KALAMAZOO, MI -- A measure to prevent donors to a city-managed fund from deciding how their money should be used was rejected by Kalamazoo commissioners Monday.

During a meeting meant to hammer out issues with documents organizing the Kalamazoo Foundation for Excellence, Commissioner Matt Milcarek introduced a motion directing the city attorney to draft language preventing donors from restricting funds. It failed 5-2 Monday night, only supported by Milcarek and Commissioner Shannon Sykes.

The action was part of continued discussion on bylaws and articles of incorporation for the nonprofit Foundation for Excellence. A vote to adopt the documents is planned for Aug. 21.

Expected to raise $500 million by 2019, the foundation would be managed by a board of directors under the guidance of the City Commission and a statement of intent from initial donors William Parfet and William Johnston.

The documents are silent on whether donors can place restrictions on their gifts, leaving it up to the foundation's board of directors to decide. It's been a frequent point of discussion, as Sykes and Milcarek feel donors shouldn't be allowed to have a say in foundation spending.

Mayor Bobby Hopewell said there are measures in place to ensure that the foundation is used for city goals. He is confident that elected leaders and the foundation's board will make the right decision.

Though some members of the community might not trust Parfet or Johnston, Hopewell said he would "defend them to the hilt."

"We can question the dots and details but the intent I know is true," he said. "Believe me, those donors are going to work hard to ensure our core principles (are carried out). They work so hard every single day to do the right thing."

Parfet attended the Monday meeting, sitting toward in the second-to-last row in the City Commission chambers. He said he understands the skepticism from some residents, but he wants the foundation to create positive change in Kalamazoo.

"I think two of us, (myself and Johnston), really trust the community and all the citizens to work together to optimize this opportunity," Parfet said.

The lead donors will lead an effort to raise $500 million, an amount Parfet said is needed to keep the foundation self-sustaining. It's a staggering figure, but Parfet said he and Johnston will work to "unleash" the talent and potential in Kalamazoo to make it happen.

"Everything starts with a small step, a five dollar bill," he said. "We'll get there."

A few restrictions on spending already exist, and donations will be legally considered "restricted" because they can only be spent in the city. There's essentially three ways the money can be used.

Funds will cover what Kalamazoo would have received each year if its property tax wasn't cut from 19.2705 mills to 12 mills, and address a structural revenue imbalance to city finances due to shortcomings of Michigan's municipal finance system.

Parfet and Johnston endorsed using the city's strategic vision and master plan process, Imagine Kalamazoo 2025, to research specific programs funded through the Foundation for Excellence. Processes like Imagine Kalamazoo will also set benchmarks and standards to improve the city.

Vice Mayor Don Cooney said the foundation should not accept any money unless it fits the three categories.

"This is going to give us the money to help our people (and) keep our staff intact and doing what they need to do," Cooney. "We got a lot of people hurting in this community. Here we have this wonderful gift that will enable us to do something for those people."

City Attorney Clyde Robinson said the documents make it clear that aspirational spending will be based on resident and stakeholder input.

Sykes worried that accepting donations that are restricted to certain uses could create a shortage of otherwise "unrestricted" money to support other obligations of the foundation. Even though the donations are used for city goals, some areas could be ignored, she said.

Regardless of the measures in place, Milcarek said it is still legal and possible to have restricted gifts. He wanted the City Commission to make their stance known through a vote.

Former U.S. Rep. Mark Schauer, D-Battle Creek, attended the Monday night meeting. He recently moved to Kalamazoo to be a part of "a progressive, inclusive community with a vision."

Schauer said he supported the foundation, comparing it to the Kalamazoo Promise. The articles of incorporation and bylaws "protect the community," he said.

"I think the foundation is an amazing opportunity," he said. "What you're doing, in my view, is a responsible approach that really does engage the community in a meaningful way. It positions Kalamazoo as a beacon for other communities."

Robinson made a few adjustments based on concerns raised when the documents were released. The documents were changed to increase the board to 15 members, of which nine members must be Kalamazoo residents.

Ten positions are for stakeholders who each represent a specific issue like education, healthcare, business/banking, art, faith, and affinity organizations. Three of the 10 must represent a different Kalamazoo neighborhood.

A third-party organization, likely the Kalamazoo Community Foundation, will nominate stakeholders. They will serve staggered three-year terms, so some members are replaced each year.

The recommendation increases the board by two members. Robinson said the board of directors would remain a manageable level, while encouraging citizen participation and providing a clear majority of residents.

The Kalamazoo Community Foundation was previously given the responsibility to select stakeholder nominees to the board and host meetings. Robinson recommended referencing a generic third-party instead of the KCF, though a partnership between the two foundations is expected.

The change gives the Foundation for Excellence the ability to use another partner if the board chooses.

Robinson also recommended leaving a policy on the Freedom of Information Act to the board of directors. Because FOIA is subject to legislative amendment and judicial interpretation, a board-adopted policy can be changed in response to any change in the law, he said.