Rock Ventures’ school digitization project emblematic of a different way of looking at philanthropy
At a stuffy Detroit Public Schools warehouse east of downtown, up to 20 Quicken Loans employees are rifling through old records four mornings a week to help the city’s school system digitize decades of student records.
It’s an example of an effort coordinated by a team of Rock Ventures employees with backgrounds in philanthropy and government exploring new ways to work “upstream” in fixing Detroit’s most vexing problems — from preventing further blight to creating jobs for Detroiters outside of their own company.
They’re operating a small under-the-radar think tank of sorts, trying to find ways to go beyond the $17 million Dan Gilbert’s family of companies plans to spend on philanthropy in Detroit this year.
The group is treading far outside of the sphere of selling mortgages, managing downtown properties and writing checks to local charities.
“We have a different DNA. It’s not your traditional corporate philanthropy,” said Chris Uhl, vice president of community initiatives at Rock Ventures.
Uhl’s group is working on a proposal to change the way municipal government is financed and has hired an outside firm to study whether investors would buy social impact bonds to fund blight prevention initiatives in Detroit.
Social impact bonds have been used in Britain, Australia and Massachusetts to fund social programs and the savings to government is returned to investors.
“We’ve got a lot of people who are problem solvers looking at how do we build a better Detroit,” Uhl said. “And in that case, one of our core pieces working on neighborhood stability is blight removal.”
Since moving Quicken to Detroit from the suburbs in 2010, Gilbert has spent more than $2 billion of his wealth gobbling up 95 downtown Detroit properties, quickly becoming the largest landlord and employer with 17,000 workers.
But as the billionaire mortgage impresario has built a downtown business empire, his companies have become increasingly focused on playing a bigger role in fixing what ails one of the poorest big cities in America.
“You can’t just build this gilded central city and forget about the rest of the people,” said Uhl, who came to Rock Ventures from the Skillman Foundation.
The community initiatives and activation division at Rock Ventures is driven by a “for more than profit” mission that mixes Gilbert’s big bet on Detroit with a “moral imperative” to reverse decades of decline, said Helen Davis Johnson, vice president of community activation at Rock Ventures.
Johnson’s group toggles between projects aimed at boosting tourism to Detroit by 1 million visits this year and programs that help local entrepreneurs launch or expand small businesses.
“We’re adamant that’s important to restarting the wealth engine,” said Johnson, who previously worked at the Kresge Foundation.
Gilbert’s portfolio includes 110 businesses that vary vastly in purpose from selling mortgages and making football helmets to designing office interiors and answering inbound phone calls for other Detroit businesses.
Rock Ventures is attempting to use the varying professional skills of its workforce for volunteer projects that go beyond stocking shelves at a local food pantry.
In the case of the DPS records project, Quicken employees who handle sensitive homeowner documents each day are helping the district purge hundreds of thousands of pages of old student records. They’ll eventually be digitizing essential records that DPS graduates and dropouts routinely need for employment, passports, verifying their citizenship and obtaining Social Security disability benefits.
More than 500 employees from Quicken and other Gilbert companies signed up to help on a project that was an overwhelming task for the cash-strapped school district.
“If we have anything, it’s human capital,” said Rachel Perschetz, director of community investments for Rock Ventures.
Employees can volunteer unlimited hours on company time for nearly 250 approved causes across metro Detroit.
The DPS project was sparked by problems Detroit’s hospitals had with getting high school transcripts and health records of job applicants who attended Detroit schools that have long been closed.
Officials at Henry Ford Health System, St. John Hospital, Detroit Medical Center were rescinding job offers to Detroiters because DPS had delays of up to three months to produce a copy of a former student’s academic records, said Jeff Donofrio, executive director of workforce development for Mayor Mike Duggan.
“When we have Detroiters not being able to get jobs because you can’t find the records in a timely manner, it just seemed like a very logical one for us to kind of swing at,” Uhl said.
Duggan detailed the project during his Feb. 21 State of the City address.
“Who’s going to scan these million pieces of paper?” Duggan said. “Well, only one person in town had that many people — so we went to Dan Gilbert.”
Quicken’s involvement is saving DPS “a huge amount of money,” Donofrio said.
“Having Quicken at the table really changes the whole dynamic and the speed at which you can accomplish the task at hand,” Donofrio said.
Like many support services in Detroit schools, the warehousing and records department has been hammered by budget cuts.
Darreaux Waddell, the lone archivist for Detroit Public Schools, said his department shrunk from 60 workers in 2009 to a team of five he now manages. The daunting task of tracking down student records dating back to the 1950s was compounded by an influx of records from nearly 80 schools that closed over the past decade, he said.
Since the beginning of February, Quicken employees have showed up each morning Tuesday through Friday to help Waddell and his assistant sort through boxes of student records.
Neither Waddell nor the Rock Ventures executives know many pages of records are contained in the white file boxes stacked floor to ceiling in the warehouse.
“At our current speed, it’s going to take years,” Uhl said.
The remaining records will be digitized with scanners donated by Lear Corp. and saved in a database that Quicken employees are helping the DPS information technology department develop, Uhl said.
“You guys are coming in and assisting me in a major way,” Waddell told Quicken employees during a recent three-hour document-purging session.
Quicken employee Kelly Erickson said the company’s request for volunteers on the DPS project was a cause she could relate to. “As someone who has needed student records of my own, I can’t imagine not being able to get those records,” she said.
Ford Motor Co. and Lear Corp. have used their employees for mass volunteer projects, but not in the way Gilbert is, said Peter Remington, a veteran corporate fundraiser and president of The Remington Group.
“Dan has kind of taken it to a new level,” Remington said.
Since planting his flag in Detroit, Gilbert has made fighting blight one of his missions, even as his mortgage company has come under scrutiny for foreclosures in the Motor City after the 2008-2009 housing crisis that fueled neighborhood abandonment.
Depressed housing values since the Great Recession have proved to be one of the biggest obstacles to getting a mortgage to buy a home in Detroit.
In an attempt to boost home values, Quicken Loans set aside $5 million for a revolving loan fund to renovate homes owned by the Detroit Land Bank Authority through a partnership with Home Depot.
Since August 2015, the Rehabbed & Ready program has renovated 37 homes in four neighborhoods, sold 27 of them and has four pending sales.
The average cost of construction and broker fees is $89,181. But Quicken subsidizes about $21,000 of the cost to create a sale price that can be matched for comparable homes in each neighborhood. In-House Realty and Title Source — two Gilbert companies connected to Quicken — have handled the listings and title work for free.
Data from Multiple Listing Service suggests the sales are having some effect on driving up home values, which are key to appraisals and getting financing from a lender like Quicken.
In the Bagley neighborhood on the city’s northwest side, average sale prices were $19,175 in 2011 and $36,373 in 2015, the year the Rehabbed & Ready program began, according to MLS data.
Nine Rehabbed & Ready houses in the Bagley neighborhood have sold for an average of $88,267, according to Quicken, while house sale prices in the neighborhood are averaging $52,693 this year.
The higher sale prices for the move-in ready homes creates comparable sales that can spur more sales or refinancing, said Gina Metrakas, an executive vice president at Quicken Loans.
“People who are sitting in homes in these neighborhoods are starting to move on them because they’ve seen what this program has been able to do to prices,” said Metrakas, who came to Quicken in 2014 from U.S. Department of Housing and Urban Development.
Subsidizing rehab projects to create comparable sales records on homes in Detroit neighborhoods can also create new business for Quicken. The land bank’s website includes a link for potential home buyers to “get preapproved with Quicken Loans” for a mortgage.
Remington said Gilbert’s mixture of business with community aid fits with the “venture philanthropy” trend started by Silicon Valley technology companies.
“They’re putting people into a neighborhood, stabilizing the neighborhood and they’ve got skin the game,” Remington said. “It really is to be commended and modeled.”
Editor’s Note: This story has been clarified to make clear that Quicken has received scrutiny for foreclosures but did not have a higher rate of foreclosures than other lenders.
Story originally published by Crain’s Detroit Business