Federal relief won’t help if communities lack the capacity to spend it

Now that billions of dollars of federal relief are flowing to cities, regions, and states nationally through the American Rescue Plan (ARP), there is an important question brewing: will the plan change our economy permanently, or was it just to help us get through the pandemic?

The potential for helping hard-hit communities is enormous. With stubbornly high unemployment numbers, loss of business revenue, and upheaval in their retail sector, many are reeling in spite of uneven economic growth. If done well, ARP’s federal relief represents an unparalleled opportunity for transforming local economies. But only if these communities have the planning and strategic capacity to access and deploy these funds in ways that are efficient, effective, and equitable.

The challenge is that far too many communities across the country, particularly less resourced and rural communities, are already stretched thin and have limited capacity to leverage the available relief money and apply for competitive funds. The resulting capacity gap could further exacerbate regional and demographic divides and help a few resource-rich communities stride ahead while leaving other communities struggling to keep up. It could also mean billions of dollars getting absorbed into local bureaucracies without anything to show for it.

In short, too many communities now face a capacity crisis; the money might be there, but the local resources for investing it strategically are spread thin. Solving for it will ultimately determine whether the ARP’s legacy is seen as a catalyst that spurs a new era of equitable economic development or a colossal waste of money that jeopardizes any future big bet investments like the American Jobs Plan or the American Families Plan.

High capacity communities have the teams and support needed to develop data-driven, community informed strategies to invest these stimulus funds in ways that lead to long-term job creation, entrepreneurial growth, and economic revitalization. Critically, high capacity communities are intentional about making growth inclusive and addressing generations of disinvestment.

To help communities truly “build back better,” the Biden administration should work with states and regions to help strengthen their local capacity in four key ways.

First, add local staffing capacity by creating a Corps of “Economic Resilience Fellows” to help engage local stakeholders and support the design and implementation of community recovery priorities. One model for this is the national non-profit Fuse Corps that places highly qualified talent into community based organizations and city halls to provide executive capacity on key strategic initiatives like increasing home ownership in Milwaukee, or building intergenerational wealth in New Orleans. Organizations like Resilient Cities Catalyst are also building out a neighborhood based fellowship model based on their experience deploying Chief Resilience Officers through the Rockefeller Foundation’s 100 Resilient Cities initiative.

Second, provide data tools and invest in local data capacity to assess the impact COVID had on the local economy, identify areas of greatest economic and social return, and track progress over time. A helpful starting point for the larger metro regions is the Small Business Equity Toolkit but these types of tools need to work for all types of cities and rural regions to get actionable baseline data and drive decision making.

Third, provide tools and support for communities to convene diverse stakeholders in their strategic planning process and connect with other communities to increase opportunities for shared learning and collaboration. For example, competitive federal and state grants could reward “hub and spoke” partnerships between cities and their surrounding rural communities to bridge the rural-urban divide and strengthen economic ties and partnership opportunities.

Fourth, increase funding and support for existing federal capacity building programs to expand their reach and align community needs with ARP’s spending priorities. One clear opportunity is HUD’s Distressed Cities Technical Assistance (DCTA) program. There are also technical assistance programs for communities through the U.S. Department of Agriculture and the Department of Labor that could support ARP’s relief priorities. The Economic Development Administration, for example, has partnered with the Center on Rural Innovation to help rural communities effectively compete for EDA’s Build To Scale (B2S) program to launch rural innovation hubs which could be foundational engines for local economic recovery.

The American Rescue Plan is one of the most ambitious plans for tackling economic inequities since the Great Society of the 1960s. But it is worth remembering that a centerpiece of the Great Society was the creation of the Community Action Program (CAP). But it wasn’t well planned in advance and, despite its good intentions, got scaled back under a cloud of controversy. ARP cannot suffer that fate.

The next 12 months are a critical inflection point for our nation — determining whether we experience a V-shaped recovery that benefits everyone or a K-shaped recovery which benefits a few. This will play out in communities across our country and ARP relief could be a game changer in determining the outcome — but only if communities have the capacity to get aligned on a plan and invest strategically.

With $350 billion on the line, let’s not leave this legacy to chance.

Christopher Gergen is founding partner of Forward Impact, co-founder of Forward Cities, and a Braddock Scholar and Henry Crown Fellow at the Aspen Institute.