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The End of Civic Innovation?

A popular grant program for entrepreneurs may have run aground



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."

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