Bloomberg Philanthropies and other organizations have poured an unprecedented amount of money into making cities more innovative and collaborative. What happens when the money runs out?
For five consecutive years, New Orleans had the highest murder rate of any U.S. city its size. It was a distinction that Mayor Mitch Landrieu was eager to shed when he assumed office in 2010. But the city was still recovering from the one-two punch of Hurricane Katrina and the national recession. “What we inherited was a city teetering on the edge of bankruptcy,” Landrieu says. It didn’t have the financial resources to deal with its crime problem by simply increasing police manpower.
So the mayor went where the money was: to outside organizations that are in the business of partnering with cities. He pursued foundations and nonprofits. He courted private companies and other levels of government. And he was successful. Indeed, Landrieu may be the current champion among American mayors when it comes to public-private partnerships. In last year’s budget, New Orleans received more than $15 million from state and local foundations alone. So many positions in city government receive some kind of outside funding -- including state and federal grants -- that the mayor’s office can’t count them all. Private funders have paid for computer programmers, a climate adaptation officer, and a civil engineer focused on pedestrians and bicyclists, along with many other positions.
Landrieu says his constituents now realize that New Orleans can’t survive without help from outsiders. “Literally everything we do here has a nonprofit component, a faith-based component, a philanthropic component and a government component,” he says.
The most consequential of Landrieu’s decisions was to apply for a grant from Bloomberg Philanthropies, which was offering several million dollars each to cities willing to create an “innovation team” of in-house consultants that would apply data-oriented problem-solving to urban challenges. The team members -- some were longtime public employees and others came from the private sector -- would be sent to troubled city agencies. The premise behind the Bloomberg grants was that a team from the mayor’s office could make government more effective at relatively little cost by teaching public employees how to be more collaborative, strategic and focused on measurable results. Unlike most foundation grants, this money wasn’t tied to a specific policy area. Its sole mission was to stimulate innovative management practices.
That appealed to Landrieu. “It fit perfectly into our governing model,” he says. “We found them and they found us and we hugged really tightly.”
The New Orleans team’s top priority was to do something about the murder rate. They reviewed crime data and convened police, academics and social services agencies. For years, local law enforcement officials had insisted that New Orleans did not have a gang problem. The team’s review revealed that to be wrong. Most of the murders were the product of petty disputes involving a relatively small number of people in a few neighborhoods. In other words, gang warfare. That led to targeting support services and law enforcement in gang hot spots. The results were dramatic. The murder rate began to decline in 2013, and in 2014 there were fewer murders in New Orleans than in any year since 1971. It’s true that many cities have experienced falling murder rates in recent years, but New Orleans had seen little of this improvement until the innovation task force moved in.
“Everything we do here has a nonprofit component, a faith-based component, a philanthropic component and a government component,” says New Orleans Mayor Mitch Landrieu. (J.D. Lasica/SocialMedia.biz)
The news from New Orleans was exactly what Michael Bloomberg had hoped to hear. Bloomberg began his national innovation campaign in 2010, while he was still serving as mayor of New York City. His foundation sought to spread an entrepreneurial spirit to local governments around the country. In 2011, Bloomberg Philanthropies awarded a total of $24 million to five cities: Atlanta; Chicago; Louisville, Ky.; Memphis, Tenn.; and New Orleans. The mayors of those cities weren’t required to pursue any particular agenda. They simply had to demonstrate that they were entrepreneurial.
So far, every city has had a success story to report. Memphis reduced its retail vacancy rate by 30 percent in key commercial corridors. Atlanta found housing for almost a quarter of its chronically homeless population. Chicago cut the licensing time for new restaurants by 33 percent. Louisville redirected about a quarter of its low-severity 911 calls away from emergency rooms and into a doctor’s office or urgent care center. The first round of results encouraged Bloomberg Philanthropies to announce another $45 million last year to support 12 more U.S. cities.
Municipal governments have rarely been given private grants of that magnitude before. Foundations have worked alongside city officials for decades to address specific policy issues, such as alleviating poverty, but the Bloomberg grants are moving urban philanthropy in a new direction. Foundations are starting to see ways that they can trigger structural and cultural change in city governments, says Ben Hecht, president and CEO of Living Cities, a nonprofit with a board made up of foundation presidents. (Disclosure: The Governing Institute has partnered with Living Cities and the Citi Foundation on the City Accelerator, a project focused on innovations for low-income residents.) “A tall soda thing or an obesity thing -- those can come and go with the whim of the mayor,” Hecht says. “But if you actually change the way government operates and it becomes the new normal, that’s a real change. That’s enduring.”
Five years ago, about a dozen mayors came to New York to discuss ways that the Bloomberg Philantrophies could help municipal government function better. The mayors described structural problems that were holding them back, such as employees’ fear of risk-taking and a lack of coordination across departments. James Anderson, who oversees Bloomberg programs on government innovation, used the conversation as a springboard for learning how municipalities solve organizational inertia.
Anderson, a former communications director in the Bloomberg administration, assembled a team of ex-city hall employees for the project. They studied more than a dozen promising initiatives in cities and countries around the world, from Baltimore to England to Malaysia. Anderson’s team came back with a prescriptive model for how municipal bureaucrats could be more inventive, data-driven and collaborative with nongovernmental partners.
A lot of the model comes directly from the style of government Bloomberg introduced in New York. During the Bloomberg years, New York City earned a reputation for trying a raft of new ideas, particularly in social policy. In 2006, his administration launched the Center on Economic Opportunity, which uses government funding to attract additional private money to test promising antipoverty strategies. In one case, New York City emulated successful programs in Brazil and Mexico, where the governments were offering cash assistance to low-income households on the condition that they meet benchmarks for school attendance, quarterly grades and preventive health.
The center has operated more than 60 programs in the past nine years, each receiving its own third-party evaluation. So far, more than a dozen programs that didn’t demonstrate a positive impact have been discontinued. Others that yielded positive results have received an expansion in funding. To a significant extent, it is an effort to apply techniques of venture capitalism to a public environment.
After Anderson and his team published a report on their review of innovative global practices, Bloomberg Philanthropies wrote a playbook with discrete steps a government can take to be innovative. The model boils down to a few key elements: researching best practices, trying new ideas, partnering with other agencies or outside groups, and tracking performance with data. “We have a lot of confidence in the model,” Anderson says. “We’ve seen it produce results in five cities on very different issues under different mayors with different leadership styles.”
It’s important to understand just how ambitious these grants really are. Most of the local press coverage in each team’s host city focuses on the size of the grants and the social ills that mayors want solved. Reducing violence and homelessness are laudable objectives, but in this case, they’re byproducts of a larger long-term plan. The ultimate goal is to better understand what innovation is and how it can be scaled up from a single office to an entire municipal government, from one city to a nation of cities. If that happened, the argument goes, mayors would be much better at managing any number of problems that seem overwhelming today.
As interested as they profess to be in the problems of cities, most major national foundations have been skittish about giving money directly to a mayor’s office. Sometimes they have insisted that cities lead the way first with funds from their own tax base; in other cases, they have feared a city might be too dysfunctional to be worth the investment.
Besides these worries, foundations have had another reason for being reluctant to plunge too deeply into urban government practices: the risk of backlash. In the early 20th century, a philanthropy supported by John D. Rockefeller paid for federal agriculture agents to help farmers prevent pests from destroying cotton crops in the South; in return, the foundation became the subject of public attacks by members of Congress who accused Rockefeller of using his private wealth to bypass the democratic process and influence public policy. Ultimately, Congress passed a law that paid for the agents directly and prohibited the philanthropy from further involvement in the program that it helped launch.
In more recent times, Bill and Melinda Gates have invested tens of millions of dollars in specific reforms to the public education system. Their preference for charter schools, tying teacher evaluations to student performance on standardized tests and establishing national education standards has drawn the ire of teachers unions and Tea Party activists. Critics argue that these policy prescriptions undermine local control over education and force teachers to dedicate too much time to test preparation.
So far, Bloomberg’s grants to cities haven’t stoked the same kinds of fears about an interloping billionaire meddling where he’s not wanted. It’s hard to pin an ideological or partisan label on them because they aren’t tied to any policy outcome in particular. Policy choices are up to the mayors.
Some of the warm receptions that the Bloomberg grants have received may be a function of how new they are. The first round finished only last year, and while cities have eagerly publicized the strides they’ve made, the details of how innovation teams work aren’t widely understood by the public. But the lack of criticism also reflects the foundation’s willingness to give mayors broad discretion in how the money is used. “It’s very powerful when cities are able to use our tools in areas where they’re hurting most or they see the greatest opportunity,” Anderson says. “When that happens, the city is going to be especially aggressive in its work.”
The innovation grants are but one example of recent partnerships between cities and foundations. In fact, Bloomberg Philanthropies alone has given nearly $150 million to more than 70 municipalities in the past five years for experiments in government innovation. At least 10 cities have added a chief community service officer with funding they received from the Bloomberg and Rockefeller foundations. Seventeen U.S. cities now have a dedicated staff position focused on climate resilience, also paid for by Rockefeller. Many of the tech-savvy Code for America fellows who embed in city governments for a year have their salaries covered by foundations. As municipalities lost substantial amounts of revenue during the recession, many mayors showed an eagerness to accept financial assistance from foundations. These represent just a slice of the much larger and older effort by foundations to influence urban policy, though traditionally the support has focused on narrow subjects that aligned with a foundation’s mission, such as public education, child welfare or criminal justice.
Michael Bloomberg began his national innovation campaign in 2010, while he was still serving as mayor of New York City. (AP)
Prominent skeptics do exist. As the field of city foundation partnerships evolves, says Albert Ruesga, CEO of the Greater New Orleans Foundation, mayors should be wary of relationships that erode democratic decision-making. “Cities have the power to levy taxes,” Ruesga says. “I don’t think it’s healthy for cities to forgo levying taxes for central public services and goods, thinking that they might get that money from private sources. There’s a price to civilization and we need to be willing to pay that price in our taxes.”
Ruesga is quick to point out that he doesn’t object to the innovation grants as they have been employed so far. That’s in part because they aren’t being used to pay for core services, such as hiring more police officers or keeping a park open to the public. The money is being spent on what may seem like the risky proposition of changing local government culture. But it isn’t displacing anything else in the budget. “The bet feels like a long shot to people,” Ruesga says. That’s exactly when foundations can and should pay for municipal work, he argues, when it involves experimentation that likely wouldn’t get public funding.
Landrieu, however, thinks he’s reached a point where he can justify using public money to pay not just for the projects started by the Bloomberg innovation team, but also for the team itself. Last year, the city spent $300,000 on team activities, about a quarter of their annual cost. (All cities had to match a third of the Bloomberg grant.)
“You don’t even have to sell it to the city council. They want you to do more of it,” Landrieu says. The challenge is making sure the city has room in the budget for a new service, but he seems committed to doing that. “When the philanthropic money runs out, you’ve got to grow your economy or raise your fees or cut in other ways to pay for that service.” The reason he’s willing to make room in the budget isn’t just the impressive results so far, but the method that made them happen. The innovation model, he says, has the potential to address any number of other problems the city still needs to tackle.
New Orleans is not the only city focused on how to sustain its innovation team once the grant money runs out. In Memphis, the city council set aside $200,000 last summer to keep its team around for another year. “We planned from day one asking the question, ‘How do we keep this going?’” says Memphis Mayor A.C. Wharton. “This is not just a flash in the pan. I think it will become a permanent part of how cities do business.”
*Infographic Courtesy of Flickr/Jerry Dohnal. This story was originally published by Governing.