Principles of Organization for Economic Development

June 14, 2010 at 12:37 pm Leave a comment

Thirteen years ago, a friend of mine Bob Shively wrote a wonderful article about
principles of organization for economic development groups. While he wrote
about small town economic development, his points are equally valid for large cities,
counties and regions. You may not agree with everything Bob has to say, but it makes
us think about the principles underlying organizational structure. Here is a reprint of Bob’s article.

Small Town Economic Development: Principles of Organization
By Robert W. Shively*

A poorly conceived organizational structure is one of the leading causes of failure
in small town economic development.

This changing pattern of community leadership has forced economic
development groups to change their organizational structures to involve diverse
elements in the community. You have to “do what you can with what you have
where you are.” Economic developers must embrace their community’s diversity.

The Fantus Company, now PHH Fantus, identified three fundamental questions
that must be answered in designing an effective economic development

1. What type of organization can reconcile the need for broad representation of the
various community groups involved in economic development?

2. What type of organization can adequately represent both public and private economic
development interests without being subservient to either?

3. What type of organization can marshal the necessary resources of the community to
address the broad range of issues it faces in creating new jobs?

There is no one right way to organize a local economic development program.
What works in one town may not work in another.


Include all local groups involved in the economic development process.

Economic development requires the active participation of many entities in a
community. Economic development has emerged from a single focus on
recruiting new industries to a panoply of activities, including capacity building,
vocational education, retention and expansion, entrepreneurship, grantsmanship,
home based businesses, environmental compatibility, and others. These
interests must be drawn together under the same tent in a unified effort of total
economic development.


Encompass all economic development efforts in the community.

No small town can afford more than one economic development organization.
The always difficult problem of financing an economic development program is
exacerbated by having more than one group contending for the same limited
funds. Administrative costs increase with multiple economic development
groups in the same community, and business leaders become frustrated with
paying multiple dues and serving on multiple boards of directors.


The governing body of the economic development organization must
include members of the power structure – the decision-makers – of the

Both the formal power structure (elected and appointed officials) and the informal
power structure (the behind-the-scenes leaders who strongly influence
community decisions) must be included in the governing body.


The governing body must have a high degree of autonomy, i.e., be able
to take independent action without specific approval of a participating
group such as the chamber of commerce or city government.

Company representatives expect the local representatives they are negotiating
with to be able to make commitments with a high degree of assurance that
these commitments will be honored. Obviously, some decisions – such as
rezoning, utility and street extensions, and tax incentives – cannot be delegated
by local governmental bodies


While continuity of membership is important, make sure to infuse new
blood into the program.

Long-term members of development organizations provide experienced leadership
and continuity, but entrenched longevity can be a problem. The author suggests
three-year terms for private-sector participants. New blood in an organization
provides new leadership, new ideas, and, frequently, a much-needed infusion of


The governing body must meet regularly and frequently, preferably once
a week.

Look at the first part of this principle, “it must meet regularly.” If a regular
meeting date is not set and adhered to, meetings are seldom called and are
poorly attended. Once a regular meeting date has been established,
participants can schedule their activities around that date and plan accordingly

The second part of the principle recommends weekly meetings. Experienced
economic developers agree that their boards should meet regularly and
frequently. Many, however, question the need for weekly meetings. Meetings
stimulate participation. The chemistry associated with people getting together
frequently generates ideas, projects and enthusiasm.


The organization must be adequately funded.

This principle is so obvious it should not have to be stated. Insufficient funding is
one of the most frequent causes of failed economic development programs.

Too many organizations spend much more time raising money than they do
performing their missions. Economic development has become increasingly
expensive. Experienced developers command higher salaries. Modern office
equipment such as computers, facsimile machines, modems and copiers have
added to the cost of maintaining an economic development office.

*Robert W. Shively, CED, FM, HM, 1997 “Small Town Economic Development:
Principles of Organization”, Economic Development Review, 15#3 (Fall): 43-46.


Entry filed under: Best Economic Development Organizations, Organization Case Studies, Organizational Collaboration, Organizational Development, Organizational Principles for Economic Development, Robert W Shively. Tags: , , .

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