Historically most economic development organizations that procured private sector funding did so by utilizing a membership-based model, like chambers of commerce and other membership service organizations.
Over the past decade, a powerful private sector funding trend has emerged. Forward-thinking and successful economic development organizations across the country have increasingly moved from a membership model to an investor-based approach through campaigns that fund multi-year programs. In doing so, these leading organizations have dramatically increased funding levels, developed more engaged volunteer leadership, begun generating greater long-term benefits for their communities and, in general, become more focused, measurable and accountable.
The membership model typically charges annual dues at specified levels. Its implication is that the business will have joined an organization, will receive services in exchange for the dues and will be supporting a worthwhile mission. Funding levels in this method are naturally limited. Companies do not generally want to pay big money to belong to an organization, no matter how worthwhile it may be. Networking events, newsletters, and other perks only provide so much value and are often provided by other organizations in the community.
A membership model of funding not only limits initial funding levels, but can constrain an organization’s ability to significantly increase funding in the future. Increasing funding this way can only be done in small increments. Most members will balk at paying a dues invoice that doubles or triples their current rate. However, many businesses have enthusiastically increased their funding commitments tenfold or more through an investor-based funding campaign.
An investor-based model of funding is clearly more effective. Organizations taking this approach first develop a long-term, comprehensive program of work. They identify specific, measurable goals and then determine the projected economic impact of attaining those goals. As part of a well-planned, well-organized and professionally implemented funding campaign, the organization secures large multi-year investments in the program. The businesses in turn are able to hold the organization accountable for long-term goals and to reap the benefits of a tangible return-on-investment (ROI).