Every Local Government Should Create An Innovation Fund

Many private sector business put a great deal of focus on innovation. New products and ways to deliver services are an important way that businesses can stand out from their competitors.

Local governments likewise should continually be seeking ways to deliver services, better, cheaper and faster. Several communities around the country are utilizing innovation funds as a way to encourage new ideas in government.

Portland – Two years ago Portland created an innovation fund, which sets aside $1 million in the city budget to award seed money to city agencies to support creative, high-risk projects with long-term payoff. City department heads seeking funding submit proposals which are evaluated by a task force made up of private sector professionals. The task force makes recommendations to the mayor who then sends the wining proposals to the city council for funding approval.

As reported by Stephen Goldsmith of Governing.com:

“In its first year, the competition received 22 proposals from 10 bureau directors. Based on endorsements from the inaugural task force, the city council approved six projects for a net total of nearly $900,000 in funding. Among the winning projects were those seeking to save money (the Portland Housing Bureau was awarded $48,000 for a data-sharing program aimed at reducing data-entry costs) and save lives (the Fire Bureau got $108,000 to implement a smartphone app designed to help cardiac arrest victims receive immediate assistance).”

In its second year, Portland expanded the program by soliciting ideas from all city employees and not just department heads.

Baltimore- Mayor Stephanie Rawlings-Blake created an innovation fund due to her frustration with her city’s persistent budget shortfalls and the lack of money for new ideas. The city set aside $2 million and asked agencies to pitch ideas that they thought would both enhance services and save money to a panel of judges. Accepted projects are funded with loans, to be paid back within five years, and agencies are expected to provide business plans showing how they expect to meet their obligations. In just two years, more than 30 ideas have been proposed, and three have been funded.

The purpose of the fund is to provide seed money for one-time investments that will lead to improved results, increased revenue, and/or reduced ongoing operating costs for City services. The Innovation Fund is meant to be self-sustaining; savings from the investments are returned to the Fund so that other projects may be funded.

Chicago- Mayor Rahm Emanuel has also created an innovation loan fund. The city has set aside $20 million for efficiency and customer improvements. So far $2 million has been committed to projects that will cut red tape for businesses and make it easier for citizens to access city services.

Government employees have lots of ideas to improve the bureaucracy of government but leadership at the top is necessary to make it clear to upper management and all employees that new ideas are wanted. Creating competitions and innovation funds seem like good ways to encourage employees to step forward with new ways of doing business. Dedicating a small portion of a local government budget to encourage ways of delivering services better, faster and cheaper seems like a good use of budget funds.

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