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Since 1992, ViTAL Economy (VE) has supported the development and implementation of collaborative funding strategies for regional CED initiatives. Historically, CED funding has relied on government-sponsored grant sources, which have limited duration and focus, based on election cycles. Based on numerous studies showing that the private sector drives 90% of job creation in a regional CED initiative, we recommend that communities turn to the private sector as leading investors in their development.
This disconnect indicates that CED initiative funding must become more diverse. It also suggests that the private sector creating the jobs and the citizens benefitting from them have a sense of ownership in the CED initiative. We advise each regional initiative to begin broadening their funding from private sector and local interests before seeking significant government grants.
These strategies are based on the venture capital community’s “golden rule,” which claims that those that have the gold make the rules. In a venture capital deal, the lead investor sets the ground rules even if it’s not the largest funding source. CED initiatives operate in a similar manner. If an economic region raises its own investments first, then government and foundation grant sources tend to follow the priorities set by the region.
Regional initiatives that consistently followed our advice not only raised significantly more funds than grants previously provided, but also were better able to maintain a consistent, long-term strategy. Their ratio of external investment sources to internal sources was typically somewhere between 4:1 and 6:1.
VE principals have had extensive experience developing collaborative funding strategies and helping regional leaders implement them. Contact us to explore how your regional CED initiative can be more successful when it uses a collaborative fundraising strategy.
Related VE Journey Point: Mobilize