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Foundation for growth Featured

12:56pm EDT August 31, 2005
The mission of the Cleveland Foundation is pretty simple: Enhance the lives of all residents of Greater Cleveland.

The question is, how do you accomplish that?

Ronald Richard, president of the foundation, says one of the main ways is through economic development that leads to successful businesses in the region. Richard, who has extensive experience in government and the private sector — including heading up the CIA’s venture capital fund and a 13-year stint with Panasonic in various roles — oversees the $1.6 billion of foundation assets. Last year alone, the foundation authorized almost $88 million in grants for various economic, arts and cultural programs.

The foundation isn’t a typical nonprofit that only gives to causes; it is also trying to help find cures to the region’s ills.

While many are down on the region, Richard is optimistic, but he says there is much work to be done.

Smart Business talked to Richard about the role the Cleveland Foundation plays in economic development and its importance in helping the region make a comeback.

How does funding economic development initiatives fit into the mission of the Cleveland Foundation?

We think economic development is the very foundation of everything we do. Without it, revenue shrinks and arts and cultural programs and nonprofits all need more funding help. Everything we care about relies on a healthy economy.

When it’s not healthy, the number of people coming here for help increases and the number of organizations that need assistance increases. It is basically a common denominator for the things we care about.

What are some examples of economic development the foundation has funded, and how did they help the community?

I’ll start with the Fund for Our Economic Future. It’s been a real catalyst, and we are teamed up with some wonderful partners. We got together with 68 other funders, some large and some small, and put our money in a common pot to be used for economic development. The result is NorTech, BioEnterprise, JumpStart and TeamNEO, all of which you’ve probably heard of.

JumpStart, in its short life, has created at least 80 jobs. BioEnterprise is really starting to spin out bioenterprises in Cleveland and build off the strengths of our great medical institutions here. What we are trying to do in all of our economic funding is to build strength on strength and leverage the resources we have in Cleveland. I think we are starting to see a lot of leveraging occurring.

Do you think nonprofit-run business ventures are going to become more prevalent as donor dollars become harder to come by?

A lot of nonprofits in Cleveland have relied on the foundation for support. It is hard for them to budget and plan, so having their own revenue stream saves them a lot of time. They don’t have to prepare applications or ask for as much support.

That’s what we found out with Community Wealth Ventures, a consulting firm that helps nonprofits figure out a way to create business to provide them with a revenue stream. If we can fund it to help them build revenue streams so they won’t need so much funding, then that’s really leveraging our money.

I think it puts them in a much better situation and allows them to really concentrate on their services and not how they are going to be able to keep the lights on.

Are there any negatives to having nonprofits running businesses?

I don’t think so. There are a lot of ancillary benefits. If a nonprofit decides to run a Starbucks franchise to bring in revenue, the management skills they hone on the revenue-producing side will make them more efficient on the giving money or giving service side. It may cause the nonprofit to need to and have the money to be able to bring in someone with more business acumen on the revenue side. That acumen can be leveraged on the nonprofit side as well.

I really don’t see any negatives. I see a lot of positives.

How do you determine which economic development initiatives to support?

We determine it very much like how we determine which arts and culture programs to support. We look at business plans and which organizations will have the highest multiplier effect and use their ability to leverage our money.

What solutions are they providing to what problem and are they the most effective? It’s really just like a venture capital fund. You bet on the jockey, not the horse.

Who’s the management, who’s the CEO? Do they have a track record and what problem are they solving and where is that in our priority list of problems?

What challenges do the foundation and the region face, and how will you overcome them?

The challenges we face are in direct alignment with those the community faces. Our challenge is to continue to be as creative, innovative and efficient as possible. We have to get better at leveraging the funding from the U.S. government and from other foundations.

We need to help us make the transition into a more global world. Cleveland is suffering like every major city is suffering because of globalization. We need to help return us to our entrepreneurial roots, create more businesses and new industries.

Our challenge is to really help create jobs. Without jobs, you can’t retain population. Our children can’t stay here, and it affects everyone from the restaurant owner to the people that run the parking lots. Jobs are based on new technologies. We have to understand new technologies could create jobs in the region.

Are you optimistic about the region?

I think the region has tremendous attributes and a base to build on. If we make a comeback, and I’m certain we will, there will be a great quality of life here.

If we enhance the job base, we can come back and be very powerful. We can attract the best minds to live here. I am optimistic.

Having run R&D for Panasonic for many years, I know what we have in the region with our universities and our medical institutions, and how they greatly enhance our ability to do technology transfer and take basic research to applied research and then into products. It will take awhile, but I think we are well on the road to a comeback. I think there is a quiet renaissance in the making in the not too distant future.

I think you’ll be seeing a lot of cranes in the sky over Cleveland. There’s the new West Quad project, and as the Cleveland Clinic pursues developments and with the work planned in the Flats, you’ll see a lot of commercial and research park space. Our neighborhoods will continue to blossom. I’m optimistic, but we have a lot of work to do.

How to reach: www.clevelandfoundation.org or (216) 861-3810