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Guest Commentary: One Neighborhood At A Time

Philanthropy in the United States holds one of the keys to life-changing possibilities. The constant challenge is how to make a measurable difference, I think, especially in terms of America’s poorest children. Lifting them out of the pain and degradation of poverty is rewarding and contributes enormously to the economic vitality of our nation.

According to the Cato Institute, Americans contribute $335 billion or more to charitable organizations every year, and every year our federal, state and local governments combined spend $1 trillion combatting poverty. Why, then, do we not see results that match the scale of these efforts? I suggest two reasons:

• One, we have yet to fully recognize and respond to the crucial fact that poverty is rooted in geography – specifically in isolated neighborhoods of concentrated poverty. In every city, a handful of such neighborhoods account for the lion’s share of crime, violence, joblessness, high school dropouts, failed schools and neglected children. Yet we tend to take piecemeal approaches to jobs, housing, health and education when the challenge is to engage simultaneously on all of these fronts in one depressed neighborhood at a time.

• Two, we have yet to fully understand and exploit the transformational capacity of our nation’s public charities, which oversee $3 trillion in assets according to the National Center for Charitable Statistics. Philanthropy needs to be much more entrepreneurial – that is, willing to take risks to discover solutions and then demand measurable, sustainable results. In other words, the same results-driven spirit that built America’s storehouse of philanthropic wealth to begin with.

A lot of data challenges philanthropy as usual. According to the National Center for Children in Poverty at Columbia University, there are 72 million children in the United States, and four of every 10 live in low-income families – 16 million of them in families below the poverty threshold. Every year, 1.5 million students drop out of school. In our 50 largest cities, only 59 percent of students graduate from high school. Every year, dropouts commit 75 percent of crimes according to the Education Week Research Center. These markers suggest either that we have grown too satisfied by the act of giving to demand results, or worse, that we have lost faith in the possibility of significant progress.

We accomplish a lot of good. No doubt, the numbers would be far worse without our work. But I worry that we get better and better at managing money without making a comparably bigger impact. I’ve been at this for nearly 60 years now, and every step of the way I’ve found it easier to make money than to give it away effectively.

That’s why, in the 1990s, we decided to concentrate our foundation investments and time in one geographic area. We wanted to take on a single implacable challenge and see if we could make something happen that we could measure, sustain and adapt, and therefore create a model for the rest of the country.


The Challenge

The breakthrough for me came when I read an essay in The New York Times by a scholar from Rutgers University, Dr. Todd Clear. He did a study of New York state prisons, and I was astonished at one result: nearly three of four inmates in the state’s prisons came from just eight neighborhoods in New York City. That hit me hard. We had experience in neighborhood change. We had helped turn around Ansley Park and Grant Park in Atlanta – grand old neighborhoods that had descended into rooming houses and hangouts for the unemployed.

But the New York study challenged us. What would happen if we took on a neighborhood of concentrated, inter-generational poverty? See if the cycle could be broken. The geographic dimension struck me as an advantage in tackling the problem. If a handful of neighborhoods generate the majority of crimes, ill health, high school dropouts, teenage pregnancies and lost children, then turning around one of those neighborhoods would not only improve those lives, it would improve the health and economy of the city, and perhaps the entire state.

Seen in this light, a neighborhood of concentrated poverty becomes a place of concentrated opportunity.

One small area with every need imaginable. You can drive around it in a matter of minutes. You can map it like a military campaign. It tells you exactly where charitable muscle needs to be focused.

You can visit, see and measure results. The eyes of the children will tell you if you’re making a difference. It’s not abstract and remote – it’s local, specific and human.


One Struggling community

The big question, of course, was: Is anything like this even possible? Well, after decades of distributing charitable dollars to so many separate, wonderful causes, we were ready to find out. We decided to focus our attention on one neighborhood, its people and their children.

Long story short, that’s how we arrived at the old East Lake Meadows in 1995. One policeman told me then that it was the most dangerous neighborhood south of Newark, N.J. At the least, East Lake was arguably the most dangerous neighborhood in Metro Atlanta. Gunfire was so frequent the police called it “Little Vietnam.” They wouldn’t go there in fewer than two cars.

Drug dealing. Prostitution. Teenage mothers. The average age of grandmothers was 32. A neighborhood in ruins, and children all over the place.

Here’s what East Lake looked like when we first studied it in 1995:

• 5 percent of fifth graders met math standards;

• Only 13 percent employment among public housing-assisted families;

• Median household income was $4,536;

• No new commercial or residential investment in more than 30 years;

• Crime rate 18 times the national average;

• All residents had a 9-in-10 chance of being a victim of crime every year.

Riding through East Lake then, I thought: If I’d been born here, I’d be in prison. The kids scrambling around in there had no choice where they were born. They wouldn’t even look you in the eye.

After 10 years of hard work, here’s what we saw:

• More than 90 percent of fifth graders meeting or exceeding math standards;

• 70 percent employment among publicly assisted families (the other 30 percent were elderly, disabled or in job training);

• Average household income of public housing-assisted families had risen to $17,260;

• Rising home values in surrounding neighborhoods; a major bank, grocery store and other retail shops and services returning to the area; and

• A 95 percent reduction in crime – to a point 50 percent lower than the city overall.

Based on the most recent test results, the neighborhood’s Charles R. Drew Charter School consistently ranks near the top among Atlanta public schools and is often No. 1, with Drew’s students out-performing the excellent schools in the city’s upper-income north side. They are the bright faces of a better future. Happy faces. And smart. A young woman whose life began in old East Lake Meadows recently graduated summa cum laude from Georgia Tech.


Hard-earned Lessons

How did all this happen? Well, it took some money and a lot of hard work by many good people, and totally focused, involved leadership – including a lead organization, the East Lake Foundation, that gave its undivided attention to the holistic revitalization of the neighborhood. To capture and share our many hard-earned lessons with local leaders in other cities, we formed Purpose Built Communities in 2009, with the backing of philanthropists Warren Buffett and Julian Robertson. We stress three major lessons:

• No. 1: It can be done. It has been done, now. Neighborhood-based solutions are powerful. Working on multiple fronts within a defined geography generates an entirely different spirit and energy. It’s a kind of stubborn will to get things done.

• No. 2: A holistic approach – once underway and gaining traction – multiplies the inspiration and progress. By that I mean the Drew Charter School, alone, could not make those children learn. But a quality place to live, a secure environment with adult role models created by mixed-income housing, and a great school with specially trained teachers – all together – awakened their capacity to learn, made them hungry to learn.

In Indianapolis, where Purpose Built Communities is participating in a similarly tough neighborhood turnaround, the new school is making the same impact. The principal and teachers have banners of dozens of colleges across the walls. Students are invited to visit college campuses. Every child is given reason to believe he or she can make it, can go to college or continue developing skills – and can succeed.

I see these children, and I think: They have more incentive to learn than my own children. I believe the real motivator is that these children see a way out. Out and up.

• No. 3: A third big lesson is the importance of mixed-income housing. At East Lake, we worked closely with the Atlanta Housing Authority and rebuilt the place entirely. Fifty percent of the units were reserved for publicly assisted families, the others for working people who could afford market rate. We wanted people of varying income levels. We wanted children to be around adults who go to work and take care of property – solid role models in the place of drug dealers, prostitutes and their customers.

Negotiating with the school board to build the city’s first public charter school was difficult. But it was important for the school to be designed and staffed specifically for children who had been deprived of so much opportunity. Today, you can walk the halls of the Drew school and see children studying math, reading and science with the same eager look they bring to swimming and tennis lessons, soccer, golf, art and music. You can step into the early childhood academy and see teachers reading and singing to children in diapers. You can see instructors from the YMCA we built on campus, working with students in physical education.

When it comes to poverty, education and the economy, I believe answers can best be addressed through creative combinations of philanthropy and private enterprise, like at East Lake. Governments at all levels can help facilitate these developments, but local leaders must plan, execute, manage and sustain them.

Looking back, I think government and private enterprise were on the right track initially with urban renewal in the 1950s and ‘60s. A lot of energy was created, but it stopped short of its higher goals. It turned into a way to clean up center cities, clear away the blight. The poorest of the poor were relocated to new houses. We developed a thousand replacement homes. We thought a new home would be all the incentive needed. But nothing else in the environment was improved, and within a few years those new homes were slums again.

Maybe that’s the biggest lesson of all. Decent housing alone doesn’t redeem a neighborhood. A better school, alone, will not do it. Nor just job training. Nor just more health and wellness opportunities. It takes all these things, simultaneously.

Imagine if urban renewal had taken a holistic, mixed-income approach, and focused not just on new housing, but on eliminating the isolation of the poorest of the poor. If that had been the aim a generation ago in America’s cities, we’d be living in a safer, healthier, wealthier nation today.


A Demonstration Model

Almost every day, I meet with someone or get on the phone, making the case with anyone who will listen. People hear me talk about East Lake and say, well, that’s a pretty story but I can’t believe you can do this just everywhere or get it to scale across the country.

East Lake is not an exception. Neither is the Bayou District development in New Orleans, nor the Meadows Community development in Indianapolis, nor Northside in Spartanburg, nor Renaissance West in Charlotte, nor Woodlawn United in Birmingham, all part of the Purpose Built Communities network of partners. Neither are the communities in Houston, Omaha and Columbus, Ohio, that are working with Purpose Built Communities. If you think these are exceptions versus genuine, tangible opportunities operating with inspired local leadership, we say let us show you. Come see for yourself.

Then imagine what the impact would be if your city – if every city in America – had a holistic, neighborhood-based, child-focused reformation effort going on in at least one (if not two or three) of its own neighborhoods of concentrated poverty.

Imagine hundreds of thousands of adults coming into the workforce. Millions of children staying in school to graduate with dreams of their own. Income being earned, taxes being paid, innovative minds contributing to the economy. Crime going down, prison populations shrinking and family health improving.


Liberate Human Capital

It is simply true: America’s greatest untapped resource is the human capital trapped in neighborhoods of concentrated poverty. These people – these children – represent trillions of dollars in unrealized economic productivity. Liberate this human capital across the nation, and economic benefits will accrue on a scale that could pay off the national debt in a decade or less.

It has become so obvious to me. I feel confident in saying that the moral imperative and the economic imperative are one and the same. It’s not just the scale of the problem – it’s also the scale of the opportunity.

People buried under generations of poverty are like oil beneath the Saudi desert – only more valuable, because their spirits and energy are renewable. Burn a barrel of oil, and it’s gone. Educate a child in poverty, and he or she will grow up pursuing dreams, working and paying taxes, and raising children who will do the same.

A McKinsey and Co. study documents how closing the education gap between the privileged and the poor could add $2 trillion or more to the GDP every year. That’s more than four times greater than our nation’s annual budget deficit.

Exhaustive studies have demonstrated that every $1 invested in early education returns $7 to $12 to a community. Other scholars document how third grade reading levels determine a child’s life path and opportunities.

On the darker side, a report by the American Academy of Pediatrics has proved that younger children living in abject poverty are subjected to “toxic stress,” a condition similar to what soldiers experience from repeated combat. Another recent study determined that a child living in poverty is likely to hear 30 million fewer words spoken or sung to them by age three. Is that not a heartbreaking call to action?

Our nation needs collective urgency about this – about the suffering, yes, but also the understanding that restoring these lives and sparing these children so much pain and misery will strengthen and grow our nation’s economy. The education gap between advantaged and disadvantaged children has doubled since World War II and is getting bigger every day, leading to poor health outcomes that translate into poor cognitive skills. According to the Brookings Institution, the number of Americans living in neighborhoods of extreme poverty grew by a third in the first decade of this century.


Leadership is Key

We have wrung our hands forever, it seems, thinking there is no solution. But there is a solution. It can be done. East Lake proves it. New Orleans and Indianapolis prove it. And if it can be done in these neighborhoods, it can be done anywhere. There’s only one real secret to it, and that is leadership. Philanthropists know the leaders in their communities. The businessman or woman with a big heart and a lot of influence, people who can pull other leaders together from the neighborhood, the business community and government. Every city and town has one or several key leaders like this.

And every city and town has one or more East Lake Meadows kind of neighborhood. The opportunities are huge. East Lake has taught us one adaptable way that is proven to work. Every city has the challenge, and every city has the resources – if some leader, some group of leaders, will just get mobilized.

I tell everyone: Use East Lake as your R&D lab. East Lake/Purpose Built Communities will test any reasonable idea. If your state doesn’t allow charter schools, talk to us. We don’t charge for these services. Maybe there are ways to get exceptions, or ways to get a public school designated as a special school eligible for additional resources in a private-public partnership.

Government, philanthropy and private enterprise – with the right leadership – can move mountains. It happened in East Lake, and it’s happening in New Orleans and Indianapolis, Spartanburg, Charlotte and Birmingham. More than 15 other cities are talking with us about getting underway. It can be done. We know at least one proven way for getting it done.

Every day, I ask myself, what in the heck are we waiting for?


In 2009, Warren Buffett and Julian Robertson joined Tom Cousins in backing Purpose Built Communities, a nonprofit consulting firm that works at no charge to help local leaders around the country revitalize struggling neighborhoods into vibrant, sustainable communities where everyone has the opportunity to thrive. Purpose Built Communities is working with 11 network members around the nation and is in conversations with more than 15 other neighborhoods. To contact Purpose Built Communities, email interest@purposebuiltcommunities.org or call 404.591.1400. To learn more, visit www.purposebuiltcommunities.org.

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