By Davia Downey (Grand Valley State University), Sarah Reckhow (Michigan State University), and Joshua Sapotichne (Michigan State University)
In 2018, the City of Detroit kicked off fundraising for the Strategic Neighborhood Fund, an effort to attract private funds to support infrastructure improvements in city neighborhoods. This initiative came five years after Detroit went through the largest municipal bankruptcy in U.S. history. Based on major media accounts, this bankruptcy was a rousing success, ushering in the rebirth of a great American city. As a feature article in National Geographic put it: “Tough, real, and cheap, Detroit, with the nation’s largest municipal bankruptcy behind it, is suddenly attractive to investors, innovators, and would-be fixers, especially young adventurers.” The credit ratings agencies seemed to agree; by February 2019 the city’s bond rating had made considerable progress towards regaining investment grade status. Yet the city’s Strategic Neighborhood Fund points to another element of Detroit’s story. Underlying the signs of progress, the city’s recovery is incomplete, narrowly distributed, and heavily dependent on the support of private philanthropy and nonprofits in the city.
Seventy miles to the north on I-75, the City of Flint is also recovering from a public sector crisis- widespread lead poisoning and an outbreak of Legionnaires disease due to faulty treatment and the failure to use proper lead abatement procedures for the city’s drinking water supply. Although the water crisis in Flint and the bankruptcy in Detroit were very different kinds of events with widely differing outcomes, the governing process surrounding the conditions for each crisis, as well as the recovery efforts, are quite similar. Both cities were overseen by emergency managers appointed by Michigan’s governor as a response to local fiscal crises, marking a period when roughly half of the state’s African American population was not governed by their own locally elected leaders and the state-appointed leadership focused on cutting local government and services. Meanwhile, deep cuts and underinvestment in the city’s local government made the leadership and engagement of the nonprofit sector absolutely integral to each city’s recovery.
In our UAR article, “Governing Without Government: Nonprofit Governance in Detroit and Flint,” we examine how trends of public sector austerity intersect with public sector crises in these two Michigan cities. In particular, we focus on the role of the nonprofit sector in responding to challenges in Detroit and Flint, and how nonprofits take on new roles and functions. Based on our empirical findings and conceptual development rooted in the comparative politics literature, we describe a framework of nonprofit governance to show how nonprofit involvement in urban politics changes when local government is exceptionally weak.
We start by examining public sector capacity in Flint and Detroit among a comparable set of Midwestern cities. Using a database of full-time local government employees gathered from comprehensive annual financial reports (CAFR), our analysis compares full-time employment (FTE) and function across 26 cities. We find that the city governments in Detroit and Flint are operating at less than half of the administrative capacity at which they operated in 2000, and they experienced much deeper cuts than most other Midwestern cities of similar size. We observe the consequences of these cuts more directly by looking at specific functional areas of government. For example, in 2000, Detroit had more than 22 FTEs per 10,000 residents working in the areas of basic government housekeeping– the human capital required to administer legal, executive, and legislative services. By 2016, this core area of city administration had 40% of its 2000 capacity (on a per capita basis). Flint’s decline follows a similar pattern. When agencies and departments are severely depleted, what arrangements emerge for responding to citizens and offering services?
To better understand governance in the context of weak government capacity, we turned to the comparative politics literature. Researchers in comparative politics have studied the emergence of nonprofit substitution as a response to weak state capacity or failures and gaps in service provisions. In order to learn more about the experiences of nonprofit organizations in Flint and Detroit, we developed a survey on nonprofit activity, as well as the extent of coordination with local government.
For example, we asked nonprofit respondents about the addition of new services after the crisis in each city. In Flint, 82% of respondents indicated that their organization began providing new services after the water crisis. In Detroit, 56% of nonprofit respondents stated that their organization added new services after the city’s bankruptcy. Thus, the majority of nonprofit respondents in both cities indicated adding services.
Concerning the relationship to local government, we found that Detroit nonprofits were more positive, suggesting improvements in local government capacity post-bankruptcy. In Flint, respondents reported weakened public capacity as well as an increased need for the development of new programs to respond to the evolving water crisis in the absence of local government. Yet even in Detroit, where local government capacity has improved, nonprofits continue to enlarge their role into traditionally public sector functions. For example, in May 2017, a 3.3-mile streetcar line opened in downtown Detroit. The largest single funder was the Kresge Foundation. A nonprofit, M-1 Rail, operates the streetcar system, known as the Q-Line (a corporate sponsor, Quicken Loans, purchased the naming rights). The M-1 Rail board of directors includes no elected officials. Thus, a major new downtown infrastructure project in Detroit is both financed and led by the private and philanthropic sectors.
Based on our results, we propose that Detroit and Flint represent different types of nonprofit governance. In Flint, nonprofit responsiveness post-crisis is high, but government capacity is low and has not recovered from the crisis. The Flint case represents an environment of nonprofit substitution, or “governing without government.” By comparison, Detroit received philanthropic funding that contributed to restoring local government capacity as the city came out of bankruptcy. We argue that Detroit is a case of elite nonprofits building government capacity, through complementary efforts.
While the distinct combination of government employment reductions and crisis situations in Detroit and Flint may not be repeated elsewhere, we do see the potential for similar processes to emerge if local public sector cuts are deep and service demands remain high or grow. Our results indicate that a greater investment in local government capacity may be required to ensure that basic public services benefit the largest swath of citizens and that nonprofits are held accountable for their enlarged role in service provision and governing.
Davia Downey is an associate professor of Public Administration at Grand Valley State University. Recent publications has appeared in the DuBois Review: Social Science Research on Race; the American Review of Public Administration; and an edited book, Cities and Disasters (Taylor & Francis/CRC Press, 2012), and Perspectives on Federalism.
Sarah Reckhow is an associate professor of political science at Michigan State University. Her book, Follow the Money: How Foundation Dollars Change Public School Politics (Oxford University Press, 2012), examines the role of major foundations, such as the Gates Foundation, in urban school reform. Her research has recently appeared in Educational Researcher, Journal of Urban Affairs, and Policy Studies Journal.
Joshua Sapotichne is an associate professor of political science at Michigan State University. His current research and teaching center on the areas of federal and state government approaches to urban policies, fiscal federalism, and city policy agenda dynamics. His research has recently appeared in Policy Studies Journal, Urban Affairs Review, and Urban Research and Practice.