Detroit Residency Ruling Rattles Area Nonprofit Groups

Controversy has erupted between local nonprofit groups and the Detroit City Council after more than 100 area charities were ruled ineligible to receive a certain block of federal funds due to a resolution unanimously passed by the council last July.

The Detroit Free Press reports that nonprofit groups that receive federal Community Development Block Grant allocations through the city must now have boards composed of at least 51 percent city residents.

The ruling appears to be atypical, as the U.S. Department of Housing and Urban Development, which oversees the CDBG program, requires such a residency rule only in the case of community-development organizations. HUD spokesman Brian Sullivan said, “This suggests to me that this seems to be a local interest and a local requirement.”

Nonprofit leaders such as Chad Audi, president of Detroit Rescue Mission Ministries, opposed the ruling. He explained that “all of the people we service are basically Detroiters.” Other groups stressed how the people they serve would suffer if federal money was lost and stressed that their board members were unpaid volunteers.

Despite opposition, Councilwoman Barbara-Rose Collins stood behind the resolution. “I don’t think community block grants were created to provide jobs and salaries for people who live in the suburbs. They were created to benefit people who live in Detroit,” she said.

The city appropriates $40-million in grants to various nonprofit groups. The ruling will go into effect on July 1 for CDBG funds for fiscal year 2008-9. Nonprofit organizations ruled ineligible for CDBG funds this year because of the residency requirement will get a chance to plead their case to the council on March 19.