How Portland Is Tackling the Innovation Dilemma

The Oregon city is using a special fund to spark new thinking in its agencies while minimizing financial risk.

by Stephen Goldsmith / November 20, 2014

We rightly expect a great deal from our municipal governments. We want city departments to be innovative -- but not to take unwise risks. We want their projects to generate impressive long-term results -- but not to cost taxpayers heavily upfront.

Can government be at once cutting-edge and careful? It's a paradox that for years has stymied municipal innovation in cities across the country.

Portland, Ore., is experimenting with an annual competition aimed at resolving this dilemma. Now in its second year, Mayor Charlie Hales' "innovation fund" awards seed money to city agencies to support creative, high-risk projects with long-term payoff -- the type that wouldn't typically make the cut in a penny-pinching city budget.

Here's how it works: Each year, the mayor sets aside $1 million in the city budget to support the innovation fund. City bureau directors hoping to win a chunk of that funding submit project proposals, which are evaluated by a task force of private-sector professionals who consider how effectively the proposals fulfill the goal of saving the city money or making government run more smoothly. The task force makes recommendations to the mayor, who then puts the winning proposals before the city council for funding consideration.

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).

Another winning proposal was aimed at improving the city government's collaboration with the private sector. The Portland Development Commission was awarded $80,000 for a program that seeks to make the city an early adopter of new technologies being developed by Portland's startup community for use in meeting the city's maintenance and operational needs. The funds are going toward the roll-out of technology for an online portal as well as face-to-face networking events aimed at connecting local tech start-ups with city bureaus. Even in its early stages, the program has already fostered significant cross-bureau collaboration, according to Chris Harder, the commission's economic development director.

With the innovation fund now in its second year, city officials are making a few changes to the initiative to inspire more and better ideas. This time around, organizers solicited project ideas from all city employees rather than just bureau directors -- a change that was aimed at fostering participation from all levels of the city bureaucracy. Organizers simplified the submission form and introduced a second round of consideration for larger projects. This year's innovation fund will also place greater emphasis on training; some of the funds will be used to pay for workshops to help managers and supervisors be more creative in their jobs.

All of these changes are aimed at promoting new ideas throughout city government. "I think the effort itself is something that should be embraced," Harder said of the Innovation Fund. "Particularly when you work for a bureau, to have the leadership encourage you to think that way is very helpful."

Portland is neither the first nor the last city to look toward competition to try to spark creative government solutions. Baltimore has its own innovation fund, which, like Portland's version, awards competitive seed grants to city agencies with creative project ideas. In the past few years, Baltimore has funded agency projects to install "smart" parking and energy meters, put in place new fiber-optic technology for the city's broadband network, and acquire a new, more efficient DNA analysis tool. And earlier this month, Los Angeles announced that it would launch a $1 million innovation fund to support creative projects dreamed up by city workers.

The Portland innovation fund can in part trace its roots back to a larger and broader predecessor based in New York City. This grant competition is run by the city's Center for Economic Opportunity and the Mayor's Fund to Advance NYC. With support from the federal Social Innovation Fund, the center supports the replication of anti-poverty programs in New York and other cities across the country, using a competitive selection process.

Innovation funds and other related initiatives offer an exciting new way of thinking about the problem of encouraging innovation in traditionally risk-averse government institutions. By combining an entrepreneur's eye for creative solutions with a public servant's mindfulness of limited resources, these initiatives have great potential to make government more efficient.

This story was originally published by Governing