D.C. Grant Makers Court Visiting Colleagues With Neighborhood Tour

Every day, tour buses by the score descend upon the nation’s capital, snaking their way in a tight circuit from the Smithsonian Institution to the White House and on to Arlington Cemetery. Rarely do they stray from that course.

But last week busloads of visitors saw another side of the District of Columbia.

Foundation officials in town for the annual meeting of the Council on Foundations fanned out to parts of the city not normally visited by tourists, and what they found was perhaps surprising.

In recent years, Washington has developed a reputation as a city out of control. The city is saddled with a severe fiscal crisis, a deteriorating school system, and a high crime rate.

Washington-area grant makers wanted their visiting colleagues to get a more nuanced view of Washington, however. And they hoped that, seeing promising changes under way, large national foundations might decide to support the efforts of charities that work in Washington’s more troubled neighborhoods.

On one excursion, grant makers went to Columbia Heights, a racially diverse neighborhood that is being revitalized as a result of intensive efforts by non-profit organizations that have received money from local and national foundations.

Thirty years ago last month, the Columbia Heights neighborhood was a charred and smoldering war zone. What had been a thriving business and residential neighborhood was engulfed in flames when riots broke out after the assassination of the Rev. Martin Luther King.

Overnight, 270 of the neighborhood’s 320 businesses and more than 4,000 homes were gutted by fire. For many years, buildings remained empty and vacant lots spread throughout the neighborhood as decaying structures were torn down.

Decades later, the area is finally rebounding. Winding through dusty streets torn up for subway construction, the visitors made their way to the Nehemiah Project, a collaborative effort that has created 32 new apartments, 15 new townhouses, and a retail shopping complex. Three non-profit housing groups worked together to oversee the planning, construction, and continuing management of the properties, which were financed by a combination of public and private sources.

Non-profit groups were able to persevere in building a project that private developers would not have attempted, says Robert L. Moore, president of the Development Corporation of Columbia Heights. “We can stay at a tough project for a long time, on the toughest block, because of the support of the philanthropic community,” says Mr. Moore, whose group was one of the leaders of the Nehemiah partnership.

The Nehemiah Project represents a fundamental shift from urban housing programs of a generation ago, says Mr. Moore. “The old urban-renewal programs were top-down approaches, while the new approach is bottom-up,” he says.

As an example, Mr. Moore cites a long-standing rule by the federal Department of Housing and Urban Development barring retail activities from its housing projects. “If you get enough of that, you end up with 12,000 people living there and you don’t have a store where you can buy a loaf of bread,” says Mr. Moore.

In Columbia Heights, non-profit groups have worked to combine housing with retail development and job creation. And charity leaders have solicited advice from neighborhood residents all along the way.

At a recent meeting to discuss long-term development plans for unoccupied lots located near a new subway station, more than 300 residents showed up to share their views. “As a non-profit, you are held more accountable than government because people know exactly what you are supposed to be working on and you really have to perform,” says Mr. Moore.

The visiting foundation officials generally seemed to be impressed by the work of Washington’s non-profit groups in rebuilding their city, especially in the way the organizations marshalled diverse ethnic groups toward a common goal.

But some grant makers on the tour of Columbia Heights remained skeptical. They said they did not see how real changes could be made while the District of Columbia was run by a control board appointed by Congress to take over key functions of government. Joe Brooks, who oversees the neighborhood- and community-development program at the San Francisco Foundation, asked how non-profit community-development groups could work with a city government that has no power. “It’s just taxation without representation,” says Mr. Brooks.

That is hardly the only challenge the city faces. The population of Washington, now 530,000, is still declining after a 50-year slide from a high of nearly 1.5 million people during World War II.

Some observers worry that, despite the good things that non-profit groups and grant makers achieve, their prevalence is not entirely positive. Since the organizations are exempt from local taxes, they also add to the tax burden of a shrinking group of home owners who have to shoulder the cost of city services.

For example, the Federal National Mortgage Association, commonly called Fannie Mae, calls itself the “leading supporter of housing and community development in the District of Columbia.” In 1996, Fannie Mae, spent $5.3-million in Washington, including about $1.6-million in support of housing and community development.

But some critics of Fannie Mae say that the company, a federally chartered business whose shares are traded on the New York Stock Exchange, should either pay local corporate income taxes or make a payment in lieu of taxes far in excess of its charitable contributions. The company, which earned $3.1-billion in profits last year, is exempt from local income taxes due to its federal charter.

Frank Smith, Jr., chairman of the Committee on Finance and Revenue of the District of Columbia’s City Council, acknowledges the good work Fannie Mae has done in supporting community development in the city. But he estimates that Fannie Mae would have to pay $300-million in taxes if it were treated like a normal company, a figure that not only dwarfs the company’s charitable expenditures but even exceeds the combined grant expenditures — $176-million — of members of the Washington Regional Association of Grantmakers.

“They are going in the right direction,” says Mr. Smith, “but they have a long way to go before they provide the amount they ought to be paying in corporate income tax.”