Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 105
PANEL V
FILLING THE GAPS: THE ROLE OF FOUNDATIONS
Moderator:
Jim Turner
Association of Public and Land-Grant Universities
Mr. Turner said that the United States is unusual in the role
played by foundations in economic development. “In the Rust Belt,
where I come from,” he said, “industrialists and even their companies
may die, but they tend to leave foundations behind that support their
communities. This is a powerful tradition because it’s creative and it can
be done through a grant process that looks at many good ideas. He
praised in particular the Heinz Endowments of Pittsburgh, where he grew
up. “The foundation has been a godsend,” he said. “It and several other
family foundations are focused on Western Pennsylvania and how to
make it better. It’s hard to think of Pittsburgh without them.”
How Innovation Clusters Are Reviving the Economies that “Urban
Renewal” Destroyed
Christina Gabriel
Bomani Howze
The Heinz Endowments
Dr. Gabriel agreed with Mr. Turner that Pittsburgh is the fortunate
beneficiary of entrepreneurs who were active a century ago, and that the
Heinz Endowment indeed focuses its efforts on the local region. “But the
idea,” she added, “is to treat the region as a living laboratory for
problems that are national in scope.”
She began by referring to her title, which began: “2532
Neighborhoods, 992 Cities, 1 Million People.” These figures represent
those who were involved in federally subsidized urban renewal projects
between 1949 and 1973. “This matters to every one of us,” she said,
“because the legacy of those urban renewal years exists in so many of
our cities. Many of these projects are now considered failures, and these
failures may be located very close to our universities and other
105
OCR for page 106
106 GROWING INNOVATION CLUSTERS FOR AMERICAN PROSPERITY
communities where economic activity is beginning to aggregate in
innovation clusters.”
This symposium is considering how we can create successful
innovation clusters in more places, she said. “You cannot tell the story of
the nation's strongest innovation clusters without recognizing the role
that federal policy and federal funding played in making these clusters
possible. You have to remember that every year since World War II,
Boston and Silicon Valley have had hundreds of millions of current-year
dollars poured into their research universities. After 65 years, it would be
shocking if those places were not centers of innovation. All the other
regions trying to innovate are trying to accelerate the process so it
doesn’t take them all 65 years.”
In the same way, she said, “you cannot tell the story of the nation’s
economically distressed communities without recognizing the role that
federal policy and federal funding played in making this economic
distress inevitable.” She said that it was important to talk about these two
issues “in the same breath.” An innovation cluster cannot be considered
apart from where it is situated in its community. A cluster can indeed lift
all boats, she said, but they cannot be successful if they are isolated.
The Urban Renewal Movement
She said that the urban renewal movement, which began just after
World War II, was partly responsible for the shape of many urban
communities today.1 A popular idea was that cities were declining
because buildings were aging and street grid patterns were out of date.
One solution proposed was to make the cities more attractive by
removing aging housing stock and replacing it with malls, parking lots,
and other modern structures. At that time, she said, the well-meaning
foundations in Pittsburgh were “doing what you would hope foundations
would do—taking the lead.” Richard King Mellon, head of the largest
foundation in Pittsburgh, was involved, as was Mayor David Lawrence
and the Allegheny Conference on Community Development.
“The foundations started very proudly,” she said, “grabbing this issue
of urban renewal before anyone else in the country. We took our smoky
city and turned the area where the Allegheny and Monongahela Rivers
come together into the Golden Triangle, a major success story. Because
of this success, we felt we could do other things. So across the river, in
Allegheny City, which is now called the North Side of Pittsburgh,
hundreds of city blocks were bulldozed, including what were a beautiful
park and vibrant weekend market. In their place is an empty
1
For an examination of urban renewal, see: Mindy Thompson Fullilove, Root
Shock: How Tearing Up City Neighborhoods Hurts America, and What We Can
Do About It, New York: Ballantine Books, 2005.
OCR for page 107
107
SUMMARY OF PRESENTATIONS
neighborhood. The street grid was cut off by a huge suburban-style
Allegheny Center Mall, which we all now recognize was a mistake.”
She referred also to a section of the city called East Liberty, which in
1928 was a vibrant economic zone. By 1970 it, too, was reshaped to
resemble a shopping mall. Now the foundations have joined to remove
some of the replacement structures and fund a community plan to
resuscitate the neighborhood.
Reaching out to the Hill District
The third of the failed Pittsburgh projects she mentioned was the Hill
District, playwright August Wilson’s neighborhood, between downtown
and the University of Pittsburgh. The old street grid was severed, cutting
it off from the downtown business district, and some 100 city blocks
were removed to make room for what is now a large parking lot and a
domed arena. It has virtually none of the amenities one expects in a
vibrant neighborhood, such as bars and clubs, coffee shops, restaurants,
lodging, banks and ATMs, gas stations, grocery stores pharmacies, and
hospitals. These amenities are found instead in the areas surrounding the
Hill District, such as the Strip District along the river below the hill and
the South Side on the far bank of the river. Indeed, it is in these areas
where new innovation clusters are springing up: robotics companies in
the Strip District, software companies on the South Side, gaming
companies just to the east of the software firms, arts companies in
Lawrenceville just north of the Hill, and biotech and InfoTech firms just
southeast of the hill and next to the universities.
Connecting the Hill to High-tech Clusters
Accordingly, The Heinz Endowments and other foundations have
joined with community organizations to integrate the Hill District with
these adjacent zones within the state-funded Pittsburgh Central Keystone
Innovation Zone. This “PC-KIZ” features “direct and deliberate bridges”
to connect the Hill to the surrounding high-tech clusters. One pilot
project under development focuses on a 1929 building originally
designed as a trade school for the Pittsburgh Public Schools. Its
classrooms, high-bay shops and labs are being converted to support a
holistic program for education and training along the entire K-12 and
adult workforce pipeline with a focus on green jobs at all levels. The
collaboration intends to connect the community to a new magnet high
school, a university biofuels research and testing lab, a green building
operating engineers training program, and a greentech-focused business
incubator. In short, these neighborhoods can now become centers of true
urban renewal if grassroots community participation is integral to the
design.
OCR for page 108
108 GROWING INNOVATION CLUSTERS FOR AMERICAN PROSPERITY
The Improvisational Quality of Clusters
Bomani Howze, also with the Heinz Endowments, noted that
promoting a Hill District connection to the innovation economy could
only begin by understanding the neighborhoods and learning how to
optimize the impact of funding on neighborhoods. Likening the process
of innovation to jazz, he suggested that renewing neighborhoods, too,
can have a “free-flowing improvisational quality.” There can also be, he
said, “organic freedom in the culture of a neighborhood that would lend
itself to the innovation processes seen in technology centers—which in
many cases are just down the road.”
He said that today there are many development projects moving into
the open spaces created by bulldozers decades earlier. “The real issue is
how this can connect to community small-business development
initiatives,” he said. The PC-KIZ, a state program, is an example of how
philanthropic dollars can be complemented by other monies to attract
private interest. “We hope that it will be industry-led,” he said, “so
people will be trained for jobs that will come.”
The objective is to attract small businesses of all kinds to the area.
One hurdle is that shops and restaurants are absent, so the PC-KIZ is
trying to encourage those amenities to move in, bringing the technology
clusters closer together and helping revive the neighborhoods.
Dr. Gabriel concluded with a recommendation for the federal
government. She recalled working in the Technology Reinvestment
Project during Clinton Administration, and said that six agencies were
able to work together out of the same general fund and still be effective
and quick at making joint funding decisions. In that case, the objective
was to find ways to support dual-use technologies. She said the lessons
learned in that exercise could directly assist the multiple federal agencies
that want to integrate cluster formation with community issues, such as
those being addressed in Pittsburgh.
Building the Workforce and the Universities
George W. Bo-Linn
Gordon and Betty Moore Foundation
Dr. Bo-Linn began by describing some unique roles played by
foundations. First, they can identify “possible pockets of innovation and
inflection points. We are not encumbered by an existing bureaucracy. In
many cases the founders are businessmen and entrepreneurs who have
long personal experience in finding and supporting those pockets of
innovation and inflection points.”
Second, he said, foundations are able to provide seed money outside
the traditional funding process. This differs from the venture capital
OCR for page 109
109
SUMMARY OF PRESENTATIONS
approach in that foundations can take longer to examine a project, pursue
a deeper due diligence examination, and support more capacity building.
With its flexibility and stature, a foundation can take risks, act quickly,
and catalyze consensus. He noted that the tradition of philanthropy was
being enriched by “a whole array of Silicon Valley entrepreneurs who
have been enormously successful, and who are putting their money into
foundations. The difference is that the living founders play a key role in
their foundations. They want to know that something’s happening, that
innovation is occurring.”
Third, the stability, resources, and freedom from political pressures
allow a foundation to stay with a project for the long run. Gordon Moore,
he said, believes that for large, important problems, it may take a decade
to have measurable success. Hence the Moore Foundation takes deep due
diligence in assessing opportunities and will commit resources for
multiple years. “He feels that if you want to see change, then you have to
commit to it.”
A Profile of the Foundation
The founding agenda of the foundation was to “make a positive
impact on the world for generations to come.” The Gordon and Betty
Moore Foundation, founded in 2000, is already the 10th largest
foundation in the United States and has provided grants of almost $2
billion. Its primary program areas are environmental conservation,
science (mostly U.S. science, especially at California Institute of
Technology), and the San Francisco Bay Area program. A notable
ongoing commitment is the foundation’s role in funding the new Thirty-
Meter Telescope on Hawaii’s Mauna Kea which, when completed, will
be the world’s largest optical telescope.
Program areas, he said, are organized around large-scale initiatives
with high potential for success. He likened these initiatives to business
decisions. “We need to have a strong case,” he said. “Tell us why it’s
going to work, how much it’s going to cost, what the measurable
outcomes are.” He said that measurable outcomes are a “defining
quality” of the Moore Foundation, because of its objective to have
“enduring impact. We try to leverage each program as much as we can—
ideally, we try to contribute about 25 percent to 35 percent. If we can’t
find collaborators to come in with us, we tend to think it isn’t time for
that project to more forward.”
A Focus on California
From 2000 to 2009, 58 percent of the foundation’s awards went to
recipients in California ($810 million, in 938 grants) and 42 percent
outside California ($981 million, in 677 grants). Among grants to
California, organizations were $291 million to the “San Francisco Bay
Area,” which for the Moore Foundation extends from Santa Cruz to
OCR for page 110
110 GROWING INNOVATION CLUSTERS FOR AMERICAN PROSPERITY
Sacramento. The majority of the California money—57 percent—was
spent on science. Grants in California went mostly to the UC system,
with 56 percent going to Caltech and 39 percent to the UC state system.
A special focus on science spending is the Marine Microbiology
Initiative, which is helping a young field to grow. Gordon Moore
believes that science should be able to move as quickly as possible from
basic research into application, where application is appropriate.”
The foundation also funds new ways to publish scientific knowledge
quickly, as shown by PLOS, the Public Library of Science. “We believe
that dissemination is key,” he said, “so PLOS was in large part catalyzed
by Moore. We also work with Google Earth to document what forests are
being preserved, what ice caps are melting, what are the effects of
drought and other climate change. We can’t know that without
instrumentation, and Moore has a particular interest in that.”
Another theme of the foundation is to support scientific discovery
before its application. “We seek the best scientists to do the best type of
science,” he said. “We don’t know what is going to have applications in
advance, but the best science inevitably has application.”
A Commitment to Nursing
Another major commitment of the foundation, the San Francisco Bay
Area Program, contains several activities, two of which support nursing:
the Betty Irene Moore Nursing Initiative and the Betty Irene Moore
School of Nursing. The primary theme is workforce development, which
is shaped by the foundation’s conviction that more and better nursing
education and training are essential to keeping the quality of health care
high and the costs low. U.S. health care accounts for about 16 percent of
GDP, said Dr. Bo-Linn, and 45 percent of all private-sector jobs added in
2007. “It’s the economic engine right now. Hospitals support 1 of 10
U.S. jobs. In 2006, with “ripple effects” included, hospitals supported
almost 14 million jobs and almost $2 trillion in economic activity.
Hospitals are the largest employers in most communities.”
“What’s the driver of health care?” he asked. “Hospitals,” he
answered. “What’s the driver of hospitals? Nurses. And here we face a
problem.” He said that the shortage of well-trained nurses is “enormous,”
and consequently the foundation has developed partnerships with over 71
institutions, investing in universities and directly supporting the
development of nurses and nurse educators. When the foundation
concluded that there were not enough nursing faculty in California and
nationally, it allocated $100 million to create a new nursing school at UC
Davis. To date, he said, the foundation had directly supported more than
1,100 individuals to become frontline RNs and nursing educators.
He said that high-quality health care saves money and lowers health-
care costs, offering several examples. One was that some 80 percent of
OCR for page 111
111
SUMMARY OF PRESENTATIONS
the Moore Foundation grantee hospitals had reduced hospital-acquired
complications, he said, including
• 66 percent fewer central-line bloodstream infections, saving $25,000
per avoided case.
• 60 percent fewer ventilator-acquired pneumonias, saving $12,000 per
avoided case.
He also said that grantee hospitals were working to reduce hospital
readmission rates.
Another program area of the San Francisco Bay Area focus is science
education, which is “investing in the future,” he said. The foundation
sustains ongoing support for informal science education, increased
professional development for teachers, enhanced classroom teaching of
students, and development of more competent teachers. The Foundation
also supports the science and technology museums of the San Francisco
Bay Area and other science rich educational institutions.
In closing, he noted with satisfaction that the Moore foundation was
created in perpetuity. “So we’ll be around to see fruits of our labor.”
Discussion
Dan Berglund of the State Science and Technology Institute (SSTI)
asked two questions: whether the locally oriented foundations, such as
Heinz in Pittsburgh and Danforth in St. Louis, had a mechanism for
collaboration with one another, and whether the large national
foundations had begun to support entrepreneurship. Dr. Gabriel,
speaking for Heinz, said that the foundations did talk to each other, for
example through the Council on Foundations and various affinity groups
that meet regularly. She said that Heinz also worked as closely as
possible with the state, and is studying how to make a bigger difference
nationally. “We’ll never have as much money as the federal
government,” she said, “but we can be more flexible, and a little flexible
money can often make a big system work better.” On the second
question, she said that the world of foundations was undergoing a “sea
change” as the newly rich become philanthropists. “There is a lot of
social entrepreneurship,” she said. “There’s a huge backlog in 501(c)3
applications.2 Everyone wants to start a new social enterprise, and there’s
so much foundation money out there. Innovators in the field of
philanthropy are asking how we can push the envelope in order to do the
things that are most needed to address problems that have been
intractable for a long time.”
2
501(c) is a provision of the United States Internal Revenue Code that lists non-
profit organizations exempt from some federal income taxes.
OCR for page 112
112 GROWING INNOVATION CLUSTERS FOR AMERICAN PROSPERITY
“Giving While Living”
Dr. Bo-Linn agreed with Dr. Gabriel about the “huge amount of
money made recently by entrepreneurs,” many of whom are “giving
while living.” The Gates foundation, he said, will self-terminate 50 years
after the death of the founders. He saw a move to areas of social
responsibility, measurability, and transparency. “These problems are so
huge,” he said, “that it requires working with private industry and
government to affect policy. Foundations cannot influence either pending
or actual legislation, but we can educate, convene consensus, and
catalyze movement.”
Dr. Wessner asked whether the Moore Foundation had tried to
broaden its commitment to hospitals by attracting more matching grants
from state or federal governments. Dr. Bo-Linn said they have not gone
to the governments for such in-kind matches, for various reasons, but
that they do collaborate with other foundations, private industry, and the
grantee itself. “There is a consortium of grant-making bodies,” he said,
“who work often with each other.”
Helping Spend Recovery Money Well
Dr. Wessner asked what other needs were most pressing to the
foundation representatives. Dr. Gabriel said that with the sudden
spending triggered by the Recovery Act, many recipients needed help to
determine the best way to spend new money. For example, she said the
Pennsylvania Workforce Investment Board had asked Heinz for
assistance. “They told us they were graded on how fast they spent the
funds, but they couldn’t spend it on staff and they didn’t want to just
shovel it out the door to the usual suspects. People who are not already in
the system and don’t already know how to navigate it are going to lose.”
Heinz was able to fund a person who was well acquainted with the right
community organizations and had experience with workforce investment
who was able to help the board seek out and secure a more diverse pool
of providers. “This is a once-in-a-lifetime opportunity,” she said. “We
have to make sure it lifts all boats and doesn’t further polarize us.”
Mr. Turner asked how organizations like the Moore Foundation,
which often reflect the efficiency and leanness of the high-quality
organizations that generated their endowment, were able to choose
grantees that were equally efficient. Dr. Bo-Linn said that a large part of
capacity building is finding the right people. The Moore Foundation had
discovered that the people who work in NGOs do so by choice and bring
to their mission real passion. At the same time, he said, it was not always
possible to measure all the activities of grantees by Six Sigma standards.3
“The engagement in broad social enterprise, distressingly, may be more
3
Six Sigma is a certification program improving measurable results in
organizations. .
OCR for page 113
113
SUMMARY OF PRESENTATIONS
like jazz,” he said. “We often innovate as we go, trying to stay engaged,
to stay together, rather than get that melody out as efficiently as possible
and demanding that you do it in half the time you did in the first cycle.”
OCR for page 114
