COVID-19 Economic Response and Recovery
Outsource programming to a local chamber, business, or other organization to improve delivery and cost savings
Cities should revisit their economic development programming to see if it would be cheaper to use vendors for particular programs.
It can be sometimes cheaper and/or more effective to hire a third party to deliver your programming. This can be a public-private partnership, which leads to both cost-savings and greater community support.
The practice of outsourcing is similar to, but not the same as, the more common practice of cities contributing to a regional economic development marketing organization, that then pools these funds with private sector resources to deliver larger-scale campaigns and programs.
Cities have successfully used outsourcing to deliver:
- Regional branding and marketing
- Local business retention and expansion programs
- Proposal preparation
- Prospect lead identification
- Inbound and outbound business recruitment missions (both planning and execution)
Oklahoma City outsources components of its economic development programming to the Oklahoma City Chamber of Commerce.
The parties agree to an annual contract for services, with rigorous reporting requirements and proper oversight. This contract, which can be found in Appendix N, is an excellent example of a comprehensive engagement agreement, containing all key elements needed to define the relationship.
The arrangement was put in place during a period of economic turbulence. The leadership was provided by the mayor and the leaders of local companies, like Kerr-McGee, Devon Energy, Chesapeake Energy, Oklahoma Gas and Electric, and Opubco.
They agreed that the city should focus on infrastructure and public improvements, while the Chamber should deliver branding, marketing, and business recruitment, retention, and expansion.
Critical to the arrangement were a very high level of trust, aligned vision and goals, and shared commitment to partnership.
The chamber subsequently led a successful campaign to win residents’ approval for the city’s MAPS programs for public improvements (see case study referenced in “Reallocating Funding” Section).
The relationship between the city and chamber has evolved over two decades and changes in leadership, but it continues to be based on a shared vision for the community.
The chamber leverages a 4:1 return on city funding, with contributions from private corporations and local foundations.
A portion of the funding has been used to deliver four MAPS campaigns, which have delivered more than $3 billion in public improvements.
How to Adapt this Approach
- Undertake an analysis of program returns on investment and potential cost savings. (Note: this will be challenging if program owners report only activities delivered, and not outputs and impact).
- Identify potential organizations which have the experience and capacity to deliver the programs.
- Draft a request for proposals which clearly defines the scope of work, output-focused key performance indicators (not activities delivered), and how the organization will be expected to engage the City.
- Create a contract for service that clearly outlines roles, responsibilities, and expectations.
- Require a say in the recipient organization’s governance arrangements (e.g., board observer, quarterly reporting, step in audit rights, etc.). In all likelihood, the city will become the recipient’s largest funder. As such, it is appropriate for the city to have a role in governance and oversight.
- Make sure the contract includes output focused key performance indicators, with agreed definitions and metrics and clear milestones.
If the recipient is likely to be a chamber of commerce, or free-standing economic development corporations, satisfy yourself that the organization:
- Has a credible track record of success.
- Has performed at a high level over a long period of time.
- Will be viewed by stakeholders and residents as credible and apolitical.
- Will be able to deliver the program more effectively.
- Will be able to leverage third-party funding for the program.
- Collaborate with organizations that you trust.
- Be very clear on your expectations regarding deliverables, key performance indicators, metrics and reporting.
- Agree on a process and chain of command for decisions and communications.
- Schedule regular update meetings to discuss progress/roadblocks and issues.
- Keep councilmembers and administrators regularly informed.
- Don’t let cost savings be the only driver in deciding whether or not to outsource. You must also trust that the vendor can do the job effectively.
- Don’t expect the vendor to know about challenges/issues that you have experienced in previous years. If there are skeletons in the closet, disclose these before contracting.
- Don’t forget that you may be the organization’s largest single source of funding. That means the impact of the relationship goes beyond the parameters of the contract. It is in your interest to ensure the recipient remains financially viable and civically responsible.
Invest in and partner with local CDCs, technical assistance providers, district management associations, merchant associations, and other nonprofit partners, which support MWBEs and businesses in LMI communities. Examples include sponsoring fellows or secondees, building philanthropic support, and providing small grants for board development or succession planning.
In this way, you are extending their ability to do local outreach, leveraging additional funding sources, and building neighborhood capacity to deliver local programming.
Neighborhood 360° – New York, NY
The New York City Department of Small Business Services (SBS) created the Neighborhood 360° program to support projects that revitalize commercial districts and build capacity amongst community-based organizations who provide assistance to neighborhood businesses.
The program is funded from City tax levy funding and provides multi-year grants, up to $500,000 annually, to local nonprofits to deliver projects based on needs identified in a Commercial District Needs Assessment (CDNA) report. The nonprofit is required to use part of the funding to hire a full-time program manager.
A CDNA report analyzes a commercial corridor’s storefront and retail mix, consumer profile, streetscape conditions that affect the shopping experience, and any unique characteristics. The analysis includes data obtained from door-to-door merchant surveys and consumer and shopper surveys. It is intended to be a roadmap for community-based partners to use to prioritize needs and interventions, as well as a tool to support fundraising efforts.
SBS also funds Neighborhood 360° Fellows for community-based organizations. These are paid SBS employees placed at community-based partners who work full time for 10 months to oversee commercial revitalization projects. Fellows also help the organizations expand their outreach to local businesses and to connect to City resources.
To date, the program has invested over $11 million in direct support to community-based organizations in 20 neighborhoods. Projects have included cleanliness and beautification, business support and retention (including free legal and accounting support), placemaking and district marketing, merchant organizing, and coordination of local program partners. Support has been provided to business improvement districts, merchant associations, local development corporations, and chambers of commerce.
How to Adapt This Approach:
- Identify possible municipal or Federal (e.g., CDBG dollars) funding to invest in a nonprofit capacity building program
- Develop goals and grant eligibility criteria
- Determine the staff resources and expertise required to administer the funding and provide technical assistance and program management support to the recipients
- Reach out to nonprofits with local trust and cultural competency, as well as organizational capacity, to support MWBEs
- Use a tool like TCC Group’s Core Capacity Assessment Tool to assess a nonprofit’s ability to achieve its mission
- Facilitate best practice sharing and group technical assistance among grantees
– Develop cohort learning opportunities including workshops, corridor tours, subject matter trainings, and convenings
– Create and moderate a platform for grantees to communicate and share successes outside of formal convenings (e.g., Google Group, Slack, Facebook group, etc.)
– Foster connections with other City agency resources; request staff from other departments (e.g., parks, sanitation, transportation, planning, etc.) to speak to community-based partners about their services
- Design an outreach plan to market fellowship opportunities to residents in priority neighborhoods; post information on local neighborhood anchor websites and brick and mortar locations and with local universities’ alumni networks
- Establish a tracking system to collect data from partners to measure program impact