Why ‘NEXT Detroit’ might be the next big problem for Kwame

I was reading article on Crain’s Detroit Business Web site and I came across a bit about how the NEXT Detroit Neighborhood Initiative is separating from the city and becoming an independent charity.

Not that groundbreaking on the face of it. A lot of city programs spin off into private charities. The Detroit Institute of Arts is one of many.

But knowing what I know about NEXT Detroit and how it operates, I thought: uh oh.Background: the initiative was launched over a year ago as a city program with the mission of revitalizing six long-suffering Detroit neighborhoods over five years. As a government program it brought in $8.9 million from private foundations, the business community, the city, and the state.

But now the city of Detroit is spinning it into a private nonprofit, claiming that doing so will attract more foundation funding.

But there’s one little problem: Who is the board of directors for this now-independent charity? Kilpatrick and other city employees who are being paid by the city still work on the program. And Kilpatrick wrote NEXT Detroit into the city budget, allowing it $25 million annually.

Legally, that’s not how 501(c)(3) (non-profit org) funding works. Sure, cities give money to private nonprofits all the time. But they have to go through the right procedures of donation. They don’t just write them into the budget. So the legalities of this whole spin-off are still unclear.

NEXT is getting all the benefits of a city program: city employees work on it, the mayor basically owns it (and he’s written himself into the contact so he can keep getting paid from it for years), and they advertise in spaces where it’s illegal for private companies to advertise (Hart Plaza, for instance).

So why are they getting away with it? Or, a better question might be, how long before Kilpatrick gets himself into another legal fix.