Of Risk and Reward

From its inception, the New York Foundation has shown an appetite for uncertainty. The founders, who were knowledgeable about the vagaries of the financial markets, were well versed in the language of capitalism. Theirs was a world of risk/reward ratios, and they somehow imbued their new foundation with a principle borne of the vicissitudes of life on the Street: the greater the expected return, the greater the investment risk. Only, in this case, the prize ultimately was not financial, but social, gain.

New York in 1909 was an industrial town striving to become a world-class metropolis. It was a city compelled to expand in every direction, including skyward and downward. Burrowers carved a warren of subway tunnels. Builders erected skyscrapers that threatened to touch the clouds. Two magnificent bridges, the Queensborough and the Manhattan, were built over the East River. The well-heeled shopped on Ladies Mile, which stretched from 10th to 23rd Streets and boasted more fine stores than anywhere else on earth. The New York Times was emerging as the nation’s newspaper of record, and Manhattan was fast becoming the center of radio programming. To highlight its ambitions, the city hosted the Hudson-Fulton Celebration, a two-week riverfront festival. It included a 40-mile-long parade of tall ships and the first flight in New York’s sky, a 30-minute jaunt by Wilbur Wright from Governors Island to Grant’s Tomb.

But there was another side of New York, the side of crushing poverty, and the juxtaposition of richness and dearth was startling.

New York was also a teeming, sweltering jungle of smoking factories and sooty skies. Millions came seeking pathways to better lives. What they found instead were crowded, dilapidated tenements, food riots, chaos, disillusionment, and an inept government steeped in corruption. The index of suffering was particularly high in the tenements, where misery smothered hope, and disease ran rampant.

The tenements contributed workers for the steady drone of industry. More people worked in the factories of Manhattan in 1909 than in all the mills of Massachusetts, and more than a quarter of a million garment workers in the city produced two-thirds of all clothing made in the United States, mainly in sweatshops. After the horrific blaze at the Triangle Shirtwaist Factory, they were called “fire and death traps.”

At a time when few foundations were prepared to step up and create infrastructure to augment the limitations of government assistance to the disenfranchised, the New York Foundation rose to the occasion. Its trustees were willing to underwrite untested programs operated by groups that battled the odds or defied convention in order to bring desperately needed social change. The trustees funded the grassroots work of nurses and social workers on the Lower East Side in 1912 to bring relief to residents in dire need, and underwrote the distribution of free milk to schoolchildren, a precursor to free lunch programs for the poor. The foundation supported organizations that raised awareness of child labor in factories, and spearheaded the national child labor movement and organizations that supported strikes by those seeking to regulate working conditions.

Throughout its history, the New York Foundation has supplied seed money to address social problems, especially at “tension points” in society: housing, public health, workers’ rights, women’s suffrage, reproductive rights, racial equity, legal aid, and more. Early trustees put the foundation on track for taking risks in its grantmaking practices.

The foundation was guided by the belief that community residents had the will if not the means to make a difference in their own lives.

Throughout its history, the New York Foundation has supplied seed money to address social problems, especially at “tension points” in society: housing, public health, workers’ rights, women’s suffrage, reproductive rights, racial equity, legal aid, and more. Early trustees put the foundation on track for taking risks in its grantmaking practices. The foundation’s interest in social welfare escalated during the Great Depression of the 1930s. The federal government provided relief to the unemployed, but public assistance proved to be inadequate and had to be supplemented by local and private agencies. The foundation worked with established social service agencies and assisted in forming new ones throughout the city.

In 1934, the foundation funded efforts to conduct surveys and make recommendations to the state government, providing a road map for relief efforts. Two years later, the foundation helped to support a dozen private family welfare agencies in New York that strove to keep people off public welfare rolls, preserve morale, and provide services not supplied by public assistance.

Over the years, a willingness to take risks has become a valued attribute of the foundation, a prize in a field where established major players are often content to stick with safer, doctrinaire outlooks on grantmaking and meeting public need. The New York Foundation’s leadership fully recognized the inherent strength of a small foundation-it had the flexibility to get in early, admittedly at the point when the risks were greatest, but precisely at the moment when resources could be aligned to solve problems before they were even acknowledged as such.

The foundation funded the emerging field of community organizing as early as the mid-1950s, supporting work in Chelsea to test the hypothesis of Saul Alinsky, whose approach stressed citizen participation in neighborhood organizations and later financed a project on the Lower East Side to help residents devise solutions for the burdens of poverty and the changing population in the neighborhood. In 1978, as the city teetered on the brink of bankruptcy, the foundation awarded startup grants to community-based projects in the city’s neediest neighborhoods, shouldering the lion’s share of administrative costs. In the late 1970s and early 1980s, it became a prime funder of grassroots groups aimed at community organizing.

As with their forebears in the early 1900s, the foundation’s trustees challenged the status quo during this period; they were willing to take calculated risks to assess local resources and mobilize and deliver them at the neighborhood level, including crisis intervention counseling for youth, advocacy services for welfare recipients, and training classes for surrogate grandmothers who would work with disadvantaged mothers and their children. The foundation was guided by the belief that community residents had the will if not the means to make a difference in their own lives. Grassroots community organizing jibed with the foundation’s bottom-up philosophical approach to social change.

The foundation is known today as a preeminent funder of grassroots groups. More than half of its grants go to community organizing groups. Foundation funding has moved toward groups that conduct community organizing to resolve common problems, increase participatory processes, and tip the balance of power.