There has been a sea change in the public sector and philanthropy is failing to fully grasp its importance. While local government can conjure up visions of risk-averse bureaucracy encumbered by red tape and an uninspired workforce — the very embodiment of “status quo” — it may hold our best hope for sourcing tomorrow’s innovative solutions that will dramatically improve the lives of low-income people.
Unfortunately, there is little chance that you would reach this conclusion from today’s patterns of grant-making. Philanthropy has long looked to nonprofits and non-governmental organizations (NGOs), led by extraordinary social entrepreneurs, to be the vanguard of innovation and problem-solving — and has invested accordingly. Those entities could fill gaps where other institutions and systems were failing, in education, health, workforce development and more. They could take risks and pursue new ideas where government lacked the flexibility, and could be the testing ground for determining what works. Only then would proven solutions be pitched to the public sector, where a program might reach new scale due to government’s stable revenue streams and greater capacity.
But when it comes to being at the forefront of innovation, government has, at best, been considered a largely irrelevant entity. At worst, it’s viewed as an obstacle to change.
This picture of local government no longer matches the reality playing out across the country. Recognizing the vast opportunity to drive lasting change with population-level results, a growing number of social entrepreneurs are finding a home in city government. Innovation offices have cropped up in cities large and small, often headed by passionate leaders with private sector backgrounds. They’re bringing new competencies around data use, continuous improvement and more. In short, much of what has made non-profits and NGOs prime engines of innovation over the last decade is becoming true of our city halls.
Philanthropy has failed to keep up. We are consistently under-investing in a key stakeholder that is uniquely positioned to drive systemic change toward greater economic security, better social outcomes, and increased racial equity. Consider that the City of New York spends more in twelve weeks than the nation’s 50 largest foundations combined give in a year and you begin to have a sense of the scale that’s possible when government assets are leveraged effectively.
The questions that keep mayors and other public sector officials up at night are often the same questions that drive our philanthropic work: How do we grow a local economy equitably? How do we deliver state of the art healthcare, the highest-quality education, and housing that meets the needs of all? And there’s no question that efforts to advance racial equity, which should be a paramount concern for all philanthropists, must take root within the halls of city government to drive the type of systemic and lasting change desperately needed.
Funders working with nonprofit organizations are often forced to ‘solve for’ limitations that the public sector simply does not face. Put another way, government is uniquely positioned to both innovate and bring proven solutions to scale because it has the innate ability to:
Drive systems change with financial sustainability. Many social sector innovations, like those that I’ve helped to create over my career, take years to reach a successful model. Then, we struggle for years thereafter to get the attention of government and the highly sought-after adoption by the public sector. In contrast, when innovation happens within the public sector, the successes can go straight into effect, “intravenously.” No annual fundraising or advocacy necessary. New practices and the related funding needed to sustain them, can quickly displace old ways of working. Importantly, they draw from the most stable funding source in America: tax dollars.
When Linda I. Gibbs was serving as New York City’s Deputy Mayor for Health and Human Services, she created the Center for Economic Opportunity (CEO)tasked with designing and implementing innovative, evidence-based initiatives to reduce poverty. With philanthropic support for experimentation, the CEO created Financial Empowerment Centers that help residents take control of all aspects of personal finance. After serving over 13,800 residents, helping them to reduce over $6.9 million in debt, build more than $900,000 in savings and achieve financial stability, the Centers went straight into the city’s mainstream budget. In the decade since, it’s become the way the city does business.
Embrace complexity. Problems such as stunted economic growth and an unprepared workforce are complex and can’t be solved by one program, institution, or even sector. Local government, especially at the executive level, has the political capital and legitimacy to bring together the diverse players needed to get desired results and keep them engaged in problem-solving. With growing frequency, local governments are convening cross-sector decision-makers, helping each understand their institution’s role in the system, setting ambitious shared goals, and using data to inform action and foster accountability.
The Central Corridor in Minneapolis and St. Paul, Minnesota is an extraordinary example. At the instigation of Minneapolis’ and Saint Paul’s then-mayors R.T. Rybak and Chris Coleman, public, private, philanthropic and nonprofit leaders created the Central Corridor Funders Collaborative to insure that a multi-billion dollar rail line would deliver social justice benefits (living-wage jobs, affordable housing, etc.) beyond the rail. The ten year collaborative saw not only the completion of the connector rail, but also an array of other benefits that no one partner could have achieved on their own — thousands of new affordable housing units, and the creation of hundreds of businesses owned by local people of color and many good paying jobs.
Provide capacity. Capacity is a perpetual challenge for nonprofit organizations. Extremely limited access to growth capital often means that they can’t quickly seize opportunities to attract, retain and build the talent and capacities they would need to scale up. The same is not true for local government. Government has both a large workforce and a stable and constant stream of income to tap into. If additional staff or new skillsets are needed, government can train existing staff, search from the various agencies for the right skills or use their next opening to hire for what skills and experience they need. This is a sorely undervalued competitive advantage.
The results of the Government Alliance on Racial Equity (GARE) demonstrate the power unleashed when government invests in the competencies of its workforce. Racial inequities, which throughout our history have been created and maintained by government policies, practices and programs, pose a central moral and economic crisis across U.S. cities today. Local government has the potential and the imperative to lead the charge in unravelling these disparities, but doing so requires competencies around racial equity that too many of us lack. Living Cities offered flexible grant dollars to an initial five-city cohort to fund racial equity audits of core government operations. Now, audits complete, city employees are taking back the work of executing on the findings and using government funds to make advancing equity the new normal.
Be accountable. Accountability for how funds are spent is common in philanthropy but accountability for results is not. Even identifying who a nonprofit should be accountable to can be a source of debate; is it to the funder, targeted beneficiaries, or communities they serve? Government, for the most part, does not suffer from these ambiguities. In fact, our democratic system has given us one of the most unforgiving accountability mechanisms — the periodic election. If we as the electorate don’t like the job being done, we vote our leaders out of office.
Louisville’s Mayor Greg Fischer is a great case in point. He was narrowly elected in 2011 on a platform of growing jobs and creating a culture of innovation and entrepreneurship. Early in his term, he rallied residents around a pledge to make Louisville a “Compassionate City,” and encouraged them to challenge his government and all citizens to live out those values. The result was broad support for a series of actions aimed at benefiting community members most in need, from thousands of volunteers annually participating in city-sponsored service weeks to philanthropists, educators, and community leaders doubling down on their commitment to college graduation for low-income students. The campaign has been essential to Louisville’s continued success. In his first term, Louisville had one of the fastest growing economies in the country, with the number of jobs out-pacing pre-recession levels. He won re-election carrying 66% of the vote.
The beauty of these qualities is that they can be applied to any problem prioritized by the mayor or executive. Boston, for example, is attacking affordable housing; Albuquerque is innovating around job creation; New Orleans has been systematically addressing income and jobs for men of color for the past four years.
For all the advantageous qualities that government brings, what it lacks is equally important — flexible dollars that allow for the type of experimentation and risk-taking we’ve seen in New York, the Twin Cities and beyond. While philanthropic resources should not fund government programs or even appear to relieve government of its responsibilities, they can and should fund early stage prototypes that few would want their tax dollars used for. The common thread in all of these examples is the philanthropic dollars that enabled government to act quickly, fail fast and innovate on our toughest problems.
Dozens of local governments are equipped and ready to lead social change, with top-notch innovation teams and staff trained on Six Sigma and Lean Innovation techniques. Philanthropic support for this type of social innovation should be commensurate with the opportunity. If change at scale is truly our goal, today’s social sector innovators are not going to get us there alone. It’s time to direct our grant dollars toward one of the most effective, albeit surprising, generators of social change solutions: local government.
This essay is part of a series titled, Accelerate This! Government as Social Innovator, which features leaders at the intersection of philanthropy and government offering ideas about how non-public dollars can be used to drive innovation and systemic change on complex social issues. The Accelerate This! Government as Social Innovator national symposium will take on May 1, 2018 in Los Angeles and feature systems-changing innovations from cities that can be adapted for your community. The event is part of the City Accelerator, an initiative led by Living Cities and supported by the Citi Foundation. For more information, click here.