Ronn Richard on Cleveland Cleveland's largest foundation, the Cleveland Foundation, gives away about $70 million every year around the region in the areas of arts & culture, education, neighborhoods & housing, an early childhood initiative, an aging initiative, and economic development. Eight months ago, the board had the difficult task of replacing retiring Executive Director Steve Minter, and the man they chose, Ronn Richard, has impressed nearly everyone with his intelligence, his passion, and his determination to take risks and approach Cleveland's problems differently. Formerly the head of research and development for Panasonic, a diplomat in the State Department, and in the venture capital arm of the Central Intelligence Agency, Richard brings a unique and cosmopolitan perspective to Cleveland. In an exclusive, broad-ranging interview, Richard spoke with Cool Cleveland about leadership, the foundation world, and economic development.

Cool Cleveland: Your background is very different from the traditional foundation/non-profit skill set. What attracted you to this position?
Ronn Richard: A chance to give back, to make a lot of things happen in a short period of time, a chance to work on things that are of deep personal interest to me: persistent poverty in a large urban core, helping with educational renewal programs, contributing to the arts & culture in a large US city, helping a city with economic development. I've long felt that the US government has been asleep at the switch for 30 years on things like energy policy. I'm excited about putting things like the world's largest wind farm for energy on Lake Erie. The wind studies are looking pretty good. We're thinking big, we're going to explore a lot of big impact possibilities. We'll be successful if we have the same record as when I ran R&D at Panasonic, where 10% of ideas were successful. The mantra we use is: Fail often, fail early, and fail cheaply. We'll do some treading where people fear to tread and try to be a high impact philanthropist...but our main goal is to make Cleveland even cooler...

When you first looked into coming to Cleveland, what was your impression of the assets and liabilities of the community?
I can't honestly say I looked into it, this just happened. It was a long arduous process. I came early and rented a car and drove up and down every street. The first thing I noticed was the number of beautiful new buildings in Cleveland, like the Cleveland Clinic, but I noticed that they are non-profits and they don't pay property tax, so I did some research on property tax revenues, the more I looked into it the more of a problem I realized. Only by a more regional approach can we bring enough tax revenue into the city to strengthen. The Lake is one of the largest business assets I have seen in this city. I see enormous opportunity for tourism. We just don't market ourselves as well as we need to.

There appears to be a new generation of leaders in Cleveland recently (yourself, Dave Abbott at the Gund Foundation, Ed Hundert at Case, a relatively new Mayor), while some of the old-line institutions are facing major change (Cleveland Tomorrow, Greater Cleveland Roundtable, Growth Assn, CVB). Are you sensing new opportunities, new approaches and a more grass-roots process developing?
I wouldn't ignore Tom Zenty at University Hospitals, Chris Carmody [at the Greater Cleveland Film Commission, who just led the Issue 31 campaign], Ann Zoller [of Park Works?], and Michael Schwartz at CSU. In the short 8 month period that I've been here, I've noticed a huge change in Cleveland. There is tremendous dynamism here now. I think the demise of the convention center issue was the time when people in their personal lives hit bottom, the city hit bottom at that time. And everyone felt that they had to start working together -so there's been enormous leadership from Fred Loop and Ed Hundert. Things are really starting to percolate and the next few years are going to be exciting. I think everything stems from leadership in life. If you look at Austin, Texas and their meteoric rise, it was because of a plan in the late 50's which lead to an explosion involving the Mayor and the head of University of Texas. In terms of leadership, the Greater Cleveland Partnership & Sandy Cutler will be one of the single most important persons in the city. I have not doubt that he will take that organization and it will become an engine of growth. The Foundation will work closely with Joe Roman, CEO. And we'll work on urban renewal, early literacy, and a whole raft of areas.

The foundation world is a very pleasant place to live, with the finest facilities and first-class accommodations. You spend a lot of time with rich old people trying to get them to give you their money. Do you see any disconnect between the circles that the Foundation community runs in, and the issues of the community that the foundations are set up to address?
The Cleveland Foundation has a strong history of pushing the envelope, we helped to save the [Playhouse Square] theatres, we helped with the first Program Related Investment, a tool that Foundations help with loans or vouching for program constituents. We helped get Mayoral control of the Cleveland school board. I didn't come into a stodgy foundation, and my charge is to make sure it doesn't become a non-risk-taking organization. I think I got the job because I come from Research & Development, where 90% of the investment fails. We have to take risks in some areas like job creation in the inner city. Many people have gone there and failed.

Let's talk about the investment potential of the CF's endowments. At the recent launch of Jumpstart, Jamie Ireland of Capital One Partners indicated that Ohio endowments (universities and foundations) have dedicated a much smaller percentage of their investment into start-ups and entrepreneurial efforts than the national average (1-2% compared to 4-8%). Do you think the region would benefit from more investment in those efforts, and do you see the CF moving in this direction?
We call that alternative investments. We have a larger percentage of our investment portfolio dedicated to alternative investment, around 5%. We've done very well with our investments, we have tremendous pride and success. There's two ways you can help in the startup area. One is in the investment portfolio & the other in the grantmaking. We might come up a few more percentage points [with our alternative investments]. We've committed $10 million to the Fund for Our Economic Future. That's cash out the door. We've backed Bio Enterprise?, Jump Start? and Neopreneur. We also play a convener role, put a lot of smart people in a room together. We can also use our political influence to try to convince the statehouse in particular that they need to put more money into basic research in higher education, because from that flows ideas and businesses and jobs. We have phenomenal universities in this state.

The social responsibility movement has taken hold, which states that individuals and institutions can make great social change simply by deciding where to spend their money and invest their capital and endowments, using screens & criteria around environmentalism, stakeholder ownership, employee benefits, women in management, etc. This movement is widely credited with causing apartheid to be overturned in South Africa, for example. Has CF considered a social responsibility approach to your endowment investments?
On the grant making side, we've talked about putting windmills on the lake to talk about renewal energy. Through Neighborhood Progress, Inc. we've done a lot. On the investment side, we're like a typical university endowment, fairly averse to risk, since we're entrusted to people's life savings, and we're very prudent. We paid at the office; on the grant making side we make up for that.

I was in San Francisco recently speaking with the San Francisco Foundation, and one of their great concerns was the perceived entitlement of their grantees, that they would continue to receive funding year after year simply for staying in business, and not being challenged to meet the changing needs of the grantees' constituents. Do you see this as a trend in the non-profit world, and in Cleveland in particular?
I think that you remember that if you give them a fish for a day, they eat, but if you give them a fishing rod, they eat for a lifetime. We've been focused on capacity building and been a bit more hard-nosed about asking our grantees to build capacity. We've been instrumental in several mergers. We gave $1 million to the Food Bank to merge and help a lot more people. It is incumbent for the non-profit sector and the regional government to consolidate & be more efficient, so there's no duplication. There is less of a sense of entitlement. We love our grantees, we look up to them, because they are the people doing the work. We were hoping that Issue 31 would pass so we would go from the #1 sponsor of the arts in this region to the #2 sponsor, but maybe next year.

The Cleveland Foundation has been a major driver in the development of The Fund for Our Economic Future. Talk about your vision for this initiative.
One of the search committee members asked me what is my first priority, I said economic development because otherwise we won't have an art museum to contribute to. This area has some great strengths, such as technology. But we have some weaknesses, like the diminishment of manufacturing. Challenges are coming such as disruptive technologies like fuel cells. Reports are that fuel cells may be responsible for the loss of 140,000 jobs because of drive train & engines not being needed. We need to find the 4 or 5 clusters, fuels cells, bioinformatics and windpower. We have to take the Jack Welch approach to be #1, not #2. Cleveland Foundation is working with other foundations to spot new industries, because new industries will create new companies. Money from the Fund for Our Economic Future will not go to companies, but to trade associations that will build industries that will create companies that will spawn jobs. We won't be funding individual companies. It's a fund for new and/or existing initiatives, not companies.

How do you see the Cleveland Foundation and the new Fund for our Economic Future working together with organizations such as JumpStart?
We helped fund them initially, and I think informally I can help them with some introductions to high tech companies. Anything we can do to help industries will go to Jumpstart, so there's a synergistic relationship.

Traditionally, Economic Development of a region has not been a priority of foundations or the CF. Brad Whitehead was already at the Cleveland Foundation as a fellow working on Economic Development (ED) before you arrived, but since then he's been elevated to a Program Officer and given a grants budget. How much money has been devoted to his program and what has he been charged to do?
We have a new organization chart & structure and we work as a team now, and work on the overall strategies of Cleveland. We couldn't separate education from ED or arts from ED. Brad is a senior program officer here and doing a phenomenal job along with many others; they're doing their thing, but doing it as a team. The community owes Brad and Jay Talbot a debt of gratitude.

How much Cleveland Foundation funding goes to ED?
I view what Kathleen [Cerveny, Arts Program Officer] does as ED, what Jay Talbot does in Civic affairs, housing & neighborhoods, as ED. I can't really say X amount of money. If you say that Health and Human Services is not part of ED, we gave out a total of $70 million last year, and probably $55 million of that was ED.

When did this change?
My predecessor Steve Minter was very collaborative in his approach to the staff, and we're formalizing that.

How does Brad's role relate to some of the larger concerns of the Cleveland Foundation?
He is one of the key members of my team, but without taking anything away from Brad, we have a lot of magnificent employees.

Good management dictates that the structure of a person's compensation program will determine their work priorities. What metrics are used in the compensation program of yourself and the Program Officers at the Cleveland Foundation?
We're kind of like a university in that sense. If you wanted to make a big salary, you wouldn't be working here, which has been documented. The people who are here want to make a difference. Not to say that we don't have metrics and accountability.

So how do you incent this culture shift that you are describing?
You do it by rewarding successful failure, by allowing them to take risks and backing them up when it doesn't go right, and by giving them credit when something goes phenomenal. We got an outsider to look at our housing program, and tell us that what we're doing here in Cleveland is #1 in the country. Kind of a family here, an honest give and take. But maybe I suffer from being way too candid.

Does that relate to your background in R&D?
I had four major lives before here. As US diplomat, I learned the benefits of disadvantages, and of lack of cooperation. It's more helpful to build bridges. I learned that running R&D at Panasonic, with 120 PhDs not shy about telling me what they thought...these were guys with earrings through their noses, who got up at noon and worked through till 4 in the morning. If you've got really bright people working for you, you don't treat them like factory workers. Then I worked for a sales organization (Panasonic) that was impatient for results. At CIA's venture capital firm I learned about what makes startups succeed & fail, and what it is about government that works and doesn't work.

Traditionally, the role of foundations has been to respond to the needs of (and specific proposals from) the community. Increasingly, money available for grants is donor-advised or directed by ulterior agendas. Are you sensitive to the risk that this top-down approach to funding a community's initiatives may lead to a "tyranny of the monied class?"
The problem with just responding - I'm trying to get the Foundation to be more proactive and less reactive. If you just respond to people who are the best equipped to buy computers and write grant proposals, you can't respond to the people who are really dispossessed. We are in this to make a difference in society. We are experts to find a community's needs. It's our job to say what are the pressing needs of Cleveland this year, and see that the money flows in that direction. Our structure needs to relate to wherever the money needs to flow to.

One of the challenges we see in Cleveland, particularly apparent in the cultural community, is the dichotomy of the dozens of small & medium-sized organizations against the super-large multi-million dollar institutions with voracious appetites for money (Cleveland Orchestra, CMA, CPH, PHS, Rock Hall, Science Center, University Circle institutions, etc). How do you see Cleveland Foundation addressing that challenge? Can you see a concern?
Power in the hands of a tyrant is a dangerous thing. Power in the hands of people who really care about the work is a wonderful thing. When I look at the nonprofit world here, they are the best and most socially conscious. Cleveland is one of the most civically conscious places I've ever seen. Every wealthy person I've spoken to wants to help. Cleveland has a wonderful philanthropic culture here, way beyond what I had expected. Nancy and Frank Porter [owner of Central Cadillac] gave us $70 million at one time, our single largest bequest. People really care about Cleveland and they want us to be a national example.

Many people are looking at our national and international economy and seeing a greater split between the haves and the have-nots. Do you see that happening locally as well, and what can Cleveland Foundation do about it?
I think that in every major urban area of the country there is a greater gulf in the income gap. The CF isn't government, we can and we must and we will do everything we can for the urban poor, job creation and inner city families. There's a desperate role to be played. And Cleveland is no worse than any place else.

Did you learn anything from the defeat of Issue 31?
There are a lot of take-aways. You need more time to educate people about initiatives and there wasn't a lot of time. There is very strong support for the arts. I think it would have passed if it would have just been the arts and not combined with other issues. I think we'll have another shot at it. People in the Greater Cleveland area need to realize that most cities have public support for the arts, and we in Cleveland don't. If we want to attract the creative class, it's an issue of competitiveness. In the meantime, the Cleveland Foundation will do what we can to promote the arts. We are thriving in the arts, with the world's greatest orchestra, one of the world's greatest museums, even in the avant garde area, we're not at the back of the class.

What is the one thing that keeps you up late, or wakes you up in the middle of the night?
I didn't have a full appreciation for how vitally important the Cleveland Foundation is for the community here. A lot of people depend on us not only for grantmaking, but for moral leadership. I came in after a titan, Steve Minter. I am moving up the learning curve fast enough, and there's a lot to be done. I've a deep sense of my responsibility and that's pretty sobering. I do love the newsletter, I frankly hope that you do well. I've told many people about the newsletter, that there's a lot of cool things going on in Cleveland and you've filled a niche that the mainstream publications haven't filled. Initiatives like yours are really, really important to attract the creative class. If we're ever going to have a Greenwich Village or a Soho here, it's imperative.

Interview & photos by Mulready

 (:divend:)