Doing Good, Public Good,
and Public Value
WHY THE DIFFERENCES MATTER
Stuart C. Mendel,1 Jeffrey L. Brudney2
1Cleveland
State University, 2University of North Carolina Wilmington
In this article, using multiple illustrative case examples, we demonstrate that philanthropic
institutions are in the business of creating public value. In framing the work of philanthropy more broadly to include the process of public value creation, philanthropic institutions and leaders are challenged to be more strategic not only in their mission-fulfillment
grant-making with nonprofit organizations but also in the way they stimulate and encourage collaboration, create the “third space” necessary to incubate ideas to transform society,
and leverage resources to increase the return on their investments toward system-wide
change. The implications for philanthropic actors and institutions suggest that the strategic
contributions they make toward creation of public value are those that go beyond transactional performance measures, such as number of dollars spent or clients receiving services,
to include ways that their investments are amplified by meaningful partnerships with
nonprofit and other organizations, changed behaviors of institutions and individuals, and
transformative public policies.
Keywords: collaboration, partnership, philanthropy, foundations, public good, doing
good, public value, Cleveland, Ohio, case examples
ASK ANY INDIVIDUAL involved in private philanthropy or leading a philanthropic institution, and he or she would likely agree that their organizations are engaged in effecting change
in society (Anheier and Hammack 2010; Payton and Moody 2008; Whitman 2008, 2009).
Most see their work as “doing good” or providing for the “public good” (Bremner 1980;
Smith 2005). Most would also agree that in serving to fulfill their missions, among their
highest aspirations are for the philanthropic investments they make to resonate throughout
society well beyond a dollar-for-dollar return (Orosz 2007; Van Til 2008). But what they are
really doing is creating “public value.”
Mark Moore first coined the term public value as a frame to guide the work of politically
elected or appointed officials in executive branch agencies, along with the senior civil servants
who aid them, in producing outcomes for the public good (1995, 1–3). Moore and other
scholars of government argued that public value arises from the actions of these same public
Correspondence to: Stuart C. Mendel, Cleveland State University, Maxine Goodman Levin College of Urban Affairs,
2121 Euclid Avenue, Cleveland, OH 44115. E-mail: S.mendel@csuohio.edu
Journal sponsored by the Jack, Joseph and Morton Mandel School of Applied Social Sciences, Case Western Reserve University.
Nonprofit Management & Leadership, vol. 25, no. 1, Fall 2014
© 2014 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/nml.21109
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management authorities that contribute to the common good of a community and have elements of altruism; are sustainable environmentally and financially; and motivate the public
to perceive society’s public institutions as stable, dignified, and trusted (Alford and Hughes
2007; Jorgensen and Bozeman 2007, 361–62; Stoker 2006).
In this article we suggest that creating public value is a much broader concept that can be
stimulated by the direct and indirect actions of private philanthropic institutions in policymaking, grant and contract work with nonprofit organizations, and the development of public–private partnership. We also suggest that philanthropic actors and nonprofit organization
leaders and managers do not normally account for public value creation and outcomes in
their grant making and program and project evaluation work, and that simply reporting on
clients served and dollars spent may satisfy a donor’s intent to “do good” but are insufficient
measures for advancing the public good or for generating the transformational change to
which many philanthropic institutions aspire. In making these assertions regarding philanthropic institutions, we apply a frame for decision making by private grant makers that has
not been addressed by Moore or others in the public management literature nor examined in
the literature of the nonprofit sector.
From the standpoint of the charitable and good works traditions of philanthropy, public
value as an outcome would reside less in the domain of government and more in the province of individuals exercising their moral and ethical judgments and sense of responsibility
(Frumkin 2002, 96 and 104–14; Hammack 1989; Salamon 2002). From this perspective,
public value is realized when individuals trust public policymakers and public institutions,
have faith in the system of economy and justice, and enjoy (conceivably) a level playing
field to achieve a measure of economic security (Bozeman 2007; Hartz 1955; Mendel 2003;
O’Connell 1983). The institutions of philanthropy also generate and nurture public value
in specific ways through their directed giving or mutual benefit programs and in general
through their standing as institutions that perform checks and balances on the power of the
public and private sectors (Payton and Moody 2008).
Appreciating the public–private collaboration origins of public value is particularly important
for philanthropic leaders who strive for the best ideas and strategies for implementing them
(Hammack and Heydemann 2009, 7). Developing a framework for philanthropic leaders,
nonprofit organizations, and public managers to understand the essential but seldom recognized role that philanthropic institutions play in creating public value will serve several
important purposes: (1) inform giving and grant making whose end results are public value
outcomes; (2) offer guidance for philanthropy, civic and business leaders, nonprofit organizations, and governments regarding the development of successful grant-funded endeavors such
as public–private partnerships that provide an observable mechanism for public value creation; (3) inform public managers on the subtle ways that public policy can stimulate private,
philanthropic investment leading to the creation of public value; and (4) generate for philanthropic and nonprofit managers a broader framework to consider and measure the impact of
their work beyond immediate transactional measures.
Based on our examination of multiple public–private partnership case examples and the
public value literature, including treatments by Moore (1995, 2000); Barry Bozeman (2002,
2007), John H. Benington (2011), and others, this article draws attention to the role
philanthropy fulfills in public value creation. We argue that philanthropic-minded civic
leaders as well as leaders of organized philanthropic institutions can create public value
through their own stand-alone initiatives but also in and through partnerships with the
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public sector (Fleischman 2007, 19–25; Frumkin 1999, 2002). Through this frame of understanding, philanthropy plays an essential, catalytic but little recognized role in generating
public value that has yet to be addressed in the public sector–centric literature dominant in
this field. To elaborate and support our arguments, we present an in-depth analysis of the
early stage development of multiple public–private partnerships (PPPs) in Cleveland, Ohio.
Public–private partnerships are distinctive relationships in which public, private, and philanthropic actors come together to generate readily observable outcomes through large-scale
collaborative efforts (Mendel and Brudney 2012a). PPPs offer a window through which we
view how philanthropic leaders and their institutions were crucial in producing public value
outcomes.
Philanthropy and the Creation of Public Value
Philanthropic leaders contribute to the creation of public value in at least three important
ways: first, through mission fulfillment and the resultant impact of philanthropic organizations in conjunction with the public and private sectors in society (Bryson 2011; Herman
and Renz 1999; Prewitt 2009; Rojas 2000; Salamon, 2002); second, by serving as catalysts
through philanthropic institutional involvement in public policy and social change; and
third, as an outcome of the stewardship role philanthropic actors perform as they stimulate
and provide the institutional space and constructive tension in which public–private partnerships—a special class of relationships that philanthropic and other nonprofit organizations form with government, businesses, and other nonprofits (Mendel and Brudney 2012b;
Squires 1989; Swanstrom 1985; Wettenhall 2003)—can incubate and thrive (Drucker 1990;
Powell and Steinberg 2002; Stone and Ostrower 2007; Van Til 2000). We briefly discuss
these aspects following (for a fuller discussion see Mendel and Brudney 2012a).
Mission Fulfillment
In the context of nonprofit organizations, philanthropic grant makers, and civic leaders,
public value arises as an outcome of the intermediary and facilitating processes that private
nonprofit organizations employ as they strive to achieve their organizational goals (Mendel
2003): public value results as mission-based organizations, such as private grant-making
institutions and nonprofits, pursue and realize the attainment of their missions. In working toward mission fulfillment, philanthropic leaders and institutions form and strengthen
social networks, sustain social capital, build community, and nurture the bonds of trust that
together with the actions of government and business make up the fabric of civil society
(Boris 1999; Bozeman 2007; Frumkin 1999; Graddy and Morgan 2006; Mendel 2010, Salamon 1995, 200). In many respects, creating public value is a primary raison d’être for philanthropy in the United States (Smith 2005).
Third Space
Philanthropic institutions may also generate public value by enabling public–private collaboration processes and contributing to the development of policy. Activities in this sphere
include marshaling and coordinating nonprofit organizations to accomplish their aims (Boris
1999; Frumkin 1999; Prewitt 2009; Scalet and Schmidtz 2002), using authority and power
to influence the public agenda (Frumkin 1999; Hammack 1999), and tracing their work as
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contributing to the public good (Bremner 1980; Powell and Clemens 1998; Smith 2005;
Whitman 2008). This process is readily observable as large-scale civic undertakings arise and
are often cast as public–private partnerships.
In public–private partnerships, philanthropic leaders often provide the framing rationale,
counsel, and funding for new initiatives, thus creating a nonprofit-driven “third space”
for meetings and administration of collaborative public–private partnership arrangements (Mendel and Brudney 2012a; Van Til 2000). Through their funding and support of
nonprofit organizations, philanthropic institutions can oversee the work of public–private
partnerships in a manner that public bureaucracies cannot (Berry 2005; Graddy and
Morgan 2006; Lecy and Van Slyke 2012). In this way, philanthropic actors enable government, nonprofit, and businesses leaders to engage more freely in thinking, planning, and
implementing collaborative endeavors, particularly during the delicate “incubation” period
when ideas and approaches are formulated outside the public view (Benjamin 2010;
Roelofs 2007).
Stewardship
In the early stages of stewardship, philanthropic leaders take responsibility for the birth,
development, vetting, and experimentation of policy in ways that advance public value and
the public good (Mendel and Brudney 2012b; Orosz 2007). For example, philanthropic
institutions contribute to the conditions and attainment of public value through their
relationships with the public sector (Berry 2005; Roelofs 2007). In accepting that private
philanthropic institutions are a class of nonprofit organizations, scholars have noted that
they operate independently as supplements to government, as complements to government
in partnership relationships, and in adversarial relationships of mutual accountability with
government (Young 2000). As a result of their involvement in relationships with government, philanthropic organizations are likely to bring about unanticipated public values and
benefits, such as positive feelings of participants, improvements in the environment for collaboration, and redirected public dollars through advocacy (Benington 2011; Jorgensen and
Bozeman 2007; Mendel 2010; Stoker 2006).
In framing the work of philanthropy to consider their accomplishments by way of missionfulfillment grant making with nonprofit organizations, the deliberate way they construct
the third space necessary to incubate ideas to transform society and leverage resources, and
by stewarding and nurturing collaborative procession, philanthropic decision makers can
include public value creation as a desired outcome of their work. The implications for philanthropic actors and institutions are that the strategic contributions they make toward creation
of public value are those that go beyond simple claims that they are “doing good.” The creation of public value is a larger-scale and more visionary accomplishment than transactional
performance measures, such as number of dollars spent or clients receiving services, which
most grant-making institutions use to demonstrate their contributions toward social change,
transformation, and the “public good.”
Public Value, Public Good, and Doing Good
Since the appearance of the term “public value” (Moore 1995) and its later refinement as
“public values” (Bozeman 2002, 2007), scholars of public administration and related fields
have considered the concept primarily from the perspective of the public sector and its
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practitioners (Alford and Hughes 2007; Benington 2011; O’Flynn 2007; Williams and
Shearer 2011). From this perspective, public value is advanced when government contributes tangibly to society by producing infrastructure and services that benefit citizens, and
intangibly when it acts beyond its traditional role as policymaker, taxing authority, arbiter,
and the like to create desirable outcomes for the community (Bozeman 2007; Moore 1995;
Stoker 2006). Public value may also align with the sensibilities of public administrators and
managers through their aspirations, vision, and most important, their strategies to manage
relationships with for-profit and nonprofit service providers to serve the public during unsettled times (Moore 2000). An extensive literature review on the topic by the Warwick Business School’s Institute of Governance and Public Management (Williams and Shearer 2010,
2011) confirms these observations.
Although not known specifically by that name, the concept of public value will be familiar
to those engaged in philanthropy. From the standpoint of the charitable and good works
traditions of philanthropy, public value lies less in the domain of government and more
in the province of individuals exercising their moral and ethical judgments and sense of
responsibility (Frumkin 2002, 96 and 104–14; Hammack 1989; Salamon 2002). The
private origins of these concepts are well known to historians, who have traced “public good” as “doing good” to the writings of John Winthrop, Cotton Mather, Benjamin
Franklin, and others in the seventeenth- and early eighteenth-century American colonial
period (Bremner 1988, 217; Hammack 1998). From these origins, “public good” and
“doing good” underpin the efficacy of “charity” and the voluntary allocation of funds to
people and for purposes that otherwise would not have them (Bremner 1988; Fleishman
1999; Kass 2008; Salamon and Anheier 1996; van Tassel and Grabowski 1996, 785–90;
Whitman 2009).
The intellectual thread casting the purpose of philanthropy in America as a driver of social
change promoting the welfare, happiness, and culture of its citizens still applies to philanthropy in the twenty-first century (Bremner 1988, 3; Fleishman 2007, xiv; Smith 2005).
Public value is realized when individuals trust public policymakers and public institutions,
have faith in the system of economy and justice, and enjoy (conceivably) a level playing field
to achieve a measure of economic security (O’Connell 1983; Hartz 1955; Mendel 2003).
The institutions of philanthropy also generate and nurture public value in specific ways
through their directed giving or mutual benefit programs and in general through their standing as institutions that perform checks-and-balances on the power of the public and private
sectors (Payton and Moody 2008).
From the perspective of philanthropic actors and their organizations, public good and doing
good arise through the collaboration of public and private civic leaders, business executives,
and philanthropic institutions in endeavors that inform public policy, focus and leverage
public resources, and resonate throughout the community (Baynes 2002, 124–27; Roelofs
2007). Much of the well-known scholarship on private power in cities documents the role
civic leaders and other private interests play in policy development and the allocation of public resources by taking action through philanthropic institutions (Bremner 1996; Dahl 1989;
Domhoff 2005; Judd and Swanstrom 2003). Scholars note that organized philanthropic
institutions realize their missions by quietly stimulating and leading partnerships among
public, private, and particularly nonprofit actors (Miller 2002; Powell and Steinberg 2002;
Prewitt 2006; Rich 2004; Scalet and Schmidtz 2002, 32–33). Frequently these actions occur
and are most readily visible in public–private partnerships.
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In addition, “public good” is a concept that some scholars accept as measurable through
market performance and the establishment of a setting that facilitates prosperity (Frumkin
2002, 65–68; Benington and Moore 2011; Weisbrod 1986, 21–44). Generally speaking,
public good arises when the creation of a commodity may be due to the outcomes of public
policy or private actions that create actual or potential benefits shared by everyone (Bozeman
2007; Weisbrod 1986). But public good also arises within the moralistic, mission- or valuesdriven work of philanthropy and is expressed through the desired outcomes of philanthropic
or other private actors for initiatives they foresee will amplify their investment in a particular
project, partnership, or other endeavor (Scalet and Schmidtz 2002, 32–34). Table 1 elaborates the terms public value, public good, and doing good. The definitions were crafted for purposes of clarity and analysis of the multiple public–private partnerships cases that follow.
Public–Private Partnership Case Examples
The following case examples involving philanthropic individuals and institutions demonstrate how the role of philanthropy in the early stages of public–private partnerships (PPPs)
contributes to the attainment of public value. The PPP cases provide insight and examples of
private leaders and affiliated philanthropy working toward mission attainment, involvement
in public–private partnership, and creating a third space. The notion of a third space refers to
a sanctuary of time and place for public and private sector actors to participate in innovative
work for the public good outside of their formal institutions, sustained by philanthropic mission, expertise, and financial resources.
Our use of PPPs helps us to identify one means by which public value is created by philanthropic actors. Although we have no way to evaluate the representativeness of these case
examples, they allow scrutiny into the contributions philanthropic actors can and do make to
the relationships among public, private, and nonprofit organizations in creating public value.
Our focus on PPPs should not preclude consideration that public value is created elsewhere
by nonprofit organizations (Mendel and Brudney 2012a). For example, a nonprofit social
service organization that works solo in meeting a need in the local community may also create public value alone. Or a community foundation that collaborates with a handful of local
nonprofits in a small community may also create public value. Space limitations preclude a
detailed examination of these possibilities here.
The five PPP case examples and the one trailing non–public value creation PPP case example
described at the closing pages of this article illustrate the potential for creation of public value
through philanthropic institutions. Table 2 briefly summarizes the five affirmative public
value creation and one negative public value creation case examples, including mission fulfillment of the endeavor, the manner in which philanthropic actors fostered or served as stewards of a third space, and examples of public value created.
The first case example, Playhouse Square Foundation (PSF), arose in 1973 after the quiet
work of forming a public–private partnership began in 1970. The original players included
the Cleveland Foundation, the City of Cleveland, and the government of Cuyahoga County.
In collaboration with a local preservation activist, the Cleveland Foundation’s professional
leadership and its civic-minded, mission-guided board of directors nurtured the initiative
to redevelop privately owned, highly visible entertainment district theater assets headed
for the wrecking ball. With the help of the Cleveland Foundation staff skilled at drawing
together leaders from City Hall, county government, and the private sector, the foundation
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The predetermined, immediate, measurable,
short-term, positive outcome or consequence
of doing good. It is mission driven and directed
at a predetermined target group of clients and/
or community.
Public
good
An activity or process of individuals, organizations, and/or government. It is an altruistic,
charitable, mission driven activity aimed at
improving the lives of others.
The holistic, full, positive, long-term consequence of doing good for a larger community.
These consequences may be expected or
unintended, known or unknown, and hard to
measure. Public value can occur as a
consequence of the creation of a third space
that allows people and organizations to
facilitate doing good in new ways (see our case
examples).
Public
value
Doing
good
Definition
Terms
Description
Being altruistic is often seen as “good.” Individuals who want to make a
difference claim they are doing good. It is an aspect of philanthropy that
scholars of civil society and philanthropic practitioners attribute to the
charitable, moralistic underpinnings of mission-based and ideally, effective,
philanthropy. Doing good drives a process that philanthropic-minded individuals
point to as a means for creating public value to benefit the citizenry.
Due to the outcomes of public policy or private actions that create benefits or
potential benefits shared by everyone. Also arises within the moralistic, mission/
values-driven work of philanthropy, and is expressed through the desired
outcomes of philanthropic or other private actors for initiatives they foresee will
amplify their investment in a particular project, partnership, or other endeavor.
Measurable through market performance and the establishment of a setting
that facilitates prosperity and arises where the creation of a commodity may be.
Achieved through the action of the federal government in the U.S. Constitution
that benefits and protects all citizens for their individual pursuits, endeavors, and
interests. Government contributes tangibly to society by producing infrastructure and services that benefit citizens, and intangibly when it acts beyond its
traditional roles as policymaker, taxing authority, arbiter, and the like to create
the best possible outcomes. May also align with the sensibilities of philanthropic
institutions and private leaders through their aspirations, vision, and most
important, their strategies to manage relationships with for-profit and nonprofit
service providers to solve social problems or create the conditions for social
change.
Table 1. Public Value, Public Good, and Doing Good
Corporations and philanthropic institutions
and individuals that perform civic
leadership, engage in public–private
partnerships, create a third space,
participation in philanthropy. Actions
include volunteering, performing
philanthropy and charity, and donating
time, goods, and other resources.
Fresh water, clean air, strong economy,
international trade, interstate highways,
bridges, the electrical grid, the World Wide
Web, social media, civil rights, the war on
poverty, charitable giving, a healthy civil
society.
Public sector contracts with private
business and nonprofit vendors requiring
behaviors such as participation of
protected populations and partnership
collaborations; community pride; improved
environment; better business climate; new
relationships between individuals and their
institutions; public safety; and public
perceptions and attitudes.
Outcome Examples
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Restore and maintain
the health and vitality
of greater Cleveland
as a catalyst for
change.
Conserve and improve
the physical
environment of
Cleveland.
Transform northeast
Ohio into a nationally
significant center of
entrepreneurship and
innovation.
Provide and maintain a
safe, clean, and
friendly atmosphere to
the public at the
gateway sports
complex.
Finance and plan
projects to eliminate
slum conditions and
promote urban
redevelopment.
Neighborhood Progress, Inc./
Cleveland Foundation,
Mandel Foundation, George
Gund Foundation, and
Cleveland Tomorrow
Clean Land, Ohio/Premier
Industrial Corporation
(Mandel Foundation)
Jumpstart, Inc./Cleveland
Foundation, Cleveland
Tomorrow, the George W.
Codrington Foundation,
State of Ohio Department of
Development
Gateway Economic
Development Corporation
(sports) District/Cleveland
Foundation and Cleveland
Tomorrow
Cleveland Development
Foundation and Urban
Renewal Phases I and II
(Title I of the Housing Act of
1949)
Enhance the lives of all
greater Cleveland
residents.
Mission
Fulfillment
Playhouse Square, Inc./
Cleveland Foundation
Public–Private Partnership Name/Primary
Philanthropic Catalyst
Institution
Established by local business leaders to assist urban renewal and
slum clearance efforts. It provided financial and planning
assistance for a number of projects in the 1950s and 1960s. Raised
funds through membership subscriptions and the sale of ten-year,
4 percent development notes to provide seed money for urban
renewal and redevelopment projects. Its first major project was to
house people displaced by the clearing of urban renewal districts.
Led to the formation of a quasi-public entity that owned and
leased properties to the professional sports teams, issues public
bonds, and serves as the fiscal custodian of public funds.
Funded a start-up nonprofit to concentrate expertise, funding,
and allocations to start-up businesses using public and private
financial and knowledge resources.
Incubator for discussion and the initiative. Convened public and
private participants. Provided funding to initiate the project.
Funded the nonprofit intermediary organization to carry out the
long-term work of the initiative.
Provided leadership in urban neighborhood stabilization,
revitalization, and new development. Facilitated collaboration
among local community development corporations, philanthropy,
lenders, and the public sector.
Incubator for discussion and the initiative. Convened public and
private participants. Provided funding to initiate the project.
Funded the nonprofit intermediary organization to carry out the
long-term work of the initiative.
“Third Space” Stewardship Role
Public Value Created
The typical urban renewal project required more than four
years to plan plus six to nine more to execute. This discouraged private developers and drove the poor public image of
many incomplete projects after the demolition stage. The
projects displaced poor residents, did not adequately provide
for their relocation, and seemed dedicated to enhancing the
wealth of the central cities by getting rid of the less affluent.
Created public asset around which business activity returned
to an underperforming and crime-filled physical space near
the heart of the city’s downtown.
Addressed the region’s declining economy, loss of jobs, and
lack of entrepreneurial growth. Focused resources to diverse
entrepreneurs and the community, accelerated growth of
early stage businesses and into venture-ready companies, and
ultimately transformed northeast Ohio into a nationally
significant center of entrepreneurship and innovation.
Ecological and environmental enhancement of urban transit
corridors and vacant lots. Created through the esthetics of a
safer, more pleasant commute for employees, better urban
planning and public safety, and tangibly through lower costs
of hiring employees for companies.
Planned and coordinated neighborhood stabilization, housing
rehabilitation, and new construction by linking public, private,
and nonprofit organizations on a large scale. Improved
housing options and property values, opportunities for
commercial business endeavors serving residents. Greater
choices for citizens of Cleveland.
Revitalized nonproductive space for the enjoyment of patrons
and the general public, and set the conditions for concentrated and dense business development in a highly visible
portion of downtown.
Table 2. Mission Fulfillment, a Third Space and Stewardship Leading to the Creation of Public Value
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contributed and inspired additional funding to acquire property and to engage in planning,
leading to a public–private partnership managed by a newly created nonprofit facilitating
intermediary organization created for the purpose of harboring and developing the project.
By 1977 the foundation and Playhouse Square, Inc., had obtained long-term leases for the
three theaters, which were purchased by the Cuyahoga County commissioners. Funding
secured from government, local foundations, and private corporations was committed to the
project to carry out the restoration, operation, and management of the theaters.
Through the Playhouse Square partnership, the Cleveland Foundation fulfilled its mission to
“enhance the lives of all residents of greater Cleveland” (http://www.clevelandfoundation.org/
About/Background.html, 2012). The philanthropic players created the conditions and drew
together the actors for public–private partnership, then created the time, space, financial, and
intellectual resources for the initiative to succeed. Public value arose from tangible benefits
to the larger community—reuse of derelict property and nonproductive historic buildings
in a highly visible business district, increased property valuations, creation of an employment center, magnet for future urban real estate development, new arts programming, and
intangible benefits of creating the teamwork and human capital necessary to accomplish the
projects. Playhouse Square. Inc., established as steward of the mission, further amplified the
work of the philanthropic leaders and continues to offer return on the original investment of
the public and private partners.
The second case example, Neighborhood Progress, Inc. (NPI), was created in 1988 through
the joint efforts of Cleveland Tomorrow, the Cleveland Foundation, Mandel Family Foundation, and the George Gund Foundation. Acting as an operating foundation, Cleveland
Tomorrow (CT) itself was a private nonprofit civic organization composed of chief executive
officers of the largest companies in Cleveland united for the purpose of improving the longterm economic health of the city. CT required the direct involvement of its members, including chief executives from the two largest philanthropic institutions, which included their
time, treasure, and expertise to stimulate novel ideas and economic growth for the region.
CT devised the creation of NPI, a nonprofit agency designed to focus attention, dollars,
and other resources on Cleveland’s neighborhood development projects, with an emphasis
on housing. NPI worked closely with city and county governments and private local and
national funders and businesses both to preserve existing housing and to redevelop older
housing stock in urban communities (van Tassel and Grabowski 1996, 733).
As in the Playhouse Square case example, the creation of NPI illustrates the intentional
power of organized, mission-driven, and collaborative philanthropy to stimulate public
policy development, convene public and private resources, and institutionalize the process of
public value creation. Philanthropic players spearheaded the endeavor by funding a project
feasibility study, convening national experts, and beginning an advocacy process to create
city and county land-banks owned and operated under public authority. With the creation
of NPI as the mission steward of the endeavor, public value arose through the initiative of
home construction, renovation and rehabilitation programs, providing ways for residents to
preserve and protect the value of their personal property.
The third case example, Clean Land Ohio is a nonprofit organization formed in 1977 as a
public–private partnership organized by private philanthropy that included a prominent philanthropist and affiliated civic leaders, the Ohio Department of Transportation and the City
of Cleveland to remove trash and provide grounds-keeping along 32.6 miles of rapid transit
right-of-way (van Tassel and Grabowski 1996, 194–95). Clean Land Ohio came about as
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local and state public officials, private business owners, and philanthropic foundations considered ways to improve ridership on light rail and to create a more inviting atmosphere for
employees commuting to midtown Cleveland. Policymakers and grant makers believed that
trash-filled vacant lots and right-of-way diminished the desire of workers to travel downtown,
ultimately increasing the costs of doing business. The Clean Land case follows the pattern
and process of philanthropic institutions driving the creation of public value using public
private partnership as a mechanism to organize resources, plan, and then institutionalize the
endeavor through the creation of a nonprofit to serve as mission steward. Intangible benefits
and public values were created through the aesthetics of a safer, more pleasant commute for
employees, better urban planning and public safety, and tangibly through lower costs of hiring employees in the city.
The fourth case example, Jumpstart, Inc., was created in 2003 to address northeast Ohio’s
declining economy, loss of jobs, and lack of entrepreneurial growth. The region’s civic, community, and philanthropic leaders explored these issues, and, as a result, NorTech and Case
Western Reserve University began quiet discussions to launch a nonprofit venture development corporation to incubate ideas and take advantage of strategic business development
opportunities in the technology fields. Cleveland Tomorrow, the George W. Codrington
Foundation, and the Ohio Department of Development provided founding grants and intellectual capital to JumpStart. This nonprofit served to focus public and private resources on
diverse entrepreneurs and the community, accelerating the growth of early stage businesses
and ideas into venture-ready companies, and ultimately transforming northeast Ohio into a
nationally significant center of entrepreneurship and innovation (“Jumpstart” 2012).
Jumpstart originated in a complicated public–private partnership arrangement involving
philanthropic, business, and public sector actors. The participation of philanthropic leaders and application of their resources closely mirror the three prior examples. The Jumpstart
organization was the institutional product of the collaboration, whose tangible benefits
included the creation of successful new business enterprises and a spirit of entrepreneurialism
that led to employment, tax revenues, and new business creation. The investments of philanthropy resonate well beyond the dollars invested in the early stage development of the initiative, with the result that public value was created.
The fifth case example, the Gateway Economic Development Corporation, arose in the
aftermath of the defeat by Cuyahoga County voters of a property tax increase that was to be
used to build a domed stadium in downtown Cleveland. In the winter of 1984–85, business
and civic leaders met to develop alternative plans for a new sports facility. Cleveland Tomorrow’s top executives from Cleveland’s fifty largest companies created a development fund to
help launch the new project, and acquisition of property began in December 1985. Privately
owned sports teams agreed to design objectives in April 1986, and demolition at the site
began in June 1987. In May 1990 county voters passed a fifteen-year “sin tax” on alcohol
and cigarettes to help finance the complex. The following month Cleveland Mayor Michael
White and County Commissioner Tim Hagan created the nonprofit Gateway Economic
Development Corporation to administer the project, marking it formally as a public–private
partnership. In this fifth case example, the development of the Gateway District, organized
philanthropy, the business community, and city and county government planned and implemented large-scale public works. The culmination was a valuable public asset, around which
business activity returned to an underperforming and crime-filled area near the heart of the
city’s downtown.
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Discussion
In each of the cases presented, philanthropic institutions and their leaders participated in early
stage discussions, project conception and design, and capital investment in public–private
partnership projects that achieved public value. Although we cannot determine whether each
case example required all three of these elements for the creation of public value, we believe
that public value outcomes are most readily observed when the three elements are present. For
example, in the Playhouse Square, Clean Land, and Jumpstart case examples, philanthropic
institutional mission achievement provided defensible rationale for the partners to stimulate
positive change, provide a framework to form public–private partnerships to move the initiative forward and—few would dispute—promote the creation of tangible and intangible public
value for the larger community. The work of the philanthropic organizations enabled the participation of actors who may otherwise have been passive or distant observers.
We would like to provide more precise measurement of these outcomes. However,
despite the manifest need for it, research on public value has not yet yielded appropriate
operationalization. Even in the most prominent and well-cited examples, such as Moore
(1995, 2000), Benington and Moore (2011), and Bozeman (2002, 2007), and entire
conferences dedicated to this concept (for example, the “Creating Public Value Conference,”
convened by the Center for Integrative Leadership at the University of Minnesota in
September 2012), measurement of public value remains elusive, with little attention and
some speculation. Based on our research, we can begin to advance this discussion, although a
full schema awaits further inquiry.
As illustrated by our analysis of the different case examples in which public value was
created (Table 2), the attainment—and measurement—of public value will be specific to the
particular project. To the extent that a philanthropic initiative achieves its immediate goals
(for example, the construction of Playhouse Square) as well as brings about the behavioral
changes sought (clients patronize Playhouse Square), we conclude that public value is created. We would press forward in our measurement, though, in two important ways.
First, in our judgment public value can be observed in the desirable effects radiating out
from a project beyond the immediate target group or clientele or area, that is, the positive
externalities created. For example, Playhouse Square not only brought patrons to formerly
unused property in downtown Cleveland but also generated other businesses, visitors to the
downtown, tax revenues, new civic groups and associations (Friends of Cleveland Playhouse),
and greater service opportunities (for example, on nonprofit boards of directors and in
operational volunteering in the theater venues). These results of the project developed over
time and were not entirely expected, which leads us to propose as a second feature that any
measurement of public value should incorporate a temporal dimension to capture its full
effects. We would also propose a measurement scheme that valued those results that occur
quickly more highly over those that take longer to develop (similar to a “social discount
rate”), both because we have a preference for more public value created sooner, and effects
over a longer time horizon are more difficult to attribute to the specific philanthropic project.
In a multidimensional framework for the measurement of public value, other aspects of the
effects experienced, such as amount of positive behavioral change realized, would also be
taken into account.
This preliminary measurement framework has implications for philanthropic agencies. It suggests that these agencies seek from those they fund information not only on the achievement
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of proposed project goals, as commonly collected at present, but also on project results
achieved as a product of these goals. Project reporting should also extend to the positive
externalities created (both anticipated and not) and encompass a temporal dimension to capture them over time.
As we have mentioned, the lens of successful PPPs offers illustration of simple, observable
ways that public value is created by philanthropic actors and institutions. But PPPs involving philanthropic players also offer the opportunity to illustrate the inverse of public value
creation. A prominent example of a PPP that did not lead to the creation of public value in
Cleveland involved the well-documented and massive Urban Renewal project Phases I and II
(Mendel 2005; Teaford 2000, 447–49).
Beginning in the 1950s and still incomplete as of this writing nearly six decades later, the
complex endeavor involved the Cleveland Development Foundation, city government, local
business, and local philanthropic institutions. Designed to remove densely packed residential
and commercial districts that would then be replaced by new construction in planned communities in three Cleveland communities, the PPP resulted in many unanticipated negative outcomes: dramatic population shifts within the city boundaries, accelerated resident
movement out of the city, decline in housing values, financial disinvestment in highly visible
neighborhoods, a reduction of the property and income tax base, and a city with weakened
services, bonding power, and overall affluence (Squires 1989; Teaford 2000). Philanthropic
institutions provided funding and agency to the PPP with the disappointing result of not fulfilling lofty expectations and, few would argue, an absence of positive public value.
Several aspects of public value are found consistently across the case examples. First, the
mission-driven process of forming and carrying out the work of the initial endeavor stimulated the creation of new successful working collaborations. These associations led to the
development of other nonprofit organizations that served as mission stewards to the endeavor,
which then carried out subsequent projects yielding public value without the intervention or
involvement of the public sector. Second, philanthropic institutions drew together public and
private actors to perform important functions that directly and indirectly benefited members
of the larger community. This work included major activities unlikely to take place without
the intervention or involvement of philanthropy, for purposes such as land use planning, public safety, economic development, and public works. Third, as tracked by the participants and
promoted in the local press, the amplification of resources informed and guided by the philanthropic institutions leveraged a return that far exceeded the initial investment (“Forty under
Forty” 1995; Keating, Krumholz, and Metzger 1995; “Mayoral Administration of George V.
Voinovich” 2012; Miller 2010; Miller and Bullard 2005; Ralser 2007, 59; Shatten 1995).
Based on our analysis of the multiple case examples and the scholarship on public value, we
conclude that philanthropic institutions may achieve their goals of doing good by contributing to the public good when they conceive of their roles as acting strategically to do the hard
work of creating public value. An important strategy is working with other organizations—
public, private, and nonprofit—in meaningful partnerships. The critical process of forming
partnerships requires that philanthropic institutions—and the nonprofit organizations with
which they work—investigate and devise conditions for partnership and help those collaborations to succeed. To this end, an important, yet little appreciated strategy is providing
a third space in which philanthropic institutions serve as relationship stewards that offer the
sanctuary of time, place, financial support, and expertise for participants in the partnership
to work out the issues leading to meaningful partnership (Mendel 2013) and public value.
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Addressed northeast Ohio’s declining
economy, loss of jobs, and lack of
entrepreneurial growth by incubating
ideas and taking advantage of
strategic business development
opportunities in the technology fields.
Established a valuable public asset
around which business activity
returned to an underperforming and
crime-filled area near the heart of the
city’s downtown.
Eliminated slum conditions and
promote urban redevelopment.
Gateway Economic
Development
Corporation
Cleveland
Development
Foundation and
Urban Renewal
Phases I and II
Improved ridership on light rail to
create a more inviting atmosphere for
employees commuting to midtown
Cleveland.
Clean Land
Jumpstart, Inc.
Preserved existing housing to
redevelop older housing stock in
Cleveland and its urban communities.
Neighborhood
Progress, Inc.
Doing Good
Enhanced the lives of all residents of
greater Cleveland by preserving
redevelopment of privately owned,
highly visible entertainment district
theater assets headed for the
wrecking ball.
Playhouse Square,
Inc.
PPP Name
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Planned and organized approach to redevelop “old”
places in urban neighborhood settings of Cleveland that
include revitalized land and property use.
Created comfortable modern facilities for patrons to view
and participate in professional sports endeavors. Preserved
the city as a home to two major league sports franchises
and the spillover business activities attributable to them.
Served to focus public and private resources on diverse
entrepreneurs and the community, accelerating the growth
of early stage businesses and ideas into venture-ready
companies, and ultimately transformed northeast Ohio into
a nationally significant center of entrepreneurship and
innovation.
Created a safe, attractive space that improved the
environment for businesses to carry out their operations
and form clusters of industry hubs and business development.
Encouraged and stimulated the conditions leading to
home construction, renovation, and rehabilitation
programs. Philanthropic players spearheaded the endeavor
by funding a project feasibility study and beginning an
advocacy process to create city and county land-banks
owned and operated under public authority.
Did not work. Slum removal was not accompanied by
initiatives that were attractive to private investments and led to
dramatic population shifts and property disinvestment that
accelerated the urban pathologies of decline.
Maintained the region’s status as a “big league” market
worthy of investment and attention by global and national
markets and policymakers.
Established the framework for northeastern Ohio to take
action as an integrated regional economy.
Increased regional employment, prospects for business
development, and stimulated the transformation of the
old-growth manufacturing industries into a “next-generation”
economy.
Used public–private partnership as a mechanism to organize
resources, plan, and then institutionalize the endeavor through
the creation of a nonprofit to serve as permanent mission
steward. Also created aesthetics of a safer, more pleasant
commute for employees and lower costs of hiring employees
in the neighborhood.
Stimulated public policy development, convened public and
private resources, and institutionalized the process of public
value creation. Provided ways for all residents to preserve and
protect the value of their personal property.
Public Value Generated
Led to positive change of longtime trends toward urban
disinvestment and decline. Generated wealth from underutilized and underperforming tax revenue assets to the benefit of
the entire community. Created a safe inviting space for the
community to gather in a previously dormant neighborhood.
For the Public Good
Created a tourist destination of concentrated performing
arts; generated increased property values in the
surrounding districts; restored and increased tax revenues
to the city in from spillover businesses such as parking,
advertisement, and services supporting the arts; increased
employment.
Table 3. Specific Examples of Doing Good, Public Good, Public Value from the Cleveland PPP Cases
DOING GOOD, PUBLIC GOOD, AND PUBLIC VALUE
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MENDEL, BRUDNEY
Philanthropic institutions may conceive of their obligations primarily with respect to mission
fulfillment, due diligence of grant applicants and transactional grantee accountability in the
form of dollars spent, clients served, and resources leveraged. Although these components
constitute an important part of the operational work of philanthropy, in this article we argue
that philanthropic institutions realize transformational achievements to do good for the public good when their initiatives are designed to lead to the creation of public value. Table 3
illustrates the relationships among the concepts doing good, public good, and public value
that emerge from the five case examples.
Conclusion
In our view, the public sector focus of existing scholarship on public value largely overlooks
the role of philanthropic institutions, civic leaders, and decision makers in the creation of
public value. To the contrary, we argue here that philanthropy at its best is in the business of
creating public value.
Based upon the literature and case examples examined in this article, we believe that
philanthropic institutions should consider not only transactional accountability but also
how their grant making is transformative toward public value creation. Using the framework
presented in Table 2, leaders of philanthropy can view their possible impact by tracing the
amplification of their work beyond transactional accountability, with which they typically
evaluate grantee performance, to transformational results that benefit the larger society. For
example, in the Playhouse Square, NPI, and particularly the Jumpstart case examples, the
process of creating public value through program delivery and quality of programs was more
important to overall philanthropic impact than the number of individuals directly served
by philanthropic dollars. Although precise measurement must await further inquiry, philanthropic institutions can further this development by offering funding opportunities that
contribute to public value creation and consider how their investment stimulates societal
transformation.
The role of philanthropy in creating public value holds important strategic and management implications for nonprofit leaders and board members whose organizations’ health
and well-being depend upon grants and charitable gifts. As we have shown, proposals to
philanthropic institutions that align with nonprofit missions can serve the public good and
generate return on investment beyond the particular project when they can be linked to the
creation of public value. Organized philanthropy should prioritize requests for grants and
gifts that conceive the transactional work as part of a larger system of services, leading to
effective, transformational change. Accordingly, nonprofits should articulate the public value
outcomes as direct and indirect benefits of their involvement. From this larger perspective,
grants and charitable gifts are more than opportunities for nonprofit “work” but for the
creation of public value as well
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is assistant dean and director at the Center for Nonprofit Policy and Practice
at Cleveland State University.
STUART C. MENDEL
is the Betty and Dan Cameron Family Distinguished Professor of Innovation
in the Nonprofit Sector at the Department of Public and International Affairs, University of North
Carolina Wilmington.
JEFFREY L. BRUDNEY
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