I had a great time exhibiting at the Mid-America Economic Development Council’s Best Practices Conference in Minneapolis last week, and I hope those of you who were able to attend enjoyed it as much as I did. While Convergent attends many conferences throughout the year, I always look forward to MAEDC conferences because there is a such a broad geographic representation of economic developers present to learn from at each of them.
While discussing fundraising for economic development with attendees at the conference, I noticed that there were a few questions that came up frequently. In case you were unable to make the conference or we simply never had the chance to connect, I wanted to share the answers to those questions with you.on
Question #1: Economic development in our community has always been funded entirely by the public sector. Why should we try to get the private sector involved?
The strongest model for community, regional, or state-based economic development across the country is the public-private partnership, with the bulk of funding and organizational leadership actually coming from the private sector. There are many benefits that come from this model in addition to the increased funding that a private sector capital campaign can bring to the table. When the private sector takes ownership, which they literally do when they are invested, they begin to work to help economic development succeed. They provide ideas and thinking that might not come out of government bureaucracy. They agree to meet with visiting site selection consultants and corporate decision-makers to share why they love doing business in that community. They become the economic development organization’s eyes and ears in terms of companies in their supply chains that are looking at expanding or relocating. They represent their community in addition to their company when they go to their own industry’s trade shows. They join staff in going to trade shows for target industries to make a more impactful impression. And so on. The economic development organization not only has way more funding but way more intellectual capital and human resources by leveraging their investor base as part of their team.
Question #2: Why would businesses want to write big checks for economic development?
Supporting economic development is a good business investment. At Convergent, we don’t consider our fundraising campaigns to be charitable contribution campaigns or membership drives. We position our client’s program as a good investment, demonstrating the value proposition and ROI. We can show a banker, for example, how the success of an EDC’s five-year program of work can translate into increased bank deposits if long-term job creation goals are met. Local businesses are true stakeholders and beneficiaries of local economic growth. And there is no more effective way to invest in local economic growth than by supporting the local EDC.
Question #3: What types of businesses are good prospects in a campaign?
Truly, any business that is a stakeholder in the local economy or that benefits in some way from the specific work you’re doing (even if only via a Business Retention & Expansion effort) ought to provide you financial support. If they haven’t in the past, or if they are only giving nominal amounts, they have been getting a free ride for what you have been able to accomplish and are missing out on what you could accomplish with ample resources. But in any campaign most of the money comes from a relatively small number of major players and these typically include: municipalities and counties on the public sector side and banks, utilities, hospitals, locally headquartered companies, and major local employers on the private sector side. However, our campaigns usually build a fairly broad base of investors that includes all types of businesses from car dealers to grocers, from law firms to casinos, from insurance companies to commercial real estate developers. The lead investor in one of my campaigns was a dog track. We explore and pursue opportunities across the board.