Mayor Bill Peduto announced Thursday that he had secured $115 million in contributions from Pittsburgh’s four largest nonprofits for his long-awaited OnePGH initiative.
UPMC, Highmark Health, the University of Pittsburgh and Carnegie Mellon University will voluntarily contribute millions to the project over the next five years, to fund measures including affordable housing, education opportunities, and programming for seniors.
Peduto called the agreement with the four tax-exempt nonprofits a “historic initiative,” likening it to the city’s postwar renaissance. "We're doing it in the Pittsburgh way — by working together,” Peduto said at a press conference outside his office at the City-County Building.
UPMC will commit $40 million for affordable housing in the city, as well as another $5 million per year for other OnePGH projects. Highmark will contribute $5 million annually for social, economic, and health needs of city residents. Pitt is offering $8 million over five years for community engagement centers, green infrastructure, and programming for seniors. CMU is investing $4 million over five years to provide education and recreational opportunities for teachers and students.
In a sense, the sums today were a down payment on previous aspirations for OnePGH. In 2018, Peduto said the city needed $3 billion to achieve its goals, $1.6 billion of which he hoped would come from nonprofits and other private sources. The amount announced today was less than a tenth of that sum.
And the size of the donations will no doubt be scrutinized. UPMC, for one, announced net income of $836 million last year -- roughly 11 times the amount the hospital giant will contribute to OnePGH and other causes Peduto identified over the course of five years.
The mayor's office took pains to show that the city had gotten a much better deal than it had under the its previous approach of dunning nonprofits for “payments in lieu of taxes.” A handout to reporters showed that since 2005, the sums received were typically in the low seven-digit range for many years, with one-time spike of $9 million in 2006. During Peduto's administration, the sums have dropped to a half-million dollars a year.
Peduto said that the money announced Thursday was “only the seed money,” and that conversations with other organizations would continue. He said he expected that “over the next five years that we can utilize these funds and then be able to double them.”
Dan Gilman, the mayor’s chief of staff, said the structure of these arrangements will vary based on program, but the goal is "to make sure there is full transparency." Gilman added that the city itself will likely have a fairly small role in actual implementation. Most, though not necessarily all, of the money will be handled and disbursed by a 501(c)(3) entity, OnePGH. That arrangement, too, will likely be scrutinzed: A "mayor's fund" with roughly similar goals, for example, has raised questions about special-interest influence in Los Angeles.
Erin Kramer, executive director of the advocacy group OnePA, said that while the nonprofit handling the funds would have to report financial activities in a publicly accessible IRS form known as a 990, “that’s not the same as transparency and democratic government.”
Kramer, whose group has endorsed Peduto’s rival Ed Gainey in the next month’s mayoral election, said that if the city’s own budgeting process “is good enough for the general fund, it ought to be good enough for this effort.” She said she worried that the donations reported under OnePGH would simply re-label efforts the large nonprofits would have made anyway, and that the program would serve “as cover for the mayor and these megacharities that don’t really want to be accountable.”
Reporters, in fact, questioned the timing of Thursday’s announcement, which came just weeks before a hotly contested mayoral primary for the Democratic nomination. Asked about the timing, Peduto said that “COVID put us back” and that he had hoped to announce the efforts in 2020 or early 2021. Noting all the moving parts, he said, "It was always more important that we did the project right than the timing.”
Peduto’s handling of how to tap the city’s largest nonprofits for support has been criticized throughout the campaign, including as recently as Wednesday night’s mayoral debate hosted by WTAE.
The mayor first announcedOnePGH in April 2018, but the project has been delayed for years. At the time, the idea was for corporations, large nonprofits and foundations to kick in money to tackle the big problems facing the city, such as hunger, homelessness and the need for universal pre-K.
As WESA’s Margaret J. Krauss reported in 2018:
The plan is rooted, at least in part, in a conundrum for cities: across the country, nonprofits don’t pay property tax. But since they depend on taxpayer-funded services such as road maintenance, police or a ready supply of workers, many nonprofits agree to make payments in lieu of taxes to their home cities. Pittsburgh used to collect these payments from a number of organizations, but the sum has dwindled in recent years. In an effort to wring money out of UPMC, former mayor Luke Ravenstahl took the nonprofit to court and challenged its nonprofit status.
Peduto called off the hounds by dropping that lawsuit in 2014. He said he wanted something more sustainable, in which nonprofits would sign long-term agreements to contribute to the city’s well-being, perhaps by earmarking the funds for specific causes.
Gilman said the discussion with the nonprofits was "collaborative," and not a negotiation. "There was never a threat" of legal action after the city dropped the UPMC lawsuit in 2014.
"These conversations only began when we dropped the lawsuit," said Peduto, who calls that move "a leap of faith," which prompted a leap on the part of big nonprofits in return.
In 2019 and 2020, nonprofits contributed less than $500,000 to the city of Pittsburgh’s budget, although contributions ran in the millions as recently as 2014.
