Letter to Community Stakeholders

Pending legislation with City Council requesting $1.6 million for 25 years from Barberton Community Foundation. Legislation has its first reading at Barberton City Council Chambers on Monday, October 9, 2023.

Letter from the Interim Executive Director
October 5, 2023

Dear Community Stakeholders:

Over the last several months, our Board has been discussing the possibility of participating in the funding of a new Justice Center and City Hall for the City of Barberton. While a formal request has not been made of the Foundation, the Mayor has begun the process by filing legislation with Council for approval to do so. On Monday, October 2nd, City Council amended the legislation, and this will now be read at full Council to ask for $1.6 million per year for 25 years. For perspective, our 2023 budget for grants, scholarships and economic development is $1.2 million, and as you will read below, our ability to increase this in the near future is limited.

We have met with the mayor and his team regarding the capital stack for this project and what our participation could look like. As a Supporting Organization, we acknowledge that we exist to support the City of Barberton, its citizens, and Barberton City Schools in a fiscally responsible manner. Accordingly, we are committed to continuing our support by maintaining the Foundation’s spending power in perpetuity while navigating the downturn in markets and significant rises in costs nationwide.
Our original endowment in 1996 was $86 million and, in reality, our endowment remains at the same level 27 years later because of the sizeable community projects we have funded. Due to inflation, $1 goes half as far today as it did in 1996. Therefore, the endowment has half the spending power that it did upon formation.

The reality of funding a project of this size is that the Board will be faced with sacrificing economic development, grants, and scholarships.

In 2023 alone, 52 Barberton students received 83 annual or four-year scholarships from the Foundation totaling $370,575 in committed awards.
In 2022, the Foundation awarded $379,015 to 35 nonprofit partners working to do good in Barberton every day. This includes (but is not limited to) partners in education such as Barberton City Schools, Jobs for Ohio’s Graduates, Red Oak Behavioral Health and Child Guidance and Family Solutions; partners focused on health initiatives like the Akron Canton Regional Food Bank, AxessPointe, the Rape Crisis Center and IBH Addiction Recovery; as well as community partners such as the City of Barberton, Victim Assistance, Habitat for Humanity, Barberton Public Library, and many more.
Since its beginning in 2022, the Foundation’s Economic Development Assistance and Downtown Rehabilitation Programs have awarded $615,433 in grants to Barberton Community Development Corporation. This funding has helped grow 17 local businesses and facilitated improvements on 13 historic properties. We helped create 60 new full-time jobs with over $2.2 million in payroll, resulting in approximately $50,000 in new, annual income tax revenue for the City of Barberton.

These examples demonstrate how the Foundation fulfills its mission to improve the lives of Barberton residents, subject to the Foundation’s spending policy and the funds that are available to spend. The Board carefully considers the impact of inflation, the strategic goals of the Foundation and the status of the original endowment. This budget has been unable to grow significantly because of the Foundation’s commitment to the debt service on Barberton High School. If the Foundation is to commit to another large capital project, the impact that these programs have (and the primary role of the Foundation) will be diminished.

The Board has also considered that the lack of growth of the endowment coupled with the funding of this project may pose an existential threat to the Foundation itself.

In considering participating in the City’s capital stack, our Board also has front of mind their fiduciary responsibility. This not only means protecting the original $86 million endowment but ensuring that it continues to grow with the increasing costs of education, social services, special projects, and operating the Foundation. The endowment is, in essence, a machine that generates the dollars we spend each year in the community. As the demand for these funds will only continue to increase with rising costs, the machine needs to get bigger to accommodate that demand.

While we do not disagree with the necessity for updated City and court facilities, our Board must balance whether this is the best use of the Foundation’s spendable funds. The City Hall and Justice Center project cannot be compared to the original funding of Barberton High School due to the difference in public support. The Foundation committed to paying the high school debt if the citizens passed a levy to show clear, public support for using Foundation dollars for the project. In the absence of a community vote for the current project, such as a levy, the Board is left to make the difficult decision alone. The timing of the City’s request forces us to bargain the growth of the Foundation’s endowment, which will further affect the ability of the Foundation to provide funding for scholarships, grants and economic development in a way that remains impactful to the future residents of Barberton.

As a stakeholder and interested party, we wanted to make you aware of and keep you informed on the thought process and decision-making related to this project. Our Board does not take this decision lightly and has been incredibly thoughtful in their diligence. We respect and appreciate your perspective. If you wish to share your thoughts and concerns, please send an email to feedback@barbertoncf.org so that we can compile them and consider the community’s input in the decision-making process.

We are thankful for the trust you place in the Foundation and its Board. We commit to preserving this trust by looking at this project from all relevant angles and continuing to fund projects that will positively impact the economic development, education and health of the Barberton community.

Respectfully,

Tiffany Peters

Interim Executive Director/Director of Finance

Questions you may have on this project:

Q: What is the impact on the fund I set up personally with the Foundation? Is my scholarship or designated endowment safe?

A: The request from the City is a request from our general endowment, not a specific, donor-designated fund. If you set up a fund here at Barberton Community Foundation, or your organization is the beneficiary of a fund, it will not be used for this grant request.

Q: Will grant partner funding be affected by this request in 2024?

A: Not at this time. If funded, the first payment on the project would not be until sometime in 2025.

Q: What does this mean for the future spending of the Foundation?

A: This remains to be determined by our Board, but the amount being requested would represent the majority, or all, of our granting budget for the short-term and will affect our ability to make impact in the long-term as well.

Q: How much is the City requesting from the Foundation?

A: As the legislation reads currently, the City will be requesting $1.6 million for 25 years

Q: You funded the entire high school, so why is this such a difficult decision?

A: Simply put, we have funded many significant projects over the years and our endowment has never kept up with inflation as a result. Because of this, we are faced with a declining ability to make community impact, and our Board has been focused on making sure the endowment grows going forward, while still funding projects that benefit the wellbeing of the community as a whole.

Q: You have $86 million, and you can clearly afford to fund this project, so why don’t you?

A: The $86 million endowment is untouchable. We are only allowed to spend from the money the endowment makes from being invested each year.

Q: Do you believe that this project is unnecessary?

A: Our board does not disagree that the current facilities need meaningful upgrades for safety and space purposes.

Q: How can you use Barberton dollars for the courts that serve multiple communities?

A: As part of our diligence, we would ensure that fair estimates of court usage are calculated so that we would only fund Barberton operations, as per our Code of Regulations.

Q: Will there be a levy if the Foundation cannot fund the project?

A: At this time, this is a question for the City and for City Council.

Q: What are alternatives to the proposed, $30 million project?

A: At this time, this is a question for the City and for City Council.