The Chicago Commitment ‒ Cities of Tomorrow
Section
As part of the “Cities of Tomorrow” series, Philea spoke with Tara Magner, John D. and Catherine T. MacArthur Foundation, to learn more about the origin and development of the Chicago Commitment; understand the uniqueness of Chicago’s context; and discover more about the opportunities and specific challenges that are addressed through the foundation’s actions for the city.
Many of the global challenges we face play out at the level of cities. These complex, interconnected and dynamic ecosystems are where many social, economic, environmental and political factors converge. This series, curated by Philea’s Funders Forum on Sustainable Cities, showcases philanthropic initiatives that aim at making cities sustainable.
Introduction
The Chicago Commitment is one of the enduring engagements through which the John D. and Catherine T. MacArthur Foundation aims to contribute to the thriving of the city of Chicago, embracing all its inhabitants, local organisations and communities. It invests in people, places and partnerships to advance racial equity and build a more inclusive Chicago.
The MacArthur Foundation is a private foundation based in Chicago, with locations in India and Nigeria. It also supports organisations around the world. The foundation invests in creative solutions to urgent challenges, sparking hope for the future of our societies. It was created by businesspeople John D. and Catherine T. MacArthur who were active in philanthropic endeavours throughout their lives, in particular in the cities where they lived: Chicago, Illinois and Palm Beach, Florida.
| City | Chicago, US |
| Period | 2016-ongoing |
| Primary constituents | Local organisations and communities, especially unrepresented and/or marginalised groups in the city of Chicago |
| Partners and collaborations | Community-based organisations; civic leaders of all kinds; and peer funders |
When did the MacArthur Foundation start to work at the city level, and what was the motivation behind it? What are the priority areas for you in this strand of work?
Tara Magner: The MacArthur Foundation has always supported activities in Chicago because it is the hometown of our founders and the location of their business, which sold life insurance. For this reason, we have always been active in Chicago, but the grantmaking in the city has evolved over time. In 2014 and 2015, the foundation went through a major restructuring, which represented an opportunity for it to take a fresh look at its focus on Chicago. A new “Chicago Commitment” team was formed in 2016. We started talking with the city’s organisations and community-based leaders to ask what they most wanted philanthropy to address in the city, and what they hoped that MacArthur would focus on specifically. We effectively co-developed the grantmaking strategy with these interlocutors.
We recognised that we could not be responsive to all the issues that Chicagoans were concerned about, as that list was far too long. We tried to identify the areas that Chicagoans prioritised and where MacArthur had expertise or knowledge. Or, alternatively, where we agreed that the issues were so important that MacArthur needed to act, we determined to build up our knowledge and expertise and deploy financial resources toward those matters.
As a result, since 2016, we have addressed gun violence prevention and community-police relations; community economic development; and arts and culture. We also support leaders at the individual and organisational level across all our focus areas.
Could you give us some examples of these different parts of work and how they are rolled out? To what extent are they interconnected?
In order to respond to the conditions of each issue or neighbourhood, we follow a slightly different process. For example, we support gun violence prevention in the communities with the highest rates of shootings, deploying approaches that have proven successful in other cities over time. We also strive to design overlapping or interconnected programmes, such that, for example, our support for community economic development is deployed in neighbourhoods where we also fund gun violence prevention efforts.
Our community economic development focus, called Vital Communities, works in ten Chicago neighbourhoods to support retail and commercial development, spurring local wealth building and providing the amenities residents have requested.
Our arts funding is supported citywide rather than at a neighbourhood level. Some years ago, we invited external advisors to help us rewrite our guidelines to have a stronger focus on equity. Now, the organisations we fund through this programme are recommended by an external panel that reviews applications against the criteria in the new guidelines.
Certain Chicago communities, such as Little Village and Englewood, offer good examples of how the different strands of our work can operate in an interconnected way. In each of these neighbourhoods, we support violence prevention activities, economic development, arts and culture, and community-based leadership. Some individual organisations work in all four areas; other organisations partner with one another to achieve shared goals.
Could you tell us more about your external panels, their composition and functioning?
The external panels for our arts funding are typically composed of 8-12 individuals. They include people with arts backgrounds and other experiences, such as journalism or community development. We aim to have a strong representation of different geographies, arts disciplines, gender, and personal identity and background, including people with disabilities and people representing LGBTQIA+ communities. We call these individuals “participatory grantmakers”. Typically, a participatory grantmaker serves for up to three years, with staggered terms so that each year we have some returning “veterans” and some who are new to the process. We pay them for their time; we also take care to avoid conflicts of interest so that grant applicants have confidence that the process is free of bias.
We treat the participatory grantmakers’ names as confidential during the review process, but once a person rotates off the panel, we ask if we may make their name public. In addition to our general commitment to transparency, we also want to make sure that grantseekers see that our work is informed by outside voices with deep connections to Chicago’s communities.
Continuing on your relationship with the community and your grantees: In the past you mentioned that during the Covid-19 crisis you had moved away from written grant reports to oral ones. What about now?
During the Covid-19 pandemic, MacArthur ran a pilot programme that offered grant recipients the option to schedule a phone call to discuss their work rather than be required to submit a written report. Many organisations said that they appreciated this option. MacArthur is expanding other options that we hope will minimise the burden on grantseekers and grant recipients. For example, in Chicago and across the foundation, we are making more multi-year general operating support grants. Our general operating grants do not require a written application, and reporting on these grants is simpler than on project grants.
Have you provided organisational development (OD) support to your grantees?
Yes, we have supported OD in a variety of ways over the years. For some time, we offered four-year grants directly focused on what we call “institutional support”. These grants enabled an organisation to focus on its own institutional strength and health. We learned that the organisations appreciated this approach because it helped them to focus on their internal operations and identify longstanding or emerging needs. Nonetheless, at the end of the day, most organisations would prefer to receive general operating support.
We also fund a handful of entities that support the capacity development of non-profits. For example, a highly skilled financial management organisation offers financial assessments, training, coaching and peer support for non-profit financial staff. It might help an organisation develop a new fiscal plan, a business model, or a plan to diversify its donor base. Other capacity support organisations in Chicago provide a wider array of offerings, such as board development, fundraising, human resources and the like. We fund these entities so that they can make their services available to non-profits for free or at very low cost.
Talking about partnerships, do you collaborate with other actors in Chicago?
Yes, for example, on gun violence prevention, we work very closely with community violence intervention organisations, with peer funders, and with governmental actors. We began to fund these programmes in 2016 when gun violence in Chicago sharply increased. We adapted programmes that had been successful in other cities and launched them in Chicago. The goal was to test these approaches locally, build an evidence base, and evaluate their effectiveness. The further goal was to attract public sources of funds to scale up the programmes once they were proven to be successful. What started as a group of five funders in 2016 is now a partnership of more than 50 donors that has raised over $140 million from philanthropy since that time.
During the pandemic, we collaborated with other foundations and non-profits to establish pooled funds that could quickly deploy funds to aid in response and recovery. These were created for immediate humanitarian needs, to help with vaccine access, and to assist certain sectors that were hard hit by public health closures, such as arts organisations.
We also collaborate with a wide array of other civic actors to achieve shared goals around time-limited goals, such as a full and accurate count of the decennial census.
Besides these new challenges that you have mentioned, what are the biggest challenges you have observed more regularly in Chicago?
Many cities face challenges related to racial segregation. A great deal of the segregation in the United States is rooted in government policies and practices from the 20th century that made it difficult, if not impossible, for non-White people to purchase homes and begin to build family wealth. This was especially true in Chicago, where in certain neighbourhoods, Black Americans were not able to access federally insured home mortgages. Over the decades, many Black families were segregated into specific communities but unable to purchase or maintain homes there, leaving them in challenging economic circumstances. These same neighbourhoods experienced disinvestment, leading to high levels of isolation and persistent racial segregation.
Many of these policies are now illegal, but it will take a long time to overcome this racist legacy. Because our work is conducted in the context of this history, our community economic development efforts prioritise local ownership and wealth building for community-based organisations and residents.
Many of our members own or invest in buildings, with the aim of giving them back to the community to use these spaces to regenerate the urban space. We often hear how challenging this work is. Among the projects you fund as part of the Chicago Commitment, do you have examples of good, successful practices in this sense?
We try to support initiatives that will increase local ownership of property and help people from specific communities remain in those neighbourhoods if they wish. In the US context we have what we call “community development financial institutions” (CDFIs). These organisations have a great deal of expertise on facilities management and how to repurpose and transform buildings. They can often lend money at favourable rates to mission-oriented entities. Even though Chicago has many mission-driven organisations that want to protect local ownership, a great deal of these cannot access sufficient capital to purchase and renovate property; others may not have experience in real estate development. We support some of these organisations to gain the requisite knowledge to enable them to step into that role. On one hand, we try to help CDFIs have enough capital on hand to lend for such projects. On the other, we support non-profits with flexible or general operating funds so that they can hire the experts they need to pursue these projects.
A good example is a non-profit organisation called Greater Auburn Gresham Development Corporation (GAGDC). It acquired an old county office building and succeeded in converting it into a “Healthy Lifestyle Hub”, which now includes a health clinic, pharmacy, bank, café, community meeting space, computing center for public use, the GAGDC headquarters, and much more. It took GAGDC 10 years and more than $10 million to bring this project to fruition. The process required time to determine with community members how to redesign the space; funds to hire lawyers to advise on zoning issues and to obtain drawings from architects and engineers; and financing for the overall project.
It is not easy to transform urban spaces. The process is quite complex and often slow, and it entails navigating through bureaucracy.
How is the foundation measuring its impact in the city?
It can be difficult to isolate and measure what is attributable to our specific funding. Although MacArthur is a large foundation, Chicago is a huge city and there are several other actors and factors playing a role in its transformation. These include private investments and public sources of funds, other philanthropic entities, tax incentives, etc. We do not want to overstate our impact and yet we want to understand how our funds contribute to positive change.
After conducting a strategy review with our Board in 2022, we determined that our community economic development grants were spread too thinly. We were working in too many neighbourhoods to have a significant impact in any single one. Consequently, we narrowed our focus from 15 neighbourhoods down to 10. We explained this decision to all grant recipients and offered large multi-year “tie-off” grants to those that we needed to phase out. We will also help these organisations by connecting them to other funders and networks.
We are now putting more resources into a smaller number of places, and combining support to different programmes (e.g. gun violence and economic development support), as we believe this will achieve greater impact over time.
At the same time, we are talking with our evaluators about how to analyse our impact in the future, especially because we are offering more general operating support grants. We appreciate that it can be hard to measure impact when grants are not project-specific.
In our final question, we wanted to ask you, Tara, what characteristics you think an ideal town should have?
I think one thing that makes a city vibrant and interesting is to have distinct neighbourhoods with unique cultural attributes. For centuries, Chicago has been a destination for new immigrants, so we have an array of communities such as Chinatown, Devon (with a large South Asian population), Greektown, La Villita (a Mexican American community), Little Italy, and Ukrainian Village, among others. Along with this diversity, we want all neighbourhoods in a city to be prosperous and safe, and to have equal access to amenities, green spaces, resources, jobs and mobility.
Philanthropy Curiosity Corner
MacArthur Foundation’s policy on indirect costs
The foundation developed an Indirect Cost Policy in the recognition that non-profit organisations face costs that are not directly attributable to projects or activities being funded by foundation grants but that are necessary to support their work and achieve their goals.
The policy was created following a study commissioned by the MacArthur Foundation that included data on indirect cost rates of over 130,000 US non-profit organisations. The study aimed at understanding the indirect cost rates of healthy organisations in order to define a benchmark for the foundation. The minimum indirect cost rate associated with financially healthy organisations in the dataset was 29%. Based on this evidence, it became the policy of the foundation to provide an indirect cost recovery of 29% of project costs on all project grants.
Additionally, the Chicago Commitment team acknowledges that many non-profit organisations wish to access public funding, but government entities often pay only 10% indirect costs on their grants. Hence, the Chicago Commitment contributed to a special fund that would enable non-profits to access additional funding to help meet the actual overhead costs of executing a public grant.
Resources
Chicago Commitment Program Strategy
Culture, Equity, and the Arts in Chicago Grant Guidelines
Little Village Environmental Justice Organization