Charity by local magnificos should be a symbol of prosperity, not a substitute.
By Holman W. Jenkins, Jr.
God bless the child that’s got his own, goes the song. That won’t be Detroit, even after shedding $7 billion in debt in its just-concluded bankruptcy.
Detroit was once
America’s fourth-biggest city, with its highest per capita income. But
these days no city is more dependent on private philanthropy to keep it
afloat. In the decade before its Chapter 9 filing, according to a study
by Bloomberg News, Detroit relied on the equivalent of $600 per citizen
per year in charitable contributions to perform fundamentally
government-like functions such as housing subsidies and blight removal.
Then there’s the bankruptcy trial itself, which revolved around Detroit’s art collection, virtually the only valuable asset in the shrunken city’s possession. To take the Detroit Institute of Arts collection out of play to satisfy the city’s creditors, a group of philanthropies, including the Kresge Foundation, Ford Foundation, Knight Foundation and others coughed up $360 million to be spread among a selected group of creditors, namely the city’s pensioners.
The state of Michigan and other governmental bodies also contributed to what became an $816 million settlement, arguing that the art collection is vital for the city’s revival and couldn’t be liquidated at anything close to its real value. Relegated to second-class status by this deal were bond insurers and other claimants who supposedly enjoyed equal status with pensioners in bankruptcy. These claimants will get none of the art proceeds.
Detroit Emergency Manager Kevyn Orr speaks with the media after a press conference at the Detroit Institute of Arts in June. ENLARGE
Detroit Emergency Manager Kevyn Orr speaks with the media after a press conference at the Detroit Institute of Arts in June. Getty Images
The museum will now become a charitable nonprofit trust dominated by its donors. No wonder private philanthropies were delighted with the deal and eager to supply the requisite rah-rah rhetoric about how the museum will be instrumental to the city’s resurrection. In effect, the charitable groups are getting control of the art collection (appraised value: at least $4.6 billion) for pennies on the dollar.
Detroit certainly has a future—lately the city has become a magnet for young urban settlers and entrepreneurs. But is Detroit really helped by assuming it must “take its place once again in the pantheon of America’s great cities,” as Kresge puts it?
Then there’s the bankruptcy trial itself, which revolved around Detroit’s art collection, virtually the only valuable asset in the shrunken city’s possession. To take the Detroit Institute of Arts collection out of play to satisfy the city’s creditors, a group of philanthropies, including the Kresge Foundation, Ford Foundation, Knight Foundation and others coughed up $360 million to be spread among a selected group of creditors, namely the city’s pensioners.
The state of Michigan and other governmental bodies also contributed to what became an $816 million settlement, arguing that the art collection is vital for the city’s revival and couldn’t be liquidated at anything close to its real value. Relegated to second-class status by this deal were bond insurers and other claimants who supposedly enjoyed equal status with pensioners in bankruptcy. These claimants will get none of the art proceeds.
Detroit Emergency Manager Kevyn Orr speaks with the media after a press conference at the Detroit Institute of Arts in June. ENLARGE
Detroit Emergency Manager Kevyn Orr speaks with the media after a press conference at the Detroit Institute of Arts in June. Getty Images
The museum will now become a charitable nonprofit trust dominated by its donors. No wonder private philanthropies were delighted with the deal and eager to supply the requisite rah-rah rhetoric about how the museum will be instrumental to the city’s resurrection. In effect, the charitable groups are getting control of the art collection (appraised value: at least $4.6 billion) for pennies on the dollar.
Detroit certainly has a future—lately the city has become a magnet for young urban settlers and entrepreneurs. But is Detroit really helped by assuming it must “take its place once again in the pantheon of America’s great cities,” as Kresge puts it?
In
The Wall Street Journal, Business World columnist Holman Jenkins writes
that charity by local magnificos should be a symbol of prosperity, not a
substitute.
online.wsj.com|By Holman W. Jenkins, Jr.
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