Best Practices

Introduction

Building a diverse funding base for a city requires a collaborative, flexible approach. By aligning community needs with available resources, cities can develop long-term, sustainable strategies that integrate traditional and innovative funding streams. This Chapter highlights practical actions that can help you expand your funding options and achieve lasting impact.

Quick Tips for Getting Started

• Establish Clarity: Document a clear vision that resonates with all departments and community members.
• Identify Champions: Harness the drive of committed city leaders who can unite people around a shared mission.
• Maintain Good Governance: Clearly define roles and responsibilities to manage diverse funding streams effectively.
• Prioritize Transparency & Wellbeing for All: Keep the process open and ensure projects prioritize underserved communities.
• Seek Early Engagement: Craft compelling messaging and involve stakeholders from the start to gain buy-in and shape solutions.
• Monitor & Adapt: Collect data regularly and fine-tune strategies as projects evolve.
• Mind your Metrics: Define measurable, realistic outcomes early on to ensure accountability and track success.
• Leverage What you Have: Harness existing structures, such as advisory boards or pre-existing administrative processes, to fast-track implementation, ensure efficient use of new funding streams, and demonstrate readiness to potential funders.  

💡Navigation Tip: Once you have completed this chapter, use the structured questions below to help you align your project goals and capacity with the most suitable approaches. These questions will also guide you as you move through the next two chapters: Funding Streams and Capital Strategies.

If you are starting with…Identifying Project Goals

• Ask yourself…
  • What is the primary goal? (Infrastructure? Housing? Public Health?)
  • What’s the scale of the project? (Small pilot or large capital investment?)
  • What’s the timeline? (1–2 years? A decade-long initiative?)
    
• Then explore in this toolkit…
  • Use Chapter 3: Funding Streams to see which approaches (e.g., taxes, social impact bonds) fit the project’s size and goals. Consider how these resources align with project timelines (e.g., foundation funding for quick wins, taxes for long-term investments).
  • Refer to Chapter 4: Capital Strategies to determine how you might bring these funding streams together to support your vision.

If you are starting with…Assessing Readiness and Capacity

• Ask yourself…
  • Administrative: Do we have staff and systems for reporting or managing complex funds?
  • Legal: Are specific funding structures (e.g., new taxes, public-private partnerships) legally viable?
  • Risk Tolerance: Is outcome-based funding (e.g., social impact bonds) acceptable, or do we need guaranteed revenues?
    
• Then explore in this toolkit…
  • Check Chapter 3: Funding Streams for specific sources that align with your capacity. (e.g., internal administration capacity to administer federal grant compliance).
  • Use Chapter 4: Capital Strategies to identify models that match capacity (e.g., Blended Funding for high admin capacity).

If you are starting with…Exploring Partnerships

• Ask yourself…
  • Who else in your community shares your vision and goals?
  • Are local hospitals, universities, or businesses potential partners interested?
  • Can budgets be combined across departments to support overlapping goals?
  • Will the community support initiatives like dedicated taxes or bonds?
    
• Then Explore in this toolkit…
  • Refer to Chapter 4: Capital Strategies for collaborative models (e.g., Blended Funding) that leverage partnerships.
  • Explore Chapter 3: Funding Streams for funding streams (e.g., public-private partnerships, philanthropic grants) that align with external or interdepartmental partnerships.

Create a Clear Vision

A critical precursor to a strong funding portfolio is defining what needs to be funded and the benefits that will be derived from this investment. A clear vision that outlines this need, and importantly, how it benefits the health and wellbeing of all city residents, is the foundation for a diverse and sustainable funding portfolio. Not only does this vision articulate city values, but it also plays a critical role in bringing together city departments, stakeholders, and the community—fostering a shared sense of connection to the city’s future.

At this stage in your strategy, consider

• Where are city goals articulated? Look to strategic plans, city vision statements, and other documents that can lay the groundwork for funding needs.
• What goals matter most to your city, and how can they be addressed together? Identify data sources that provide critical feedback on the goals that matter to your community.
• How can departments collaborate to develop a more cohesive strategy? Who are the champions or leaders that need to be engaged from across organizations to create and support a unified strategy?
• Can initiatives address multiple needs simultaneously? E.g., Affordable housing that also supports health and workforce development.

Assess Resources & Gaps

To diversify funding, it is essential to understand where your city stands in terms of available resources, funding opportunities, and existing gaps. A clear understanding of how current funding is being used—and where there is room for improvement—can reveal key opportunities to expand revenue streams.

For this reason, a critical step in establishing a diversified funding portfolio is conducting a landscape scan to examine current funding streams, identify shortfalls, and explore untapped revenue sources.  This should encompass a review of city-held resources, alongside external funding pathways that can be leveraged to fill gaps in municipal funding.  It is crucial to consider the long-term sustainability of funds at this stage, taking into account opportunities that are one-time investments, such as grants, alongside long-term funding strategies like taxes or fees. 

It may also be helpful to establish and maintain a centralized inventory of potential funding sources available to the city, which can be leveraged to address emerging needs, close gaps, and fund innovative projects.

At this stage in your strategy, consider

• What funding streams are currently being tapped?  And, are they being used to their full potential?
• Are there untapped opportunities or underutilized funding streams that could support high-priority initiatives?
• Where are there funding shortfalls? What are the barriers to increasing funding, and how can these challenges be addressed?
• Where can different departments collaborate to maximize resources? What about external partners?
• What new funding streams might be available? Think of grants, partnerships, corporate sponsorships, or social impact investments.
• How can your city tap into funding that is not directly accessible, such as through nonprofit or corporate support?
• How could new or existing resources be combined for a more comprehensive funding solution?

Explore New Opportunities

A diversified funding strategy that targets health and wellbeing cannot sit solely within any single city department or organization. Successful diversification depends on strong internal and external relationships. The more departments and teams collaborate, the better they can pool resources and align efforts around shared goals.

External partners, such as community organizations, academic institutions, and private businesses, can bring in new funding sources that the municipality might not be able to access on its own. These partnerships are crucial for unlocking additional resources and driving innovative solutions.

At this stage in your strategy, consider

• How can departments communicate more frequently and collaborate to foster trust?
• Are there ways to create clearer paths for cooperation on funding strategies?
• How can shared accountability mechanisms be established to ensure that all stakeholders take ownership of efforts to identify, develop, and utilize diverse funding sources?
• Who are the local community organizations that could help identify service gaps and unmet needs? Consider hospitals, community-based organizations, foundations, and academic institutions.
• Are there local academic institutions that could partner on research grants or innovative solutions?
• What opportunities may exist in partnering with businesses for corporate social responsibility (CSR) programs or sponsorships?

Montgomery’s Grants and Partnerships (GAP) Initiative is a proactive strategy to help local organizations access, manage and sustain funding streams that align with the city’s goals for equity and community development. Recognizing that many small nonprofits, educational institutions, and local businesses face barriers when navigating complex grant systems, the City of Montgomery created GAP to close the divide between available funding and community capacity.

Collaborative Approach

Launched and led by the City’s Office of Grants Management, the GAP Initiative functions as a bridge between city government and community-based organizations. City staff collaborate with nonprofits, schools, faith-based groups, and local businesses to share funding opportunities and align efforts with the city’s strategic plan. The initiative helps reduce service duplication, streamlines efforts across sectors and ensures more equitable access to resources.

Aligning and Braiding Funding Sources

Montgomery’s GAP model uses a braided funding approach—coordinating various funding sources, including city budget allocations, community contributions, and competitive grants—to support collaborative solutions. Rather than funneling all funds through a single stream, the city identifies multiple aligned funding opportunities and supports partners to bring those resources together around shared priorities. In many cases, technical assistance from the city helps grantees braid together federal, state, and philanthropic funds with local dollars to create sustainable programs.

City Leadership and Support

Through GAP, the City of Montgomery plays a hands-on role, maintaining a searchable database of funding opportunities, coordinating grant-writing workshops, providing one-on-one technical assistance, and helping organizations track and measure their impact. The program also facilitates convenings to foster stronger networks among community-based service providers.

Building Capacity for Long-Term Impact

The GAP Initiative has not only supported individual organizations in securing funding, but it has also strengthened Montgomery’s overall civic infrastructure. By focusing on collaboration, transparency and shared success, the initiative has enhanced local capacity for delivering programs in education, workforce development, public health, and housing. Organizations report improved readiness to apply for grants and greater alignment with the city’s long-term priorities.

A Model for Equitable Growth

As more cities seek to align community-based work with public investment, Montgomery’s GAP Initiative presents a compelling model: one that centers on technical assistance, equity, and local partnerships to maximize every dollar and deepen community impact.

Engage the Community

City residents are critical partners in developing a strong funding strategy rooted in health and wellbeing. Community members, especially those most impacted, bring lived experience and valuable insight into how funding can be most effective. Furthermore, engaging community members and leaders transparently in budget discussions can foster critical trust while ensuring that funds are spent in ways that yield the greatest return on investment.  One example of how cities can engage residents in these conversations is through community-driven approaches, such as participatory budgeting processes.

At this stage in your strategy, consider:

• Who are the communities most impacted by the issues being addressed?
• How can community members be meaningfully engaged to shape funding decisions from the very beginning?
• What existing infrastructure does the city have to engage residents?
• What channels can be leveraged or created to maintain ongoing, two-way communication with residents and stakeholders?
• Are there trusted partners that already work with community members who could serve as a bridge to them?

Evaluate for Sustainability

Before committing to large-scale projects, it may be helpful to pilot smaller programs to evaluate their effectiveness. This can ensure that desired impacts are achieved, resources are being used effectively, and the funding strategy is sustainable.

Establishing proven funding strategies creates a feedback loop that, in turn, enables the city to garner additional funds by:

• Demonstrating Impact: Data and outcomes from previously funded initiatives can be used to showcase a city’s success and highlight scalability and long-term benefits, attracting larger investments. 
• Building Longevity: Establishing the case for sustaining funding streams through recurring grants, endowments, or policy changes that institutionalize funding for successful programs. 
• Refining future proposals: Successful funding models showcase a city’s adaptability and innovation, serving as evidence of its fiscal stewardship and as prototypes for future funding.

At this stage in your strategy, consider

• How might pilot programs be used to test different funding strategies before expansion?
• What metrics should be used to measure the success of these initiatives, both in the short term and for sustainability?
• What long-term partnerships or revenue streams can be identified to ensure continued support?

Build Momentum

Before committing to large-scale projects, it may be helpful to pilot Once initiatives have been funded and are showing results, it is important to celebrate progress and wins. Recognizing the efforts of all involved helps to sustain momentum and encourages further collaboration. It is also critical to engage the community by transparently communicating how funding is spent and the positive results it is creating, which builds trust and encourages broader support.

At this stage in your strategy, consider

• Who should be updated on progress? Internal departments? External partners? Community members?
• What department and/or individual(s) will be responsible for communicating progress and impact stories with stakeholders?
• How can achievements be publicly recognized, whether through media, events, or community gatherings?
• What milestones can be celebrated to keep stakeholders motivated and engaged?