The Rhode Island Foundation is pulling the plug on a two-year-old nonprofit created to help revitalize Providence’s downtown core, a measure that signals possibly more belt-tightening by the philanthropic foundation.
The Downcity Partnership fired two staff members and its executive director, Peter Armato, will be let go on July 3, after the Rhode Island Foundation board of directors voted to eliminate staff funding for the partnership and to close its office.
The foundation plans to keep alive the partnership’s mission of jumpstarting the city’s arts and entertainment district by awarding grants to another organization to carry out the work.
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Downcity Partnership represented the foundation’s largest grant and program-related investment in the group’s 87-year-old history, with an initial commitment of $9 million and a related $1-million investment for the relocation of Traveler’s Aid. The partnership was housed in the Rhode Island Foundation building.
Reeling from stock market losses to its endowment, Rhode Island Foundation executives said it was necessary to cut the partnership loose if the foundation is to continue to provide stable grant funding for other nonprofits. Last year, foundation grants totaled $22 million.
Without a turnaround in the stock market – where a vast amount of the foundation’s $325 million in assets are invested – other organizations supported by the foundation will notice a decrease in their funding next year, a foundation executive said.
“Next year the foundation will certainly be looking to tighten its belt all over the place. The grant programs will be affected,” said Rick Schwartz, the foundation’s vice president for communications.
The foundation disperses 4.5 percent of its total endowment to nonprofits each year, but that number could be impacted due to consistent losses in investments. Schwartz said the group’s donations are based on a 16-quarter rolling average of investment performance. He said the front end of that cycle no longer buoys the last three years of losses.
Schwartz said, “All of the quarters will be down, except maybe two or three,” despite the foundation posting stronger returns than most national benchmarks and indexes.
He added that the foundation will have a better idea of possible cuts to other grant programs come August, when the foundation’s board of directors starts work on next year’s budget.
The foundation will find immediate savings by eliminating the three-person staff of Downcity Partnership. Its total operating costs were in the range of $400,000 to $500,000 per year, according to Armato. The foundation’s board voted on April 24 to close the office, and soon after fired Monica Anderson, program director for Downcity, and a support staff member.
Schwartz said it was critical to eliminate the administrative costs related to running the partnership.
The foundation will continue to support efforts targeted by the partnership by giving grants to an outside group. Requests for proposals have gone out soliciting groups to apply for a foundation grant to support Downcity efforts. The foundation hopes to select a group by July.
The foundation will continue to offer a pool of cash – now at approximately $7 million – to Downcity businesses looking for low-interest gap financing.
Armato said grants are expected to be announced soon.
Armato referred to the grants when asked about the group’s accomplishments.
“In most tangible terms, we’ve agreed on loans – that if they close in the next month – will result in $5 million worth of lending to stimulate revitalization in Downcity.”
When announcing the changes to the partnership in a May 9 letter – signed by Rhode Island Foundation President and CEO Ronald V. Gallo and Downcity’s Armato – the foundation pointed to several accomplishments of the partnership. The achievements included identifying key partners in redevelopment, like the Greater Providence Chamber of Commerce and the city; holding a holiday program to promote Downcity; initiating the gap loan program; and helping launch a Downcity Residents Alliance, whose aim is to improve safety, infrastructure maintenance and other quality of life issues.
Schwartz said the foundation will follow through on an ongoing survey sponsored by the partnership to gauge the needs and desire to bring more retail space in Downcity. Toronto-based Urban Marketing Collaborative Inc. is conducting the three-month project.
“What will happen after we get the findings and recommendations is not known. Whether they sit on someone’s desk or go forward is up to who takes this on,” said Schwartz.
Schwartz pointed out that the foundation has a staff of 42 people who could be used to support Downcity Partnership projects during the transition.
Armato joined the partnership in July 2001, after doing city revitalization work in Bellevue, Wash., a suburb of Seattle. He worked in similar roles in Houston, Georgetown and Savannah, Ga.
Armato will be missed, said Joshua Miller, president of the Downtown Merchants Association and owner of the Trinity Brewhouse downtown.
“I think the expertise (Armato) has is invaluable to the people involved in downtown,” said Miller.
He added that Armato played a role in getting off the ground a business improvement district, a united effort by property owners downtown who will assess themselves a fee to provide supplementary services needed to improve the area. The improvement district is spearheaded by The Providence Foundation.
Depending on the direction of the foundation’s investment portfolio, the staff of the Downcity Partnership might not be the only ones impacted by the stock market.
“If the market doesn’t pick up now, I wouldn’t be surprised if a couple of staff people at the foundation are laid off,” Schwartz said.
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