When Deby Cowdin was laid off from her job designing trade-show displays in 2006, she promptly launched a new company from her home.
“I decided, for extra money, I would take old wine bottles and melt them into household products for sale,” says Cowdin, who called her company From the Blue Bag. “I started at Crocker Park Farmers Market on Saturday mornings, and that first Saturday out I sold $500 worth of products.”
So Cowdin started contacting local bars, offering to take away their garbage for free so she could recycle their discarded bottles. She would wash and remove the label from each one, then melt them into bowls, cutting boards, and other tableware. But Cowdin quickly maxed-out her basement kiln — and her house’s electrical capacity. By 2008 she was stuck: unable to get a bank loan for a larger kiln, or hire a staff, or move her shop out of the basement.
But in 2009, she applied for a grant through the Civic Innovation Lab, a program sponsored by the Cleveland Foundation. She was awarded $30,000. It provided precisely the boost she needed to turn the basement business, with its staff of one, into a product line that now employs ten people and is distributed at 400 stores in 38 states. Her facility — in industrial space on West 114th Street at Berea Road — already has diverted 200 tons of glass waste from local landfills.
Cowdin can’t say enough about Civic Innovation, and she’s not the only one. Since its inception in 2003, the program has helped 55 entrepreneurs with start-up funds of up to $30,000.
“If it wasn’t for that grant money, which got us in a building and paid our rent for six months to get us on our feet and get kilns, we’d never have gotten where we are,” she says. “If it wasn’t for them, we were pretty much at a standstill.”
But now it’s the Civic Innovation Lab that seems to be at a standstill. Uncertainty about the Lab’s future began to trickle out in mid-summer, when the program’s panel of 20 mentors — who identify projects for funding and lend expertise to the chosen ones — came away from the process with the sense that they were selecting recipients for the last time.
At a more recent meeting with Cleveland Foundation program officer Robert Eckardt, the mentors expressed concern over the program’s future — in particular whether the foundation would continue funding it. Eckardt acknowledges “nervousness” among the mentors, but says it’s grounded in a confluence of unrelated events.
Those events include reduced funding from the foundation, the spring departure of the Lab’s director, and the recent announcement that no more grants would be made — and no more applications accepted — until further notice. The Lab, Eckardt says, is simply under review. “After five years, the question became where does it go next?“
From the outset, Civic Innovation was designed to spark entrepreneurship. The idea was to drive ideas into reality, to enable projects that would add to the region’s economy and its quality of life — especially daring projects that would have a hard time getting money elsewhere. It remains a noble and idealistic goal, especially as the region tries to recover from its economic devastation.
But all signs indicate that the Cleveland Foundation plans to at least scale back the program, if not eliminate grants altogether.
“The reason the Cleveland Foundation exists is because of people who took risks and succeeded — wealthy industrialists who are gone now for good,” says one mentor, who spoke with Scene on the condition of anonymity. “The only thing that will save this region now is entrepreneurs. If [Civic Innovation] is allowed to fail, it is one of the most cynical” decisions they could make.
Spokesman Scott Tennant says the foundation should have a better sense of its direction by December. In the meantime, “the Lab is continuing its normal operations.”
The definition of “normal,” however, may have been recalibrated: As a sort of parent company of Civic Innovation, the foundation was its exclusive funder for the first six years. Annual money earmarked for the Lab ranged from $400,000 in 2004 to $525,000 in 2008. But the figure dropped to just $150,000 in 2009, and the same in 2010. Neither Eckardt nor Tennant blame the reduction on the tanking economy; instead, they say, it’s because the Lab had carried forward budget surpluses from previous years.
But at the same time the grant money dried up, applications hit at an all-time high. The Lab still offers mentorship programs that advise entrepreneurs on how to pitch their ideas and build their businesses.
In the spring, Jennifer Thomas — Civic Innovation’s director at the time — touted the program’s success on a Cleveland Foundation podcast. Perhaps the most well known among the 55 projects it has funded is Ray’s Indoor Mountain Bike Park, which converted a vacant warehouse on the West Side into an internationally famous playland for mountain bikers looking to ride through winter. (A second facility is slated to open this fall in Milwaukee.)
There are plenty of other successes: Full Circle Fuels converts diesel vehicles to run on vegetable oil and supplies biodiesel made from used restaurant oil. Sunflower Solutions develops solar panels for export to developing nations. The Cleveland Rowing Foundation aims to develop a culture of competitive rowing crews and a boathouse on the Cuyahoga, and recently cleared a major hurdle in making it happen.
About one in four of the companies supported by the program are thriving, and a similar number have failed. For the rest, it’s too early to tell.
A Cleveland State University economic impact study found that the Lab had a $9.4 million effect on the regional economy in 2008 and created 128 jobs that year alone. Though it was only a one-year study, Thomas and its authors extrapolated that Civic Innovation had a $20 million impact through the life of the program — not bad for the total $2.7 million the Foundation invested over the years.
But after two years of Lab funding at a fraction of previous levels, Thomas resigned to take a position at the Knight Foundation in Akron. Civic Innovation is now in the hands of program director Andradia Scovil, its sole staffer. She says she’s asked for the director’s title, but the Foundation has yet to promote her or name anyone else to the post.
Nonetheless, Scovil has only generous things to say. “What we could call this is a transitional phase. The foundation is taking a good look to make sure it’s going in the right direction,” she says with the diplomacy of one who knows how the bread gets buttered.
She says the Lab has received one grant from another foundation, but when asked how much it was, or whether it would enable them to resume investing in entrepreneurs, she says simply that she “can’t talk about funding.” She believes, however, that the Lab’s track record will help it get funds from other sources.
Entrepreneurs following Cowdin’s path can only hope the money keeps flowing.
“They changed my whole life,” she says. “And before that, every one of my employees was out of a job and looking for a long time.”
Send feedback to mgill@clevescene.com.
This article appears in Sep 29 – Oct 5, 2010.
First I want to say that I am not defending the Cleveland Foundation (CF) or bashing the Civic Innovation Lab (CIL). However, NEO has about a dozen “non profit” economic development groups focused on entreprenuership (Bioenterprise, Jumpstart, Magnet, Fund for our Economic Future, Cleveland Now, Cleveland Plus, Nortech, Team NEO, Minority Business Accelerator, just to name a few).
Almost all of them have the majority of their funding come from the state and the rest come from groups like the Cleveland Foundation. However, almost all of these groups spend the majority of their budget on their own high salaries and overhead.
For example, at Jumpstart, $8m of its $11m budget is spent on their high overhead and salaries. For instance, according to their latest tax filing, the CEO just gave himself a $30k raise to bring his total comp to $428k and the top ten employees earn over $2.3m. This group was set up to invest in startups in order to help them get off the ground and create jobs. Instead, only $3m of the $11m state funded budget gets invested and the rest goes into these high salaries and overhead.
If you look at almost everyone of these groups, all of their missions overlap, they all get most of their funding from the state (taxpayers), almost all of them spend money on themselves the way Jumpstart does instead of using toward their mission. However, no one wants to admit this because if any of these groups merged and even if they kept their budgets, no way could you justify all those $200k salaries under one organazations.
To defend the Civic Innovation Fund, although I think the mission overlaped, they are the only group that used their budget towards their mission (actually granting it to ideas). I think they had two paid employees and I think they were paid at levels you would expect to see at a non profit like this (no $428k CEO with a dozen $200k people).
However, to defend the Cleveland Foundation, they have to make some tough choices as they only have so much money and have to make wise use of it. However, next to Ohio’s taxpayers, the CF is the largest funder of all these overlapping groups.
My suggestion to the Cleveland Foundation, merge CIF as well as many of these groups into one group and put the person in charge of CIF in charge of this group. Somehow, with only one staff member, she was able to manage sorting through all these applications, vetting them, choosing the winners and then set them up with mentor and coach to help them. Jumpstart spends $8m in overhead and needs 35 people to do this. CIF somehow was able to do this with 2 people.
burtondorion Thanks for the post. Very interesting information. Greed at its finest. I agree if Cleveland is to be serious about creating jobs through entreprenureship and innovation then the organization that were established to do so should cut back their salaries dramatically, reduce their staff and spend the money where it should be the most effectively
What people need to understand is that no other organization gives grants at the level the Lab does or to the type of grantees the Lab has. Many programs in this area (Jumpstart and BioEnterprise are good examples) will only invest in your idea if you have the potential to make multi millions in the first 5-10 years. This is not who the Lab is helping. The Lab’s grantees are people who have no other options to get funding, but who make Cleveland a better place to live, provide jobs that many people can fill and attract other people who have the same entrepreneurial spirit to our city. This program has certainly proven that it can be successful, and if The Cleveland Foundation hopes it will quietly go away I hope they are wrong.
The idea of cutting off…or possibly cutting off an organization, who seems to be putting a valiant effort into mentoring, inspiring, and motivating up and coming entrepreneurs of Cleveland to help elevate a badly hit economy, is unsettling to me.
I think the only reason the CIF is being considered one of the organizations to go is because of the word “Civic” which makes it a local funding group with smaller investments (up to $30,000) into local entrepreneurs with a smaller return compared to some of the other organizations which are considered regional and give higher investments (up to a million +) and cater more towards tech based companies that will be more of a payoff to the state as a whole. But, when you have an organization who is producing a 25% success rate (1 out of every 4) with the grants they hand out (55 total), with an impact of over $20 million added to a specific economy over the life of the organization and only has a 2 person staff who makes an average wage for a non-profit (between 40k and 80k) then the ROI is pretty good. CIF is definitely a focus that Cleveland needs.
The biggest thing about the other organizations that should be changed or at least looked at and be considered apart of initial cuts are the salaries… $428k? The President of the USA only makes $400k… But again this is where politics come into play and the little fish is the first to get cut. It is very unfortunate
As a CIL grantee, I can safely say that I would have moved out of Cleveland years ago if CIL hadn’t pulled me back in. The powers-that-be in NE Ohio should put more resources towards “doing” and less towards “talking about doing.” By resources, I mean not only money but also time, talent, creativity and brainpower. We only have so much of all of these resources and when we squander them on “talking about doing” we leave less available for actually “doing.” Every time I read about yet another grant going towards advancing Cleveland through a study, symposium, think tank, white paper, luncheon, feedback session, field tour, marketing program or brain drain initiative, I flinch. CIL is all about “doing” instead of “talking about doing” which is exactly what Cleveland needs.
This should have been expected… the very reason why we shouldn’t rely on non-profits and tax dollars to fuel entrepreneurship. Here’s an idea, kill the state income tax like other growing states, and allow entrepreneurship to happen on its own. Cleveland needs to get passed its old corporate ways. No more give aways, bail outs, or bribes… create an environment where entrepreneurial growth is an outcome of a well designed policy, not over regulation or re-channelling tax dollars to pick winners and losers of small business. Leave the small business vetting to real, profit-driven angel investors and VC’s.
All of these comments are great – especially those comments from people who actually received a grant from CIL. However, those of us who applied and did not receive funding will honestly tell you that the whole process is political and its about who you know. Shame on The Cleveland Foundation for allowing such a program to be administered by people with personal gain and not giving everyone a “fair” chance.
This is a program that should be getting more funding not less, The CIL is a true financail outlet for small and innovative business ideas. My hope is that the Cleveland Foundation and possibly other funding partners find a way to increase the capacity of the CIL
It makes no sense at all to end a program that obviously makes Cleveland a better place to live. Cleveland is a city that most of the talent leaves because of the lack of oppurtunities. If it goes away then so goes the rest of the talent little by little.
If Civic Innovation Lab wants to reinvent itself to better serve the needs of the community then that is understandable but dont just walk away from a vision that will heal a city thats been burned enough.