 2008Fund Support: $3.4 millionWorks to advance the growthof African American andHispanic-owned businesseswith annual revenues ofat least $2.5 million in 16Northeast Ohio counties.

NorTechFounded: 1999Fund Support: $11.75 millionA technology-basedeconomic developmentorganization that acceleratesthe growth of innovation-based clusters in advancedenergy, exible electronicsand water technologies.

Team NEOFounded: 2007Fund Support: $10.43 millionA joint venture of the regionslargest metro chambers ofcommerce that advancesNortheast Ohios economyby attracting businessesworldwide to the 16-countyCleveland Plus region.
http://localhost/var/www/apps/conversion/tmp/scratch_7/bioenterprise.comhttp://www.jumpstartinc.org/http://localhost/var/www/apps/conversion/tmp/scratch_7/manufacturingsuccess.orghttp://www.gcpartnership.com/economic-inclusion/~/media/Files/Inclusion/Minority%20Business%20Accelerator_web.ashxhttp://www.gcpartnership.com/economic-inclusion/~/media/Files/Inclusion/Minority%20Business%20Accelerator_web.ashxhttp://www.nortech.org/http://www.teamneo.org/http://www.teamneo.org/http://www.nortech.org/http://www.gcpartnership.com/economic-inclusion/~/media/Files/Inclusion/Minority%20Business%20Accelerator_web.ashxhttp://www.gcpartnership.com/economic-inclusion/~/media/Files/Inclusion/Minority%20Business%20Accelerator_web.ashxhttp://localhost/var/www/apps/conversion/tmp/scratch_7/manufacturingsuccess.orghttp://www.jumpstartinc.org/http://localhost/var/www/apps/conversion/tmp/scratch_7/bioenterprise.com


23/27

23

Key Takeaways

Build upon the momentum of existing intermediaries in the region by funding theirwork but also shaping their strategy to address important social components.

Supporting economic intermediaries provides an opportunity to partner with thebusiness sector and deepen collaboration across other aspects of the agenda.

customers and introduce them to funding sources.By just one measurethe number of companiesattracting venture capitalthe transformation inNortheast Ohio has been remarkable. Until earlyin this century the deals were so few that no one

even bothered to track them. From 2002 to 2006,203 companies received venture funding. Thatnumber more than doubled over the next veyears to 472 companies.

Working with private sector leaders whofounded many of the intermediaries, the Fundhelped inuence state policies that created newresources for entrepreneurs and funded moreresearch and commercialization efforts. For

example, the Fund helped build public supportfor renewal of the Third Frontier Bond Program,a $2.3 billion state program that invests in next

generation industries. Additionally, the Fundhelped support the creation of the Ohio VentureCapital Fund, a $150 million fund of funds that hasattracted venture capital rms to Northeast Ohio.

The success of these effortsnew businessesformed in communities and national attentionfor changes occurring in Northeast Ohiohelpedbuild further support for the regional approach tobusiness development. Sustained commitmentto intermediaries who produced value fordiverse stakeholdersresearch universities, localbusiness incubators and investorswas criticalto changing perceptions and attracting resourcesacross the public and private sectors to support

the infrastructure needed to catalyze newindustries or attract global venture capital.


24/27

24

Prior to their participation in the Fund,most funders had never funded economicdevelopment activities. Funders havecomplemented the work performed by a smallfull-time staff at the Fund by owning several

key responsibilities. The Fund has learned fromits experience about the most effective way toengage members in the work, and the types ofskills and functions best performed by its in-house staff.

Fund members have become more comfortablewith their civic leadership role through greaterexposure to economic competitiveness issues.

While participation varies across individualmembers, funders have generally played a keyrole managing activities such as performingdue diligence on grants, coordinating cross-sector convening and guiding research efforts.This experience has elevated their sharedunderstanding of both what needs to be doneand how it needs to be done. The Fund has alsocreated opportunities for funders to engagebeyond the context of grantmaking decisions.

However, even the most engaged membersparticipation in the Fund is but one of manyprojects they support. So, the Fund has built asmall professional staff to manage core aspectsof the work. The instrumental roles played

by Fund staff include: 1) thought leaders withthorough knowledge of strategies for promotingeconomic prosperity that command trust andrespect from stakeholders in the region; 2)coalition builders who understand complex

relationships and institutional allegiances inthe region and seek to convene a broad swathof civic inuencers; and 3) strategic analysts who can lead research and evaluation toidentify opportunities and impact in the region.Opinions about the amount of overhead afunder collaborative should commit to staffingthese functions varies across different fundercollaborations and even varies among Fund

members themselves.

Furthermore, streamlining decision-makingand administrative processes remains key tooptimizing the value that both funders and

Sta the collaborative with core

strategic competencies

Lesson 6


25/27


professional staff to deliver. The Fund has begunto shift away from cumbersome committeestructures and grant authorization processesthat made managing the work needlesslybureaucratic. For example, programmatic grants

of any size used to require the approval ofevery single funder; the Fund recently adoptednew guidelines that allow the Fund to makesmall grants without approval and mid-sizegrants with authorization from an officer of

the Fund executive committee. Additionally,the Fund recently disbanded several long-standing committees in favor of forming ad-hoc committees that form to address emergingopportunities. As a whole these changes have

reduced administrative burdens on Fund staff,involved funders in more strategic conversation,and enabled the Fund to respond more nimbly toemerging issues with an authoritative voice.

Key Takeaways

Engage funders beyond nancial support; ask them to own key responsibilities formanaging the ongoing work.

Eliminate administrative burdens and cumbersome decision-making processes soprofessional staff can focus more time on high-value activities for advancing the mission.


26/27


Based on the Funds experience over the past 10 years, its clear that foundations can playa vital role leading a regions response to economic challenges and opportunities. The roleof foundations is particularly important in this new economic environment, which requiresunconventional strategies for generating growth and opportunity.

At the same time, foundations cant doeverything on their own and must effectivelyengage stakeholders across all sectors. InNortheast Ohio, businesses, metropolitanchambers, government officials and institutionsof higher education are providing leadership andconfronting challenges alongside the Fund.Foundations must play a key role identifyingways that stakeholders can collaborate toward

addressing complex issues pertaining toeconomic competitiveness.

Since this is new territory for many foundations,it requires changes to the way they typicallyapproach their work. They need to go beyondtheir traditional grantmaking role by developingclear points of view and building broad support

for common agendas. Though difficult, the payoffin the form of regional economic vitality andprosperity make it more than worth the effort.

All of the lessons learned by the Fund have acommon theme: the value of persistence andadaptation. Developing well-balanced,collaborative strategies for strengtheningcomplex regional economies requires a

willingness to fail forward. The Fund has learnedthat it takes sustained effort to bring together theright stakeholders able to partner effectively andproduce transformative impact. The rst solutionis rarely the right one, which means the mostimportant lesson of all for those seeking toadvance economic opportunity is to be preparedto adapt, modify and learn.

Conclusion

Networking at JumpStart


27/27

Abington FoundationAkron Community FoundationAshtabula County PartnershipBurton D. Morgan FoundationCase Western Reserve University

Cleveland Clinic FoundationCleveland FoundationCleveland State UniversityCommunity Foundation of Lorain CountyCuyahoga Community CollegeCuyahoga CountyDavid and Inez Myers FoundationDeaconess Community FoundationElizabeth Ring Mather and

William Gwinn Mather FundEva L. and Joseph M. Bruening FoundationFirstEnergy

Frances Shoolroy Charitable FundFred A. Lennon Charitable TrustGAR FoundationGeorge Gund FoundationGeorge W. Codrington Charitable FoundationJ M Smucker CompanyJohn Huntington Fund for EducationJohn P. Murphy FoundationJohn S. and James L. Knight FoundationKatherine and Lee Chilcote FoundationKelvin and Eleanor Smith FoundationKent H. Smith Charitable TrustKent State University FoundationLorain County Community CollegeMartha Holden Jennings FoundationMeisel Family FoundationMt. Sinai Health Care FoundationNord Family Foundation

Members of the Fund for Our Economic Future in Phase 3 (2010-2012)

Oberlin CollegePayne FundRaymond John Wean FoundationReinberger FoundationSaint Lukes Foundation

Sherwick Fund of The Cleveland FoundationSisters of Charity Foundation (Canton and Cleveland)Stark Community FoundationStocker FoundationSumma Hospitals FoundationSurdna FoundationTecovas FoundationThird Federal FoundationTrumbull 100 and Trumbull County Community

Foundation Economic CoalitionUniversity HospitalsUniversity of Akron

Wayne Growth PartnershipWesteld Insurance FoundationWilliam J. and Dorothy K. ONeill Foundation

Participants < $100,000Frederick W. and Janet P. Dorn FoundationHollington FamilyJohn G. and Karen R. Nestor Fund of

The Cleveland FoundationJoyce FoundationKulas FoundationMarcia and Harold Levine Philanthropic FundMichael V. ShafarenkoNathan and Fannye Shafran FoundationRay MurphySusan and John Turben FoundationWeathertop FoundationWhitehead Family Fund

Appendix

catalyzing regional economic transformation lessons from funder collaboration in northeast ohio

Documents