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Rapson: 3 factors key in seeing historic public investments land equitably across America

American Cities

This commentary is an edited version of the opening remarks from the joint Brookings Institution and Kresge convening: Helping Communities Make the Most of Public Investment, held on Oct. 18, 2023 in Washington, D.C. Visit the convening webpage here. A video replay of the event will be posted when available.

For the last two years, the philanthropic biosphere, think tanks and local governments have been – appropriately – transfixed by the question of how to land federal dollars in place.

We’ve seen a proliferation of efforts within philanthropy, among federal agencies, and across national trade organizations to facilitate, accelerate or otherwise enhance the ability of localities to draw down those federal dollars.

Think the Local Infrastructure Hub, masterminded by Bloomberg Philanthropies and the National League of Cities, which prepares small cities and towns to make successful applications for competitive federal grants. Or Hyphen, an effort to devise approaches for philanthropy to co-invest alongside government. Or the What Works Plus collaborative, which serves as a central information clearinghouse for creative and effective local draw-down strategies. Or countless others focused more narrowly on the nuances of accessing the funding flows aimed at public health, water infrastructure, public transit, or workforce development.

All of this is tremendously important and worth every ounce of the time, money, and brain power dedicated to it. Individually and collectively, these efforts are a powerful jump-start to a process of unfathomable complexity and profound import.

And yet, they are just a jump-start. It can be argued that the more difficult challenges lie ahead.

Accessing those dollars may be a necessary ingredient to positioning our communities for the waves of challenges rolling in – upgrading essential infrastructure, moving catalytic dollars into climate preparedness, training our workforce for the next-generation tech and energy economy, and eliminating health, education, and income disparities among communities of color.

But they are not sufficient. They themselves won’t do the trick. We accordingly need to talk as much about imagining and implementing and sustaining as we do about drawing down.

Those topics run the risk of failing to stir our souls. They often don’t generate press releases. But without smart implementation and without adopting approaches that can be generative over the long term, we will be coming together in five years, 10 years, or 15 years and asking ourselves, “What happened? How did we manage to let this opportunity slip through our fingers?”

From Kresge’s perspective – based on our team’s deep local work in Detroit, Fresno, Memphis, New Orleans and other cities – three elements appear to be essential to getting it right:

First, activating – or building – cross-sector and cross-disciplinary capacity to plan for, absorb, and distribute these funds. Second, reverse-engineering the right forms of capital in the right doses, in the right sequence, and through the right channels to stimulate market investment. Third, unpacking and redistributing risk based on who can take more and who should bear less.

Arching across all three is the understanding that these imperatives must be placed to mitigate and adapt to climate vulnerability and pursue reparative racial equity.

First, activating cross-sector and cross-disciplinary responses.

No single entity – no matter how dedicated, experienced, or high in capacity can activate these federal dollars all by itself. Although local governments hold the election certificates, they also have to struggle with the regular churn of personnel and the cadence of local elections marching on without regard to federal spending deadlines. And that is not to mention that the nonprofit sector is often the execution arm of the municipal public policy apparatus.

The bottom line is that you need a big, distributed team now more than ever.

That is certainly the message from Ashley Swearingen, the head of Fresno’s Central Valley Community Foundation. She describes the monies flowing into the Fresno DRIVE plan, a blueprint that emerged from more than 300 individuals representing more than 150 civic, community, and business stakeholders.

Places that have built the muscle to work across disciplines and sectors are the ones that not only draw down the dollars but also have a tremendous advantage in both spending them well and effectively extending the implementation horizon.

The best time to build that muscle was 10 years ago. The second-best time is now.

It is not too late – it is ALMOST too late, but not quite too late – to build the team with the capacities to spend federal funds for transformation. You’ll notice I write capacities, plural.

You need an alignment among organizations to ensure that the full spectrum of civic capacities is well-positioned, well-resourced, and well-informed about the opportunities potentially moving in their direction. You need the people who can reset not only what infrastructure elements are created, for whom, and to what purpose but also who designs that infrastructure, who builds it, and what roles nonprofit delivery systems and local procurement policies can play. You need a range of actors to invest in the community-based capacity to hold decision-makers accountable.

Next, the second bucket re-imagines capital configurations and deployment channels.

Even more than the ARPA dollars, the dollars flowing from the infrastructure law and the inflation reduction act must steer away from the projects bound up by the inertia of traditionally conceived and executed public works projects.

It is all too tempting for cities to default to civic auto-pilot, ensuring that the dollars move in channels of least resistance – channels that meet the needs of rapid deployment or political expediency, not the imperatives of advancing equity or facing down climate change.

And yet, scores of examples are emerging in which cities are reimagining those channels in bold and innovative ways – braiding together multiple forms of capital from various sources to carry federal dollars the critical last mile to projects that deliver for low-income communities.

Just a quick example from Detroit, where the city is using federal dollars to create a 30-mile greenway circling the city, a la the Atlanta BeltLine. The city is paying to clear the right of way and lay the pavement. But to catapult from concrete to community-building and to create development without displacement will require an investment of philanthropic dollars, community sweat equity, CDFI financing, and other sources of creative capital to build out safe, inclusive, inviting, and connected communities along the greenway’s edges.

Finally, the third bucket is redistributing risk.

People around the country are being called on to navigate a trifecta that simultaneously advances racial equity, contributes to a carbon-neutral future, and puts dollars to work within an aggressively tight expenditure window. That ambition is unprecedented. So, too, is the level of risk.

We can be assured that things will not go as planned, that decision-makers will make some bad decisions, and that there will be front-page stories – and partisan vituperation – about failed projects and unrealized visions.

Opting for caution – for the default setting – in the face of that risk is all too tempting. But it is unacceptable.

Reinforcing and fortifying the status quo – one of perpetuated inequalities in health, education, economic mobility, and every other dimension of community life and one of flooded streets, incinerated forests, unbreathable air, and crushing heat – is to relegate our children to a dystopian, unjust, and unsustainable future. It is crystal clear who will be left holding the bag for our non-performance.

So, the choice is not whether to embrace risk but how.

Philanthropy has a suite of tools to lower the perceived risk of public and private investment in communities, including grants, loans, guarantees, equity investments, and others. But our role needs to be played in the context of a civic framework of interwoven and mutually assumed responsibility among all the sectors.

Let’s think about what that might look like in the context of a hypothetical new manufacturing plant built with federal subsidies from the CHIPS and Science Act.

We could imagine a robust and rigorously enforced community benefits agreement. We could expect a variety of federal, state, and local subsidies that serve to de-risk the private sector investments in the plant. We could foresee companies committing to job creation, prevailing wages, and worker and community investments. And we could anticipate multiple sectors contributing to building regional capacity for the kind of training and supply chain enhancements necessary to generate a healthy pipeline of workers to hire and businesses from which to purchase.

The goal should be a methodology in which every sector – public, private, philanthropic, or non-profit – contributes to the success of a regional economy, an industry, and businesses and families – rather than the one-sided giveaways that have too frequently characterized these investments in the past. Each part of the calculus is connected to and bolstered by the others in pursuit of genuinely shared prosperity.

Let me close by acknowledging the very practical pressures at play. Because the federal stop-watch is ticking, local governments must make big decisions soon. That creates an acute tension.

If cities move too fast, they risk spending the money in ways that won’t achieve the ambitious goals they and the Administration have set – staggering sums that cities are unlikely to see again. If cities move too slowly – paralyzed by the high aspiration and degrees of difficulty of transformation – they could readily bog down, surrender to overwhelm, and revert to the quick and easy.

The only escape route, it seems to me, is to sight against a more distant time horizon.

The transformation we seek doesn’t happen in a moment or a single presidential administration. If we can step back and contribute to a decision-making framework comprising short-term victories, intermediate milestones of progress, and long-term recalibration of public systems, we have a shot at getting this right.

That approach helps us to be accretive, with each new infusion of federal funds opening new pathways for investment. That approach enables our actions to be compounding, with each project holding the potential for exponentially higher impact. And that approach contributes to civic efficacy, with each milestone bolstering a place’s capacity to take on increasingly wicked challenges.

Rip Rapson is the President & CEO of The Kresge Foundation.