A Half-Billion from Detroit’s “Shadow Mayor” Latest Sign of Donors’ Power in Cities

Dan gilbert played a formative role in Detroit’s QLine streetcar, including naming it after Quicken Loans. Susan Montgomery/shutterstock

Dan Gilbert—the Quicken Loans mortgage mogul, Cleveland Cavaliers owner and one of the 40 richest people on the planet—announced last Thursday he plans to invest $500 million in Detroit’s neighborhoods over the next 10 years.

The first $15 million will pay off overdue property taxes in the city, but no other specifics have been released. The money will come from two Gilbert-linked philanthropic institutions: the Gilbert Family Foundation, which is contributing $350 million, and the Rocket Community Fund, the philanthropic arm of his business empire, which will kick in the remaining $150 million.

It is a massive philanthropic commitment in a city that’s faced challenge after challenge: the contraction of the automakers that once gave it the moniker Motor City; population loss that has left a large portion of its housing stock vacant; the lingering wounds of the 2008 mortgage crisis; an unemployment rate that, at one point, hit 28%; and a 2013 bankruptcy that was the largest municipal filing in history. In response to Gilbert’s commitment, Mayor Mike Duggan called it “an extraordinary day for Detroit, a major step forward on a strategy to start to break the cycle of intergenerational poverty in this city.”

It is also only the latest chapter in Gilbert’s complex relationship with Detroit. Once dubbed the city’s “shadow mayor” by Politico, Gilbert is by some estimations the most influential person in the city. Rock Ventures, the umbrella company for his more than 100 enterprises, employs more than 17,000 people in Detroit, making it the city’s largest employer and taxpayer. His real estate company, BedRock, owns more than 100 downtown properties. He has invested and committed more than $5.6 billion in Detroit over the last decade—and the revitalization of the city’s downtown over the past decade is largely his doing.

In other words, Gilbert is deeply invested in Detroit—financially and philanthropically. And it is hard to separate the two spheres. This new pledge places him among the top philanthropic givers in the city—the Kresge Foundation, one of the city’s biggest benefactors, made $33 million in grants in Detroit in 2019. The announcement also raises a number of difficult questions.

How should we view a philanthropist whose giving could fuel an enormous return on their own investments? What to make of philanthropic gifts to a city from someone who also received millions in local tax breaks? How will such overlapping interests influence who is heard and who is not? And more broadly, how do we ensure that one patron’s preferences do not outweigh the people’s?

The role of billionaire donors in America’s cities

Gilbert’s commitment offers a fresh example of the influence and power that billionaires increasingly wield in American cities—and an unusually stark one, given Detroit’s unique circumstances. Wealthy residents have long played power brokers in their hometowns and adopted cities, whether through philanthropy, economic might, or both. (Foundations, of course, have similar power, but rarely the same overlapping financial interests.) Yet as Inside Philanthropy founder David Callahan argued early last year, decades of attacks on government by rich elites have helped weaken our public institutions to the point that private dollars seem increasingly essential.

Over the last few years, billionaires around the country have been bankrolling what might once have been city-funded projects. Philadelphia set out to reform its juvenile justice system with help from media mogul and former New York Mayor Mike Bloomberg. Chicago expanded its after-school soccer programs in underserved neighborhoods with help from hedge fund titan Ken Griffin. A group of cities is launching guaranteed income trials with help from Twitter co-founder Jack Dorsey. And billionaires across the nation have donated to COVID-19 responses in their home cities.

Billionaires have also become instrumental in the development of several high-dollar city parks, which often serve as the crown jewels of economic redevelopment efforts—and fuel gentrification and displacement. The High Line in Manhattan is the prototypical example, a truly impressive public space that contributed to skyrocketing real estate values, championed and partially funded by private donors. That included millions from Barry Diller and Diane von Furstenberg, who would go on to spearhead and bankroll a new “floating park” on the Hudson, drawing significant backlash. This level of giving for city parks was once unheard of; now, it’s almost commonplace, and carried out by wealthy donors who sometimes reap financial benefits of revitalization efforts.

These examples often seem fairly innocuous. Many arose out of community processes. But it is a mark of our civic health—or at least the policy path we are on—that such private investments seem all but necessary for modern cities. Large private investments in a city’s economy also yield certain winners and losers, and there’s no guarantee that they are determined in a democratic or equitable manner. Even one of the founders of the High Line ultimately expressed regret at who ended up benefiting from the hugely popular tourist attraction.

At $50 million a year, Gilbert’s pledge could, in a worst-case scenario, go the way of Mark Zuckerberg’s $100 million attempt to remake the New Jersey school system, an effort laudable for ambition, but disastrous in its consultants-before-community approach. Like Zuckerberg, Gilbert is a white male donor backing a majority Black city. However, at least for its first step, community engagement does seem to be part of this new pledge. The focus on property taxes emerged through meetings with Detroit residents and leaders that Gilbert’s wife, Jennifer, held throughout 2020. “We did a lot of listening,” she told CBS.

Detroit is, simultaneously, a dramatic example of the roles now played not just by billionaires, but foundations in American cities. The city exited its 2014 bankruptcy thanks in large part to a $816 million deal known as the “grand bargain.” After a plea from the bankruptcy judge, foundations took the highly unusual step of pledging around $366 million to lessen the cuts for city retirees and preserve the city museum’s vaunted art collection, including works by van Gogh and Matisse.

What does Gilbert’s philanthropic history tell us?

We’ve covered several of Gilbert’s past philanthropic projects in Detroit. The history suggests overlap between his philanthropy and financial interests is the rule, not the exception, for the billionaire.

Gilbert was one of the backers behind the QLine, a downtown Detroit streetcar that started operating in 2017, as covered by my colleague Tate Williams. It was the first urban rail transit line in the country built and run not by the city government, but by a nonprofit with funding mostly from private investors and foundations, according to Next City. Gilbert gave $10 million to the project, served on the governing board and helped choose a name that echoes his Quicken Loans.

From one perspective, the project was a victory that brought much-needed public transit to a cash-strapped municipality. From another, it was a less-than-democratic choice over competing plans that offered longer service lines. Gilbert was not the only, nor the largest, donor behind the streetcar, but it’s notable that its 3.3 miles serve downtown, which is where most of his real estate holdings are located. A 2018 research paper on public-private partnerships found that business leaders, including Gilbert, were steering the QLine project with their interests in mind, the Detroit Metro Times reported, though the nonprofit that operates the streetcar disputed the report’s conclusions.

As my colleague Mike Scutari reported, some have called the QLine a form of “transit gentrification” that serves businesses more than residents, and point out that growth in the city’s downtown and midtown have come as other neighborhoods continue to struggle, giving rise to what Kresge Foundation President Rip Rapson has called “two Detroits.”

Gilbert is also one of two major supporters, along with real estate billionaire Stephen M. Ross, of a $300 million University of Michigan research complex that would serve as the anchor attraction in a plan to turn a former jail site into a 14-acre tech campus at the edge of downtown Detroit. Gilbert, who bought the site from the county in 2018, has made a “significant contribution of land” to the project, according to the university’s press release.

The project appears likely to be an economic boon for many in the city, particularly Gilbert, who is positioned to serve as developer for the planned neighboring attractions. But as reported by Scutari, not everyone is excited about the project. An op-ed by University of Michigan faculty accused the school’s officials of being “complicit in the dangerous practice of the wealthy and powerful alone determining the direction of development,” as IP covered at the time.

The interplay between Gilbert’s investments and philanthropy is one his team has readily acknowledged in the past. “We frame it as doing good and doing well,” Matt Cullen, former CEO of Gilbert’s Rock Ventures told Philanthropy Roundtable in 2014. “Philanthropy alone won’t work in the city of Detroit.”

“We fundamentally believe the city of Detroit is an undervalued asset,” he said. “And we fundamentally believe that now is the time to get in at the bottom floor of economic development in this city, and that we will benefit as a result of it.”

Gilbert’s relationship with Detroit 

Gilbert grew up in a Detroit suburb and attended law school in the city. And the announcement on “CBS This Morning” underscored where this effort ranks in his priorities: It was one of his first TV interviews since a 2018 stroke—the recovery from which he likened to a “marathon.” 

Critics have noted that a lot of his previous philanthropy focused on downtown Detroit—where much of his investments also lie. Perhaps in answer, the pledge’s first installment hits all city neighborhoods. Wiping out back taxes will also directly benefit residents. Gilbert’s team says about 20,000 families will get relief from the program, which will preserve an estimated $400 million in wealth and home equity in the city. Future investments will focus on home repair, efforts to bridge the city’s digital divide and initiatives to boost employment.

“We’d like to see the people of Detroit benefit,” he said in the TV appearance. “When you’re at the energy level of downtown right now, we can carry that to the neighborhoods.” 

Gilbert has invested a large share of his fortune in the future of Detroit. Now—after years of more intermittent donations, from university gifts to COVID relief—he’s made a sizable philanthropic pledge to the city. And much more could be on the way from the 59-year-old. He and his wife signed the Giving Pledge back in 2012, committing to give away a majority of their wealth, which is currently estimated at just shy of $40 billion.

Regardless of what one might think of his motives and his willingness to listen to the community, it seems clear that his preferences and passions are going to shape the future of Detroit. He has a staggering amount of power for an unelected individual. Yet aside from trying to get his ear, city residents have few ways to influence him. You can’t vote a billionaire out of office. 

How Detroit and other communities handle this tension—which shows no signs of abating—could, in turn, shape the future of America’s cities.