State legislators poised to rap IndyGo for fundraising flop

The Legislature authorized a tax increase—approved by voters—that is helping to pay for the operations of the Red Line. (IBJ file photo)

IndyGo is likely to be in the hot seat again when the Legislature convenes in January because the transit system has raised just 1% or so of the private funding called for by a state law that helped fund a major expansion of the system.

The Indianapolis Public Transportation Foundation has banked $70,527 since receiving not-for-profit status in June 2019. But under the law passed in 2014, it’s supposed to be raising at least $6 million in private donations per year.

And while IndyGo officials call the law—and the associated fundraising requirement—unrealistic, at least some lawmakers are unlikely to let the issue go during the 2021 session.

The result could be a cut in the tax revenue that helps fund the system.

The fundraising provision has existed since the Legislature authorized a 0.25-percentage-point increase in the city’s income tax to fund a transit expansion that included more buses, more frequent routes and the operational costs of the Red Line. The law requires IndyGo to raise at least 10% of the revenue generated by the additional tax—or about $6 million.

Freeman

That has never happened. But no one raised the issue until early this year, when Sen. Aaron Freeman, R-Indianapolis, introduced an amendment that would have penalized IndyGo financially if it failed to meet the 10% threshold.

Freeman’s February proposal also would have blocked IndyGo from moving ahead on its Purple Line and Blue Line rapid-transit projects.

Neither Freeman’s amendment nor a compromise measure passed, and when the legislative session ended March 11, the issue remained unresolved.

But it’s one that Freeman is keen to revisit.

“This is going to be a topic in the next General Assembly,” Freeman said. “The fact of the matter is, taxpayers in Marion County were told one thing. A different thing is happening.”

IndyGo’s foundation has struggled to raise money. It launched its fundraising campaign just as the pandemic hit—right after Freeman introduced his proposal.

Brown

Freeman said he understands that the COVID-19 pandemic has affected the IndyGo foundation’s ability to raise money. But he’s also frustrated by the agency’s almost total failure to raise private money, despite the state law, which didn’t include any penalties for noncompliance.

Voters approved the transit tax in November 2016, and tax collections began in October 2017. IndyGo established its foundation in 2018, though it did not name an executive director and begin raising money until January of this year.

Now, that foundation director, longtime IndyGo employee Roscoe Brown, plans to retire at the end of the year. IndyGo launched a search for Brown’s successor several months ago, and says it plans to name that person within weeks.

Brown could not be reached for comment by deadline, but some foundation board members say the current fundraising expectations are unattainable.

An ‘insane’ goal

Wilson

The current goal is “exorbitantly high,” said Rick Wilson, who chairs the foundation’s board and also serves as treasurer of IndyGo’s board. Wilson also said he knows of no other transit agency in the country that is expected to support its operations through fundraising in a similar way.

“While the foundation is committed to doing its best to meet those expectations, what is outlined in the legislation is simply not a realistic goal,” Wilson said in an email provided to IBJ through IndyGo staff.

Wilson said he expects the foundation, and its fundraising requirement, will come up during the 2021 legislative session.

Greg Hahn, a foundation board member as well as IndyGo’s board chairman, called the $6 million goal “insane.”

“I know what it takes to raise $6 million,” Hahn said. “There’s only a handful of foundations in town that can do that, and especially not one that’s brand new.”

The coronavirus pandemic has made fundraising difficult for many not-for-profit organizations, one expert said, and those challenges are even steeper if the organization is newly formed.

Osili

Hahn

Una Osili, the Efroymson chairwoman at the Lilly Family School of Philanthropy at IUPUI, said some organizations whose work puts them “on the front lines of the pandemic” have seen increased interest from donors.

But not-for-profits whose work is not directly relevant to the health crisis are finding fundraising more challenging right now, she said.

One reason is that the pandemic has curtailed many of the face-to-face meetings through which not-for-profits typically solicit prospective donors. “Those are much harder to do in a virtual setting,” Osili said.

Face-to-face interactions are important, Osili said, because they help an organization forge bonds with donors. “It really does come down to trust and engagement and building relationships with donors. … Developing that relationship does take time.”

A new organization that hadn’t yet built those relationships will likely find fundraising during the pandemic especially challenging, Osili said.

Seeking relief

IndyGo is hoping for a change to the 2014 legislation that would give it more flexibility in how it could use private funding.

The agency “seeks to work with elected officials to amend the [legislation’s] language in a way that would enable the foundation to utilize the money it raises to support community programs and initiatives, rather than IndyGo’s regular operations,” agency spokesperson Faith Chadwick told IBJ via email.

Breaux

Sen. Jean Breaux, D-Indianapolis, said she isn’t sure how much appetite legislators will have for punishing IndyGo’s fundraising failures, especially during a pandemic. “I don’t know how high a priority that will be.”

The discussion will come as the Legislature is crafting the state’s next two-year budget and lawmakers are redrawing their own districts as well as the state’s congressional districts.

Breaux voted against the IndyGo bill in the 2020 session, but she told IBJ in March that she did want to see the agency “get its stuff together” and start raising money. Most of the Purple Line’s route is in her east-side district.

Breaux said her thinking on the issue has evolved since then, and she’s now questioning the funding requirement altogether.

If the topic does arise during the next legislative session, Breaux said she’d like to see a discussion about why the requirement exists.

“Why are we insisting that IndyGo even have a 10% private match?” Breaux said. “We don’t require [Indianapolis Power & Light Co.] to go out and raise 10% of its private funds, and this is just as much a utility as that.”•

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37 thoughts on “State legislators poised to rap IndyGo for fundraising flop

  1. The Indiana Legislature’s demands are completely unreasonable. IndyGo is already facing a budget crunch and they are important in terms of getting people, especially essential workers and nurses, to work. Instead of gutting them with an arbitrary threshold, why doesn’t the State help them?

    1. IndyGo agreed to this. They are the ones with their heads up. Poorly run Corporation and has been for years.

    2. IndyGo did not “agree” to this – it was legislation requiring them to do it. No other government entity at any level in Indiana has such a ridiculous requirement. It was not more than Republican hostility to local government, despite the obvious service that mass transit provides to employers and employees. Do not forget that the Indy Chamber fully supported and advocated for the Marion County Transit Plan and the funding to implement it.

  2. Waste of money… More congested now. we aren’t a large enough city to sustain this system we are too spread out. If it would have been implemented in the early 1900’s people would be used to it and it would make sence.

    1. I’m not a rider but agree with Sen Breaux about IPL not having to raise 10% of its private funds. Transit systems in other cities don’t have to raise a percentage of private funds. Indianapolis has needed an improved transit system for years and now as they build for the future, Mr. Freeman wants to try and stop progress. There are many millennials who have no desire to own a car, truck or suv.

    2. This issue, is at its core, a call for a public private partnership. When individuals or businesses are asked to donate large sums of money for operational costs, they want to see something from that like, recognition or a cost benefit. That model will not work for IndyGo. This is the essence of why why have government. Taxes are collected and redistributed for the greater good of society. IndyGo is needed to provide more efficient transportation for people to get to where the need or want to go. It also serves as a means to help us all have clean air to breath, cut down traffic congestion, and allow more productive uses for commercial land now required for parking. This, in the long term will help to promote much more efficiency, value, and a much better quality of life for the citizens of our city and state. Think of it as an extension of what we already provide, like roads and bridges, police, fire protection, education, etc. These services are all accepted as necessities, but they were not always there.

      The notion that IndyGo should be raising money privately to support its operations, is inherently the wrong approach.

    3. This issue, is at its core, a call for a public private partnership. When individuals or businesses are asked to donate large sums of money for operational costs, they want to see something from that like, recognition or a cost benefit. That model will not work for IndyGo. This is the essence of why why have government. Taxes are collected and redistributed for the greater good of society. IndyGo is needed to provide more efficient transportation for people to get to where the need or want to go. It also serves as a means to help us all have clean air to breath, cut down traffic congestion, and allow more productive uses for commercial land now required for parking. This, in the long term will help to promote much more efficiency, value, and a much better quality of life for the citizens of our city and state. Think of it as an extension of what we already provide, like roads and bridges, police, fire protection, education, etc. These services are all accepted as necessities, but they were not always there.

    4. This issue, is at its core, a call for a public private partnership. When individuals or businesses are asked to donate large sums of money for operational costs, they want to see something from that like, recognition or a cost benefit. That model will not work for IndyGo. This is the essence of why why have government. Taxes are collected and redistributed for the greater good of society. IndyGo is needed to provide more efficient transportation for people to get to where the need or want to go. It also serves as a means to help us all have clean air to breath, cut down traffic congestion, and allow more productive uses for commercial land now required for parking. This, in the long term will help to promote much more efficiency, value, and a much better quality of life for the citizens of our city and state. Think of it as an extension of what we already provide, like roads and bridges, police, fire protection, education, etc.

  3. The legislative mandate is entirely unreasonable. Fundraising is a difficult activity and on for which the transit agency has no expertise. How much would be spent for staffing fund raising experts to attempt to raise the funds noted. This is and unprecedented mandate that NO transit agency in the United States is required to meet. The fundraising requirement should be stricken — it is a poison pill established to guarantee that they system not improve. This mandate makes no sense as the rationale for enacting a dedicated source of funding is to have a stable source of funding to allow capital improvements and operate the system. Accountability is reflected through goal monitoring for efficiency and effective measures as reported to the National Transit Database plus adhering to capital and operating cost limits per income tax and operating revenues. Revenue from the 0.25 income tax and can implement the system improvements defined for the long range plan presented to voters. For what purpose would the 10% of revenue from donations be used as it would be in addition to the income tax. The law is unreasonable, unjust, with justification to benefit system users; it saddles the agency with a task that requires resources and expertise far beyond what a transit agency focus on: effective delivery of bus service. Why not simply zealously monitor agency operations to ensure cost fit within that 0.25 tax threshold. Any private contributions could be used to offset some operating costs or be used to improve roadway, sidewalk, signal and signal infrastructure along streets where IndyGo operates. Why is IndyGo to target of such negative actions when the agency finally is able to provide better service and frequency on par with Louisville, Dayton, Columbus and Cincinnati.

    1. Weren’t the proponents of this expanded Red Line gushing about all the people and companies they had lined up to donate to the foundation? Ridership on Red Line has never met expectations even when it was free much less now that people have to pay to ride it.

    2. The Red was planned far before Hogset thought it was a good idea to go ahead with, even though many business and property owners had objections, Hogset sat on his thumbs and was unavailable. So, Republicans are as much to blame, as in BluIndy electric cars and charging stations.

  4. Ahh, I love it when people agree to terms when they are desperate to “sell” a plan, then whine about having to meet the terms they committed to as part of the original bargain. I wonder if the plan would have gone thru if Mr. Wilson described the condition as “insane” at the time it was under consideration.

    What is truly telling is the timeline – there was absolutely NO effort to even attempt to live up to the commitment until the issue Mr. Freeman raised the issue. I wonder how much the retired Former IndyGo employee Mr. Brown has been paid for his efforts leading the fundraising efforts – more or less than the $70,527 that has been raised thusfar?

    The Red Line has failed to meet any of the commitments in the original project. The project cost more, took longer (especially with “do-overs), and negatively impacted businesses to a greater extent than the promoters said it would when they sold the project. Even before Covid, it was well documented the ridership and service levels were well below the projections used to sell the Red Line.

    Solution? Proceed with all haste on the Purple and Blue Lines. Why have one debacle when you can have three? After all, it’s not like private industry – it is government spending other people’s money…

    1. Why would a quasi-governmental agency have to raise private dollars? It makes as much sense as telling the police or fire department that they are going to be defunded if they don’t privately raise 10% of their budget.

      This was a landmine put in place by Republican lawmakers to make sure no city in Indiana would get something that would not directly benefit their suburban and rural voters. Despite the fact that Indianapolis is 25% of the states GDP.

    2. No one agreed to anything. It was an idiotic requirement forced into the legislation mainly by meddling country-bumpkin legislators who don’t even live in Indianapolis. No other public transit system in the world has this stupid requirement.

      How about requiring a 10% percent charitable fundraising requirement for all the roads built in the state? How many BILLIONS of dollars and decades of time have been wasted building the still incomplete I-69 expansion that saves 15 minutes of driving time?

      The most offensive part is that if this truly moronic “accountability” punishment passes, it will mean taxpayers will STILL pay the same amount of tax, but the money will just sit in some escrow account until if and when the day comes that IndyGo can meet the fundraising requirement. So, people still pay the same tax, but get less services. In truth, this is a punish the taxpayer proposal, and I wish the legislators proposing it would at least be honest and call it that.

      I hope Hoosiers wake-up and realize what useless dunces they continue to elect to the General Assembly, year after year.

    3. Christopher B – your contempt is showing [country bumpkins and dunces – perhaps you should just say “deplorables”]… Apparently smart people only live in cities and all people who live in cities are smart… Interesting, then, that so many cities are fiscal messes… Regarding “no one agreed to anything”: If you ask a bank for a no/low interest loan, with no payments for 5 years, and they say they will provide the money but at a different (higher) interest rate and you have to make payments starting immediately, if you then take the money are you not obligated to their terms? IF, at the time those terms were put in place – whether you agree with them or not – IndyGo had stated they would not proceed under those terms, I’d have more respect, and then the conflict would have been resolved (one way or the other) right up front. But they proceeded knowing the terms, and the fact that they had done nothing until very recently suggests they really didn’t intend to live up to the terms. But really, how often is the public sector held accountable? Perhaps Michael D is correct in his speculation that maybe IndyGo was hoping for a benevolent patron or patrons to help them.
      Senator Breaux’s attempt to equate mass transit with a utility doesn’t really hold up. I’m no fan of IPL and many other utilities – the consequences of any poor decisions are paid for by their rate payers. But a much greater proportion of the population (nearly 100%) use utilities whereas a small percentage of the population utilizes IndyGo.
      Responding to Wesley H: a Light Rail project would have made the Red Line project look like a smashing success. And relative to Indianapolis growing enough to offset the GOP supermajority, unless something turns around pretty soon, Indianapolis may be contracting, not growing, as evidenced by business closures, boarded up windows, fewer people out and about.

    4. Lawerence D., I rightfully have contempt for grandstanding politicians, power-hungry control freaks, and ignorant individuals. And, if individuals act like country-bumpkins and meddle in the affairs of others of which they have no knowledge, then I am glad to call them out. I have relatives who grew up and still live in the country, and they are generous, kind, and decent individuals, so my issue is not with individuals who live outside of cities, but with dumb and dishonest people. As for your comments: A tax is NOT a loan. IndyGo did not borrow money. The people of Marion County voted to tax themselves to fund a public transit system. The meddlers in the General Assembly cannot stand letting the people make decisions for themselves, so they snuck in a poison-pill with this idiotic charitable funding requirement, which NO OTHER public transit system in the world has since it makes no sense.

      If the yahoos in the General Assembly truly feel so strongly about holding public agencies accountable, they should start with the Indiana Department of Transportation and require it to set up a charitable foundation to raise 10% or more of the cost of building new highways, and make the law retroactive so that Hoosiers could claw back some of their tax money which has gone to the huge cost-overruns on the I-69 debacle.

    5. I have an idea, all of you who are so desperately defending Indy Go not raise the public dollars chip in and subsidize the debacle yourself. Public transportation never works without huge subsidizes, Amtrak at one time was subsidized about $65 for every single ticket nation wide. Now there is a bargain. you can’t charge what it cost to get the users to their destination, so steal from those who don’t use it to pick up the difference. ROI, ZERO. Surely 500 of you crying heart liberals will chip in 10-12 grand each to reach there goal.

  5. Lawerence D.
    You got it exactly right.

    I also love how the pandemic is an excuse whereas the bill passed six years ago. Typical bureaucracy with no accountability by leadership. In the real world they wouldn’t be able to keep their jobs. We all know that this is going to end up costing taxpayers more money.

  6. Eliminate this boondoggle….No need for this expense and tax…Quit using the Covid as an excuse as 6 years of non commitment and the occasional visit from a absentee Mayor who has hunkered down as they say is enough to discontinue this waste !

  7. i suspect the 10% commitment was agreed to with the hope Lilly Endowment would step to the plate and fund most of it for the near term until the people forgot it was even part of the deal. Lilly probably looked at it and wisely decided a city bus system is better funded by the riders and government and not with charitable dollars.

  8. Quit wasting Hoosier taxpayers hard earned dollars on this Hogsett-driven BOONDOGGLE!!

    Indy-go has been a ridiculously run organization for decades. They are inept. STOP SUPPORTING THEM with State dollars.

  9. I will have to say the 10% fundraising goal was just a trap laid by Republican lawmakers. 73% of Marion county voters approved the additional tax with no mention of this landmine weasel clause. This is just a way for the Republican lawmakers to make sure NO city in Indiana gets something that won’t benefit their rural base.

    If the Republicans have lost all but a handful of seats on the City county council, it is because the one of the planks in the Indiana Republican platform is to dump on Indiana cities, despite the fact that Indianapolis alone accounts for 25% of the Indiana GDP.

    1. You’re completely correct. It’s the same way the State banned the region from pursuing a light rail transit plan. The GOP is anti-city. It will continue to be hard for Indianapolis to progress as a city until it grows enough to get rid of the GOP super majority in the Statehouse. That’s going to be quite a while.

  10. Meanwhile INDOT will spend over $330 million to rebuild the 465/69 interchange. This State has plenty of money for cars and the people who drive them but ignores transit and the people who need it.

    Also, the Colts and Pacers aren’t bringing any $ to Indy without fans so when are they refunding tax dollars used to build their stadiums?

  11. Yes, a single interchange costs more than the entire Red Line. Regarding the Red Line living up to expectations, bear in mind ridership builds incrementally and typically require 18 to 24 months to be achieved. The Red Line has not operated for a full year under normal conditions. Transit projects are implement based on longer term projections and longer term needs for the next 20 to 40 years as specified in MPO plans which each city must have to receive federal funding. IndyGo has developed a plan per federal policy; that IndyGo has a dedicated local funding via an income tax enables it to compete well for federal matching funds for transit. Average density is not a defining criterion for where transit is effective – Indianapolis is not unique in being ‘spread out’ but reflects typical mid-size metro characteristics and is not unlike nearby Louisville KY, Dayton OH and Columbus OH — each of those cities provide a much more robust transit system than Indianapolis. Salt Lake City area density is not unlike Indianapolis, yet that conservative metro area has a transit system with local and express buses, five light rail lines, and commuter rail. While Indianapolis due to Indiana is far less progressive than Utah regarding transit, this need not continue. The current IndyGo plan should continue and finally provide a product that is attractive and the key to doing so is greater frequency–which means more buses and more space to store and maintain them; greater reliability — which means bus lanes and signal improvements; and comprehensive complementary services — which means seamless linking transit trips with Uber and Lyft for areas and destinations where typical bus routes would not be cost effective. The income tax is enough for the plan to be realized. As for IndyGo being required to solicit donations, this is ludicrous – why would one want to donate to an agency that receives tax revenue! Furthermore, if IndyGo could raise the noted $6 million annually — essentially, $6 million beyond the revenue provided by the income tax — for what purpose would these funds be used, The rider on the enabling legislation is bad policy without any sound justification to improved transit service delivery which is the expertise of the transit agency, fundraising requires another skillset and costs. How much would IndyGo have to spend to hire fundraising staff? One reiterates, the current requirement does not make sense and is not attainable. The objective should be to ensure operations are cost efficient and effective within industry norms and per requirements of the Federal Transit Administration and National Environmental Policy Act.

  12. Hey, how about Indygo stop charging “fares” and start collecting fix amount “donations” to ride the bus. If state lawmakers want to play games, I say play right along.

    The poison pill clause in the state law is ridiculous, but no more ridiculous than collecting “donations” instead of fares.

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