Hartford Business Journal

20 Hartford Business Journal • January 15, 2018 • www.HartfordBusiness.com EDITOR'S TAKE Hartford's residency requirement misguided D uring a Q&A session at the Connecticut Business & Industry Association's recent economic forecast event in Hartford, Chris Swift, chairman and CEO of The Hartford, talked about the competitive pressures to recruit talent, particularly at a time when the insurance industry is shedding 70,000 workers a year to retirement. Wooing the best and brightest, no matter where they live, is one of the top challenges the property and casualty insurer faces, Swift said, mirroring sentiments of most other corporate and small business executives these days. Indeed, the search for talent in the private sector often knows no boundaries; compa- nies are willing to bring in smart and capable people, particularly when it comes to C-suite executives, regardless of where they live. Shareholders expect nothing less. But that's not how the city of Hartford operates. Due to pres- sures from an ill-advised residency rule, which requires mayoral appointees to maintain a continuous residence in the city during their employment, Sean M. Fitzpatrick, Hartford's director of de- velopment services — a key position within the city — submitted his resignation Jan. 8, effective Jan. 31. Fitzpatrick had come under scrutiny recently when it was discov- ered he was renting a room at the city's Town and County Club, a members-only social organization not typically known as a place for permanent residence. Fitzpatrick also owns a home in Simsbury. The Internal Audit Commission promised to look into the matter at its Jan. 17 meeting; Fitzpatrick bowed out before then. I'll admit, I'm not sure Fitzpatrick adhered to the letter or intent of the law (he says he did), but it's a bad law at that and the city should eliminate it. Any big city mayor, or small town leader for that matter, should be allowed to woo the best talent they see fit for top administration jobs. Voters and city residents should want and ex- pect to have the most competent staff working on their behalf, regardless of where they reside. I understand the sentiments of home rule run deep in this state, and that some may think an outsider may not have the best interests of the city in mind. But that's the type of old-school thinking that often leads to vast inefficiencies in gov- ernment, and it's certainly not up to date with 21st-century workplace norms. The idea that government should operate more like a business is offensive and non- sensical to some. But this is another example where government should take a page out of the private-sector's playbook. The city of Hartford should reverse its residency rule so the mayor can recruit the best and brightest. Elections must come down to substance over style Following Oprah Winfrey's passionate speech at the Golden Globes, many people, par- ticularly depressed Democrats still stewing over President Trump's election, are getting excited about the media mogul's potential presidential run in 2020. Various media reports say Winfrey is seriously considering a run for the land's highest office and her remarks at the recent Hollywood awards event, in which she coined the phrase "A new day is on the horizon," certainly sounded like a campaign stump speech. But before voters get too excited about a Winfrey 2020 campaign, we must ask: What are her qualifications for the presidency? She is clearly an American icon and an inspirational story we can all be proud of, but that doesn't make her fit to be president, arguably the most important and challenging job in the world. Where does she stand on important issues like the nuclear capabilities of North Korea or the recently enacted federal tax reforms? Few people excited about a potential Winfrey presidency know the answers to those questions. This country's celebrity worship has already spawned an unfit president, who has shown his ability to run an executive boardroom is limited to the pretend halls of his former reality show, "The Apprentice." All too often these days, Americans vote for personality or style over substance, which can lead to damaging consequences. As we head into an important 2018 election year nationally and in Connecticut, voters have a responsibility to go below the surface, get informed about important issues affect- ing this state and country, and choose candidates not simply because they are likable but because they have ideas that will help solve problems. If that is the standard for how Americans choose their political leaders, then truly a new day might be on the horizon. RULE OF LAW How foundations saved the city of Detroit By John Horak T he financial predicaments facing the state and Hartford came to mind as I was reading about how Detroit resolved its financial predicament (and 2013 bankruptcy) with the assistance of $366 mil- lion from grantmaking charitable foundations. There is a critical mass of founda- tions in Connecticut — and I wondered if there were lessons to be learned from what happened in Detroit that could be applied here to produce similarly positive structural results? In Detroit the foundations led and encouraged stakeholders (unions and the state of Michigan) to join them at the bank- ruptcy bargaining table and helped raise an aggregate $850 million ($366 million from the foundations) to settle the city's pension obligations and to save its art collection. Foundations also assisted with basic needs by paying for police cars and the like. The deal enabled Detroit's rebirth and is known as the "Grand Bargain" because of the enormous public return on investment it provided. Inter- estingly, foundations provided $628 mil- lion of funding in Detroit between 2007 and 2011, a fact I'll come back to shortly. According to the Connecticut Council on Philanthropy, in 2014 our foundations held $12.2 billion (in endowment) and distribut- ed $ 1.01 billion (this does not include $3.48 billion of individual giving). Under the law foundations have considerable discretion when deciding what to support, permitting everything from poverty relief to "lessen- ing the burdens of government." Some assets are restricted, but there is discretion within restricted fields and broad discretion over the balance. These amounts seem large enough to make a structural difference if well deployed. My search for lessons from the Grand Bargain took me to the point of conversa- tions with current and former Connecti- cut foundation leaders, and with Phillip Wm. Fisher (coincidently, a University of Hartford graduate), the chairman of The Max M. & Marjorie S. Fisher Foundation in Detroit and founder and CEO of Mission Throttle, a social impact strategy firm. At the end of my work, I concluded that there are lessons to be learned from Detroit. First, there are voices who suggest there is not much to learn from the Grand Bargain because it was a "one-off deal" that produced an enormous return only because the stars were aligned uniquely: a critical mass of Detroit foundation wealth, an espe - cially competent bankruptcy judge, etc. I disagree. The Grand Bargain paid extraordinary dividends because of the hardball business acumen with which it was deployed: The foundations put money in only after union concessions and an exit from bankruptcy was attainable. Compare the different returns on the $628 million of foundation funding in De - troit between 2007 and 2011, and the $366 million invested in the Grand Bargain. Second, I ran into a surprising amount of defensiveness among foundation representatives when I raised these ques- tions. They were quick to respond with a robust list of the many good causes they fund — but that's not the point. The point is that "goodness and wor- thiness" are not metrics by which struc- tural effectiveness is measured, and if the goal is to "fix" social problems, a system of metrics is necessary to determine what works and what does not, in order to guide future grant decisions for maxi- mum impact (not unlike the way business investment decisions are made). No one will disapprove of grants to feed poor children (an admirable charitable use of funds that is easy to measure), but the foundations taking on these tasks should be candid about the follow-up question: Will the funded programs lessen the likeli- hood of the children's children ending up in the same food line in a few years? Finally, Phillip Fisher offered some general comments to the effect that the philanthropic sector is not producing the structural results of which it is capable, and that better results will follow if some capi- talist thinking is added to the recipe. Capitalism has two strengths: its rigor- ous decision-making (business acumen and metrics), and its ability to create new wealth where it is most needed (foundations can support economic development). For more on this thinking check the web- site of Mr. Fisher's Mission Throttle, or an article in the Dec. 5 edition of the Chronicle of Philanthropy ("How New Forms of Phi- lanthropy are squeezing Traditional Chari- ties") in which Benjamin Jealous (former head of the NAACP and now a venture capi- talist) is quoted as follows: "Grant Makers can point to few victories. Social problems remain as vexing as ever." My perspective is this: Our foundations are the fruit of capitalism — the value of their massive tax favored endowments rises and falls with capital markets, and the more capitalist market success the more money the foundations have to pursue philanthropy. Capitalism and phi- lanthropy can work together that way. I recognize that many foundation-sup- ported causes deliver meaningfully on their promises. But when you look at the state of the state (and its inner cities), and the capac- ity of our foundations, it's reasonable for us to ask if the tax-favored wealth in their endowments is delivering as much of a bang for the buck as was promised. John M. Horak is the director of TANGO Nonprofit Education and Consulting. John Horak Greg Bordonaro Editor Opinion & Commentary

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