Be My Neighbor This philanthropic fund is encouraging business growth, but will it start a trend?

Here's a novel concept: philanthropic organizations joiningforces to transform a flagging regional economy by fosteringentrepreneurship. Sound improbable? In Ohio, 80 entities formedFund for OurEconomic Future to do just that.

The three-year initiative launched in 2004 has raised $35million, which is earmarked in part for fostering entrepreneurshipand business formation in sectors with strong growth potential."Our goal is to shift the regional economy from traditionalindustries to promising areas such as advanced energy,nanotechnology and electronics," explains Bradley Whitehead,who oversees implementation of the fund's initiatives.

Rather than investing directly, the fund bestows grants onnonprofit venture development entities like BioEnterpriseand JumpStart. These, in turn, offer assistance to early stageventures in the region, ranging from lending expertise to providingfunds. JumpStart, for example, advises and funds companies acrossindustry sectors, investing between $50,000 and $500,000 in itsportfolio companies. BioEnterprise focuses on offering a broadspectrum of assistance to companies in the health-care sector andon gaining recognition for the region among the national VCcommunity. In the past three years, BioEnterprise has received$3.65 million from Fund for Our Economic Future--money it hasemployed to help early stage firms build management teams,commercialize innovations and reach out to investors.

"BioEnterprise provided us with three major areas ofsupport," says J. Lloyd Breedlove, 58, former CEO and currentboard member of Imalux, a medical imaging device company thatbenefited directly from the fund's grant to BioEnterprise."They helped with early fundraising, including connecting uswith potential investors; assisted in preparing materials; and madeintroductions to our current CFO and chief medical officer, as wellas to our investment bank and to key contacts at medicalfacilities."

The trickle-down approach is also paying off for the region as awhole, says Baiju Shah, president and CEO of BioEnterprise."Prior to 2002, Cleveland was barely a blip on the radar forattracting health-care VC funding," he reports. "We weregetting roughly $30 million a year through the [dotcom] bubble.Last year, we attracted $171 million."

While Fund for Our Economic Future remains something of ananomaly in the region, other would-be hotbeds of innovation aretaking notice. "We've had interest from lots of peoplelooking for the magic elixir," says Whitehead. "We'veheard from Buffalo, Houston, Toledo and even Ireland, but wehaven't seen anyone pull it together yet."