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June 28, 2019

Why nonprofits are taking over Detroit, Flint governance

Though nonprofit philanthropies aid cities in times of need, like when natural disasters hit, their work usually ends when the crisis subsides. But that’s not the case in Detroit and Flint. New research from Michigan State University finds that nonprofits have acquired unprecedented involvement in how these two cities are governed.

Sarah Reckhow, associate professor of political science at MSU, said shrinking local governments coupled with flourishing philanthropy have created “nonprofit governance,” where nonprofit leaders guide urban policy, sometimes with limited input from elected officials and citizens.

“Both Detroit and Flint have been relying on private financial support to prop up local government,” Reckhow said. “This has been occurring since Detroit’s 2013 municipal bankruptcy and the Flint water crisis. Having nonprofits step in and save local government isn’t a sustainable solution, especially since nonprofits are not accountable to citizens.”

Reckhow and her co-authors examined U.S. cities where local governments have been severely weakened and crisis situations have compounded their problems. The authors also looked at more than 15 years of annual local government employment data across the Midwest, with emphasis on Detroit and Flint. They found that most cities have substantially reduced their workforce, resulting in extreme declines in public services.

Taking a deep dive into this data was “startling and disturbing,” Reckhow said. “Detroit’s and Flint’s governments shrunk far greater than their populations declined.”

From 2003 to 2016, Detroit lost 29% of its residents and cut more than half of its city government workforce. Flint lost 22% of its population between 2000 and 2016 – and city government reduced its workforce by 56%.

“Our research shows when local governments are so weak they can’t provide basic services like affordable and safe drinking water and public safety, nonprofit involvement in urban politics greatly increases,” Reckhow said. “Nonprofits are doing heroic work, but they shouldn’t be providing basic public services.”

Reductions in local government for Flint and Detroit are significant, but Reckhow and her co-authors did find differences between the two cities. They surveyed nonprofit leaders in each city as part of their study. Respondents in Detroit indicated that local government has improved its capacity and responsiveness since the bankruptcy. In Flint, nonprofit leaders were far less positive about city government and its capacity to serve citizens.

Though Detroit is faring better, it has striking examples of nonprofit governance, Reckhow said. The new M-1 rail line in downtown Detroit is privately financed and managed; the nonprofit Kresge Foundation is the largest funder, and there are no elected officials on M-1’s board of directors.

Reckhow’s research revealed the underlying issues creating nonprofit governance stem from the State of Michigan. State policies sharply limit local governments’ and school districts’ ability to pay for infrastructure, personnel and other basic functions, creating a strong incentive for local officials to seek private funding.

“Michigan school facilities are funded solely by local property taxes in contrast to many other states,” Reckhow said. “Michigan’s failure to offer state aid is a problem for ailing cities like Detroit and Flint, where low property values result in low property tax revenues – but where residents are so poor that even those taxes are a serious burden.”

Though this research focused on Michigan, Reckhow said these outcomes can occur in other cities across the U.S. when government is substantially weak.

“Our findings indicate quite clearly that Michigan state government needs to revisit its revenue sharing policies,” Reckhow said. “Certainly, private funding can help cities, for which we are all very grateful, but essential public services such as clean drinking water, police protection and public education is a local government responsibility. So the question becomes: How much longer are state leaders going to stand by and watch our urban citizens suffer?”

This research was published in Urban Affairs Review. Reckhow’s co-authors are Davia Downey, Grand Valley State University, and Joshua Sapotichne, MSU.

By: Kim Ward

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