Economic development organizations (EDOs) face greater uncertainty and reduced margins for error in 2026. Federal funding remains unpredictable, and program priorities may shift mid-cycle. Public scrutiny of major projects is increasing, while expectations from employers, officials, and residents remain high.
This environment requires greater discipline, diversification, and focus on clear outcomes. Our work with clients and partners nationwide highlights several trends shaping how organizations plan, fund, and execute strategies for the coming year.
Funding Diversification Becomes a Core Operational Requirement
Federal support remains important, but it is no longer a reliable foundation for most organizations. Variability in grant timing, eligibility, and continuity disrupts multi-year plans. For many EDOs, funding diversification is now essential.
Local and regional campaigns now focus on private sector commitments, philanthropic participation, and fee-based services tied to defined outcomes. Boards are asking for more precise alignment between dollars raised and activities delivered. Campaign structures are shorter, more targeted, and built around specific initiatives rather than broad operating needs.
This shift benefits organizations that set measurable goals, assign accountability, and consistently report outcomes of their work. Capital plans lacking this structure are more difficult to fund and sustain.
Business Retention and Expansion Gains Priority Over Attraction
While business attraction remains important, 2026 planning prioritizes existing employers and small firms. Higher development costs, infrastructure limitations, and political resistance to large projects have reduced opportunities for major relocations.
In contrast, retention and expansion programs offer clearer returns with lower risk. Workforce access, space constraints, and supply chain issues now drive many local investment decisions. Small business growth also carries more weight as communities seek stable job creation across multiple sectors.
EDOs are investing more staff time in data-driven outreach, employer services, and follow-up. BRE efforts are increasingly connecting with workforce providers, utilities, and local lenders. This approach demands coordination, not just promotion.
Economic Development Continues to Expand into Adjacent Policy Areas
Housing availability, workforce readiness, and infrastructure capacity now shape nearly every development outcome. These issues sit outside traditional economic development authority, but they influence site decisions and employer growth.
As a result, EDOs increasingly serve as facilitators. They align planning agencies, housing groups, utilities, and education partners around shared priorities. Success now depends more on coordination than control. This broader scope also increases political exposure. Data centers, energy use, and land consumption are now subjects of public debate. Economic development leaders must manage risk, communicate tradeoffs, and maintain credibility with diverse audiences.
Next Steps for 2026 Planning
Convergent partners with economic development organizations, chambers, and nonprofits to design investment-driven campaigns with clear outcomes. If your organization is reviewing funding structures, program focus, or campaign strategy for 2026, we can help define a results-oriented path forward.
