• Opinion
  • November 19, 2018
  • 8 minutes
  • 1

A new matchmaker: how the third sector can ease public-private friction

Opinion: Third sector organisations can make opposites attract and deliver systems change

Teamwork and collaboration bring success

This opinion piece was written by Sarah Batchu, Senior Policy Advisor and Project Manager — Mayor’s Fund to Advance New York City. It was a runner up in the 2018 Apolitical Young Thought Leaders competition. For more like this, see the other winning entries.

President Donald Trump’s  “I alone can fix it” rhetoric has shocked many in the United States and beyond. However, as columnist Anand Giridharadas recently noted in Winners Take All, this rhetoric is not unique to the American President. Billionaire “philanthro-capitalists” have been using this talking point for years when justifying the launch of their own ambitious initiatives to address the growing inequality created in the wake of their success. Yet, these efforts often bypass one key player: government.

Without the partnership of the public sector, private sector impact investors are unlikely to achieve the widespread, disruptive change they seek through their social initiatives.

To achieve effective public-private collaborations that tackle inequality and its associated challenges, city government must invest in third sector actors who can bring the private and public sector together. No partnership is easy — but the rewards, for both government and philanthropists, could be immense.

The odd couple

Private sector actors of any kind often demur when asked to partner with government. They believe government is too slow to work with and too bureaucratic to navigate. I most recently heard this argument from the president of a company deploying a citywide public-private infrastructure project. The president argued that by the time they could negotiate their agreement with the City — which took a matter of years, not months — the agreed-upon terms no longer made sense.

This critique is unsurprising. American government was created to be inherently slow to change, in part to protect citizens from the whims of an ever-shifting executive branch.

As a consequence, the private sector seeks to go at it alone when they want to solve society’s challenges. Many young philanthro-capitalists approach their philanthropic giving as they approach their business, identifying a competitive edge and focusing on how they can solve problems better than others, including government.

Private sector impact investors working in isolation cannot scale change at the same level as government

However, private sector impact investors working in isolation cannot scale change at the same level as government. In 2016, some of the biggest impact investors based in New York City — Carnegie Corporation of New York, JPMorgan Chase Foundation, Rockefeller Foundation, Robin Hood Foundation, and the Ford Foundation — deployed a combined USD$1.2 billion both in New York City and beyond.

Their investment, while large, represented just 1.5% of the City of New York’s USD$79.9 billion budget that same year. Government is always likely to be the biggest impactor and investor in almost any domain.

Three’s company

To create truly sustainable social change at scale, the public sector needs to make partnering with government more appealing to private sector impact investors. City government can achieve this by creating “third sector” organisations like my organisation, the Mayor’s Fund to Advance New York City.

The Mayor’s Fund is a nongovernmental organisation (NGO) established in 1994 by Mayor Rudy Giuliani to work with City Hall in jointly-approved projects. As an independent NGO working alongside government, the Mayor’s Fund to Advance New York City responds to the emerging needs of the city by seeding promising, evidence-based models; evaluating the efficacy of new programs and policies; and bringing innovative solutions to scale.

Since its creation nearly 25 years ago, the Mayor’s Fund has served as an incubator for and investor in new solutions to New York City’s most intractable challenges. For instance, with the support of the Mayor’s Fund, the City opened its first Family Justice Center in 2005 — allowing domestic violence survivors to access prosecutorial, counselling, and housing and financial assistance services in one location for the first time.

In 2010, the Mayor’s Fund and the Mayor’s Office for Economic Opportunity received New York City’s first Social Innovation Fund grant from the national government to replicate some of City’s most successful anti-poverty pilot initiatives in other American cities and to evaluate their impact.

We move faster than government but still understand their need

The model of the Mayor’s Fund appeals to private sector impact investors because it lowers the transaction costs of partnering with government and circumvents government bureaucracy. We move faster than government but still understand their needs.

This model is gaining traction globally and in the United States, with cities like London, Los Angeles, Philadelphia and, most recently, Las Vegas establishing their own third sector partner organisations.

No partnership is perfect

However efficient or popular this model is, it’s not without its challenges. In particular, any city government investigating the creation of this infrastructure must consider how the new organisation can maintain political independence while staying aligned with the priorities of City Hall leadership.

Once the organisation fails in either respect, it can be difficult to recover the public’s trust. Recently, I spoke to another city trying to re-brand an affiliated NGO that shares some operating similarities with the Mayor’s Fund. Although the NGO was in perfect alignment with City Hall, its alignment had been mismanaged to the point where the public viewed it as a “slush fund” — a reputation that the City had difficulty shaking.

Private sector impact investors will always feel a pull toward fixing social problems on their own. However, if city governments create third sector organisations, they can make partnership more attractive to the private sector. By integrating the sheer scale of the public sector with the entrepreneurial approaches of the private sector, cities will reach more people with better solutions. — Sarah Batchu

(Picture credit: Flickr/Tri Mukti Yuliana)


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