Two Kalamazoo leaders put their hearts, and money, into city

Kalamazoo is a leafy, older, sizable (74,000 population) town in southwestern Michigan. Known for years as the headquarters of the Upjohn Company and Western Michigan University, the city has a well-earned reputation for deeply engaged citizenship and civic involvement.

Over the past decade, the Kalamazoo Promise has made a national reputation as an innovative program that provides the city’s public school graduates with free tuition to attend college. Around $80 million in anonymous contributions have funded college scholarships for 4,200 students. In the process, the program has stabilized local school enrollment and property values, as well as increasing college attendance rates.

The town is spackled with art museums, internationally recognized music festivals and well-preserved 19th-Century buildings. Kalamazoo College is one of the highest rated small, liberal arts institutions in the country. Historic families such as Upjohn, Gilmore, Parfet, Todd and Connable have over the generations established patterns of generous civic engagement that other communities could only envy.

Against this remarkable citizenship background stands Michigan’s chronic statewide pattern of and systemic failure to support local government that looks like a system specifically designed to impoverish local communities that otherwise would be flourishing.

Unlike most other states, Michigan does not allow local option sales taxes and severely restricts how much local governments can increase local property taxes in the wake of severe declines in value over the Great Recession. Moreover, nearly half of all property tax revenue is off the tax rolls – the result of nonprofit institutions like colleges and hospitals. State revenue sharing has (also) been cut back by quite a bit” says Timothy Bartik, senior economist at the W. E. Upjohn Institute for Employment Research.

Against this mixed background of civic engagement and present financial stringency comes the announcement last week of a new municipal foundation, the Foundation for Excellence, as a device to help resolve the city’s finances. William D. Johnston and William Parfet have come together to pledge $70 million to the city over the next three years to help resolve Kalamazoo’s current financial problems and fund reducing the local property tax rate.

Johnston is chairman of Greenleaf Trust, a privately held wealth management company and Vice Chairman of Western Michigan University’s governing board, where he is the primary advocate for creation of a new medical school. He is married to Ronda Stryker, the granddaughter of Dr. Homer Stryker, founder of the Stryker Corporation, a successful manufacturer of medical equipment and supplies, and a member of one of America’s wealthiest families.

Parfet is the retired chair of MPI Research and the great-grandson of W. E. Upjohn, who originally founded the Upjohn Company. A long-time civic leader with projects spreading throughout the community Parfet also donated a 330,000 square-foot building in downtown Kalamazoo to serve as headquarters for the new WMU medical school. (Disclosure: Parfet also serves on the steering committee at the Center for Michigan, which includes Bridge Magazine)

I’m lucky enough to know both, and I can tell you any community in Michigan would drool at having two residents with the philanthropic track record and citizenship commitment of these two guys. Johnston is a quiet, large-framed man who sits powerfully behind his desk at Greenleaf Trust in downtown Kalamazoo. While Parfet – whose quick wit disguises his passion for his community and his deep understanding of the forces that lurk behind business and community success, is a compelling speaker and a statewide leader.

Their gifts to their community are truly jaw-dropping. Detroit, for example, benefitted from the “grand bargain” that brought together local businesses, philanthropists and unions to resolve the city’s bankruptcy. In the case of Kalamazoo, the $70 million will go toward nothing less than an effort to stabilize local government finance and set the stage for future business and population growth.

The initial $70 million, three-year gift is aimed at three priorities: City budget stabilization ($7.6 million); reducing property taxes from 19.3 mills today to 12 mills ($32.7 million); and support for new ideas to reduce poverty and provide improved services to needy children ($30 million). The big challenge will be to raise related foundation endowment funds from $300 to $500 million.

This won’t be easy, especially since most Michigan cities are already finding times increasingly tough to manage their local finances … and Kalamazoo is no exception.

But thanks to local families with a deeply rooted sense of civic responsibility, Kalamazoo has a better-than-even chance to move to an entirely new way to think about financing local government. What an achievement for two families to tell generations of their offspring!