On 4 November a federal bankruptcy judge approved a financial reorganization plan for Detroit that relies on nearly half a billion dollars in philanthropic support to shore up the city’s pension system, protect its world-class art museum, and help lift the city from insolvency.
As Detroit emerges from what is America’s largest municipal bankruptcy, some big names in philanthropy will now put their dollars to work in unprecedented fashion –providing a cash infusion to a government pension system. A group of US foundations are pledging to contribute $366 million over 20 years to an $816 million fund that will help the city pay the pensions of its workers and retirees. The Ford Foundation will make the largest contribution to the fund, pledging $125 million, while the Kresge Foundation is pledging $100 million.
The museum itself, the Detroit Institute of Arts, will pay $100 million to that fund –money it has raised in less than a year from a host of sources, including the J Paul Getty Trust, the Andrew W Mellon Foundation, several local family foundations, the Big Three automakers, various Michigan companies, and individual donors.
Altogether, support from foundations and museum donors will total $466 million, with the state’s contribution covering the remaining $350 million to be paid to the city pension system over the 20-year life of the deal.
The framework of what’s become known as the ‘grand bargain’ was crafted by federal bankruptcy mediators last fall and announced in February. In return for the philanthropic support, Detroit will transfer ownership of the museum’s collection and facilities to the non-profit that runs it.
Click here to read Drew Lindsay’s article for the Chronicle of Philanthropy and here to read Monica Davey’s article in the New York Times.