Public or Private: City Fiscal Management in Crisis Response

By Bloomberg Associates’ Rose Gill and Megan Sheekey

In their efforts to combat the COVID-19 pandemic, local leaders are managing monumental challenges including understanding available federal benefits and programs, navigating complex legal and regulatory issues, and managing resources—both public and private—to support their communities. While government has broad access to people and service delivery channels, in this unprecedented circumstance it also needs strong partners to effectively meet the immediate and complex public issues the COVID-19 crisis has brought to bear.

In the last few months, hundreds of new COVID-19 response funds have rapidly been launched across the country with the help of community foundations and other philanthropic sponsors. The private resources deployed to community priorities have ranged from food delivery to personal protective equipment for frontline workers to contact tracing efforts.

While public-private collaboration is not new, a crisis of this scale can present new and unfamiliar terrain for some city leaders. Whether funds for COVID-19 public programs are being administered by a municipal government or facilitated by a partner, city leaders must work to ensure their effective coordination and management.

Effectively Administer Federal Funds Locally

Mayors and city managers have taken fast action to address community needs and tap available local, state, and federal resources. Cities serve an important function as fiduciaries for federal relief/stimulus funds and the public expects cities to manage those funds effectively and stretch the federal dollars to the maximum.  Yet, officials have already referenced concerns about the risk of fraud, waste, and have estimated that 10% of the total aid could be lost, instead of going where that aid is needed.

Bloomberg Philanthropies, as part of the COVID-19 Local Response Initiative, is working with city leaders to ensure they both understand how to access CARES Act federal funds made available to state and local governments and adequately document COVID-19 related expenditures to maximize proper use and federal reimbursement. And, through the U.S. Conference of Mayors, Bloomberg Philanthropies has produced a Guide to support to cities  to optimize ways to navigate access to all available federal aid/funding and to administer, oversee and safeguard those funds.

Cities should act sooner rather than later to establish controls to flatten the fraud, waste and theft curve. Key integrity controls are the first line of defense. A well-designed integrity monitoring plan, including documentation of funds received, expenditures paid, and disbursements made, can prevent negative consequences and create an environment that successfully guides a city for the duration of the COVID-19 crisis while the emergency response operations move forward.

Establish Strong Governance in Public-Private Partnerships

There has been an unprecedented response from the philanthropic sector to help address the global pandemic but it’s important to recognize the role and limitations of philanthropy, which cannot match the scale of government. It is also crucial for city leaders to know the rules that govern how and whether a city may solicit or accept private funds.

Some cities have few guidelines regarding the solicitation and management of private funds, while other municipalities have very restrictive requirements. These governing rules can be found in the city code or charter, City Attorney memoranda (which often carry the force of law), or previous court rulings or legislation that may pertain to the work of the partnership. In some places, even state law may have provisions that govern what cities may do relating to acceptance of donations.

While the number of donor-driven response funds established is a testament to the level of collaboration to support needs, strong governance, transparency and accountability measures cannot be overlooked even in a time of crisis.

Appropriate Management of Private Funds

Some cities have a dedicated nonprofit that works closely with City Hall, such as the Mayor’s Fund for Los Angeles that raises money for civic priorities. Others, such as Denver, have an Office of Strategic Partnerships that provides a bridge to the private sector and other non-governmental stakeholders. These entities are well positioned right now to serve as a central coordination point for City partnership, align goals, establish priorities, and identify resources.

The Los Angeles Fire Department launched a new high capacity testing site in Skid Row to offer free access to COVID-19 testing for residents who walk up or who are referred by street outreach teams. Photo courtesy of Los Angeles Mayor’s Office

For city leaders working in collaboration with a local foundation or other fiscal partner on COVID-19 response efforts, City staffing should be in place to manage partnership activities. Leaders must ensure that appropriate oversight and management structures are in place to effectively administer funds and grant programs on behalf of impacted communities. All government and non-government parties involved in the operation of a public-private collaboration should clearly define their respective roles, as well as goals, in order to establish proper boundaries and hold individuals accountable. In addition, not only does a city have to hold its private sector partners accountable to the terms of any agreements and scope of projects, but it must also ensure its internal city staff knows of all legal constraints or conflict of interest rules as well as maintains clear and open lines of communication.

Prioritize Transparency throughout the Process

Whether municipalities are managing crisis response funds internally or through a fiscal partner, transparency with all stakeholders is crucial from the start. While there are undeniable community needs linked to COVID-19, partnerships and administration of funds should be guided by clear principles and standards, not simply whether activities meet legal requirements.  Strong communications around fundraising activities, donors, project budgets, allocations, as well as the roles and functions of different partners is essential.

Building in a protocol of clear reporting of outcomes, not just to funding sources but also with the public, will help to build trust, direct future efforts based on outcomes, and strengthen both public and private efforts to curb COVID-19 and its impacts.

Bloomberg Philanthropies is accelerating the fight against COVID-19 with initiatives that include the COVID-19 Local Response Initiative and the COVID-19 Global Response Initiative.

This piece was written by Bloomberg Associates’ Rose Gill Hearn, Principal of the Municipal Integrity discipline, and Megan Sheekey, Strategic Partnerships lead, with contributions by Amy Kurland. Bloomberg Associates is the philanthropic consulting arm of Bloomberg Philanthropies. Founded in 2014, Bloomberg Associates works side by side with client cities to improve the quality of life for residents, and make cities stronger, safer, more equitable and efficient. Learn more here.