Foundations are stepping up to help the city of Detroit with commitments of $330 million to reduce underfunding of the city's two public pension systems and keep the Detroit Institute of Arts' collection intact.
The presidents of the $571 million Community Foundation for Southeast Michigan, Detroit; the $3.3 billion Kresge Foundation, Troy, Mich.; the $10.9 billion Ford Foundation, New York; and the $2.2 billion John S. and James L. Knight Foundation, Miami, are members of a leadership committee that is directing fundraising efforts, according to a statement from mediators appointed by Steven W. Rhodes, the U.S. Bankruptcy Court judge overseeing Detroit's bankruptcy petition.
The primary mediator, Chief Judge Gerald Rosen of the U.S. District Court in Detroit, is brokering negotiations between the city and its creditors.
Mr. Rosen approached a number of foundations in December with a proposal to build a reported $500 million fund that would help satisfy the city's pension obligations while alleviating the possible need to sell art to pay city creditors.
The DIA collection in December was estimated by Christie's to fetch between $454 million and $867 million if sold.
The combined liability for the $3.4 billion Detroit Police & Fire Retirement System and $2.77 billion Detroit General Retirement System is estimated to total $3.5 billion, according to the city's bankruptcy petition filed on July 18 by Kevyn D. Orr, the state-appointed emergency manager.
The Community Foundation of Southeast Michigan has set up a fund that will go directly to lower the pension fund liabilities, however a permanent endowment is not planned, said Mariam Noland, president of the foundation, in an interview.
Other Michigan-based foundations playing a role in the effort so far include the $1 billion William Davidson Foundation, Troy; $104 million Fred A. and Barbara M. Erb Family Foundation, Bloomfield Hills; $167 million Hudson-Webber Foundation, Detroit; $164 million McGregor Fund, Detroit; and the $2.2 billion Charles Stewart Mott Foundation, Flint.
Details of the philanthropic plan have not been revealed and the amount donated by each foundation and other supporters is not available. Mediators said in their statement that additional foundations “are expected to announce their participation in the near future” without naming those entities.
The mediators said they are “deeply grateful for the incredibly generous and constructive part the foundations have agreed to play in this larger process,” according to the court statement.
In a statement, the foundations said they share a strong commitment to the revitalization of Detroit and Southeast Michigan: “Many of us have worked for years to help rebuild the city and ensure its prosperous and sustainable future.”
Sherri Welch, a senior reporter at Pensions & Investments' sister publication Crain's Detroit Business, contributed to this story.
