07 May Trends In Economic Development Funding
Recently I had the opportunity to present at the Tennessee Economic Development Council’s Spring Conference. I was asked to speak about current trends that I am seeing in Economic Development Organization (EDO) funding… what follows is a brief summary of key points in my presentation.
Public Funding: Declining, but Still Substantial
One of the most striking shifts we have seen is a reduction in public funding for EDO financing due to a number of factors, including a decrease in federal and state grants, and more money attached to specific programs (rather than to the general fund).
While public funding is in decline, it is certainly still a significant budget amount for most EDOs. Not surprisingly given the current economic climate, accountability and transparency are key when communicating with public funding decision makers, as is the development of performance-based metrics.
Private Funding: More Important Than Ever
Private funding now makes up the majority of EDO financing and we do not expect this to decrease anytime soon. As public sector dollars decrease, the private sector has had to make up for the funding gap – either through in-kind donations, increased investment through member dues or sponsorships, or a variety of other funding methods. The private sector has picked up right where the public sector left off in recent years.
An increasing amount of EDOs are undertaking a fundraising effort to support their multi-year strategic plan. These plans help pay for workforce development, marketing, education, infrastructure, business retention & expansion, spec buildings and investor relations initiatives – just to name a few.
Most organizations use fundraising campaigns as a way to increase the engagement and communication with your local and business community leaders, who help create your strategic plan. How will a capital campaign strengthen your EDO?
- Increased financial resources
- Predictable multi-year funding stream
- Diversified funding portfolio
- Broader investor base
- Stronger public/private partnership
- Increased visibility and recognition
- Better community understanding of your work
- Stronger relationships with allies
- More leadership engagement and fresh ideas
- Relevance, measurability, accountability
- Excitement, unity, momentum
You Must Tell the “Impact” Story
Every Convergent campaign is focused on demonstrating the Return on Investment (ROI) an EDOs programs has on the community at large, various industry sectors, and even individual funders. In our opinion, there is simply nothing more important to getting investors engaged than letting them see the “big picture” from the outset – and answers the all-important question of, “What’s in it for me?”
More now than ever, you must convey the impacts of your initiatives and the positive outcomes from your program of work by using specific benchmarks and goals to measure your progress. Engage your investors and communicate in a way that allows them to participate in the development of your strategic plan and oversee any potential changes to your plan, which ensures accountability.
EDO financing is evolving at a rapid pace, and it’s simply not possible to fully discuss all the trends we are seeing in one blog post. If you are considering launching a campaign to help increase your financial resources in the future, I would welcome the opportunity to discuss your needs in greater detail.
In the meantime, I will leave you with the key takeaways I hope my audience left with. They are all crucial elements that must be taken in to account while considering a campaign:
- Do your research
- Be creative
- Engage and communicate with your local public and private sector leaders
- Complete a thorough feasibility study/goal assessment before launching a campaign
- Ensure accountability & transparency
- Use performance-based metrics
- Educate decision-makers about your organization’s impact