Kresge, Knight, and Ford Foundation Lead Effort to Save Detroit’s Art

(January 14, 2014) — Some of the US’s best known foundations have committed $330 million toward a deal to avoid cuts to Detroit retirees’ pensions and save the Detroit Institute of Arts’ renowned collection.

Nine foundations with ties to Michigan—including the Ford Foundation, the Kresge Foundation, and the John S and James L Knight Foundation—have offered to contribute to a fund which would relieve the city-owned Detroit Institute of Arts museum of its responsibility to sell some of its collection.

Detroit currently has $18 billion in debts, and the city’s retiree’s pensions are at risk of being reduced by bankruptcy proceedings. According to the city’s bankruptcy petition, the city’s pension funds are underfunded by $3.5 billion.

It is believed to be the first time foundations have been asked to invest money to prop up public sector pensions. Under a new deal, brokered by the primary mediator, Chief Judge Gerald Rosen of the US District Court in Detroit, the museum would be transferred from city ownership to the control of a nonprofit, which would protect it from future municipal financial threats.

However, the $330 million alone is not believed to be enough to safeguard the art collection: as much as $500 million may be needed to protect the art from an auction, officials told the New York Times. Any of the 100,000 creditors pursuing claims against the city could also object to the plan.

The foundations would stipulate that Detroit must put the money into its pension system, said Alberto Ibargüen, president of the Knight Foundation.

This is not the first instance of charitable groups’ and high-profile figures’ trying to help. Previous contributors include Lloyd Blankfein, the chief executive of Goldman Sachs, and billionaire Warren Buffett, who announced a $20 million initiative to help small businesses in Detroit last November.

 “There’s a lot of detail to work out here—it’s a moving target,” Mariam Noland, president of the Community Foundation for Southeast Michigan, told the newspaper.

Noland revealed the plan first took shape when Judge Rosen, whom she knows, called her office. His office “reached out to me and said: ‘We have an idea. What do you think about raising $500 million?’ ” she said. “And I said, ‘Are you crazy?’ Actually, I didn’t say that — you don’t say that to a federal judge. I said, ‘Let me call some people I know.’ ”

Darren Walker, director of the Ford Foundation—the nation’s second-largest private foundation, with $11 billion in assets— told the paper it was “unprecedented and monumental for philanthropies to undertake this kind of initiative,” but that “if there was ever a time when philanthropy should step up, this is it.”