CHALLENGER INSIGHTS Vol. 29:
Finding Funding, Part 1
Find the Money, Find the Opportunity
“Find the money and you will find opportunity.” This is what I was taught in my first years in the business, and it still holds true. Are you asking prospective customers how they source funding for projects?
Leading your prospective customer to funding sources will mean a world of difference in building a business relationship because it’s usually the primary obstacle for public safety agencies. Helping secure funding creates the ultimate win-win—they get the item they need, you get an earlier “in” and become a trusted partner.
Operating vs. Capital Budgets
Public entities gain revenues through taxation. Budgets are formed for operating expenses like payroll, rent, and benefits, and capital expenses like buildings, furniture, and equipment. Our projects tend to be capital projects. As a Chief Deputy Sheriff told me recently, “Money for operations beats out capital improvements every day of the week.”
Bonds
Let’s say an agency is in need of new evidence storage, personal storage, body cameras, firearms or laptops. Where do they get the money for these things? Usually, it’s through bonds.
Public entities offer bonds as a means to raising capital funding. Since tax revenues can be inconsistent from year-to-year, local governments often issue bonds. The bonds work sort of like a loan. People invest in the bonds for an interest payment on their money. The local government gets the funds to complete projects today and can pay off the bonds over an extended length of time as taxes are collected.
A city finance officer or finance department will put together and manage the bond. Most often the county commission or city council must vote to approve the bond. Using a Google search to track news with search terms on the name of the local government and “bond” may help identify when the funding is being voted or is approved. This information can keep you informed about the status of a project you have provided budget numbers.
Tax-Exempt Municipal Leases
Let’s say a municipality has a shorter term, more urgent need—for example, evidence lockers for accreditation or shelving for a specific area. They don’t want to go through the involved process of a bond initiative. In this case, they may have the option of procuring these items using a Tax Exempt Municipal Lease.
Tax Exempt Municipal Leases are a way that local governments can borrow money through a third party company. For customers, the advantage of using a lease is getting the short term financing option to complete the project. Another advantage is that, depending on the municipality’s policies, sometimes these lease payments can be moved into operating budgets—meaning less administrative work to get the items needed.
If you have come across a project which has short term storage solution needs but doesn’t yet have funding, please contact me. Through tradeshows and contracts, I have identified a few firms specializing in municipal financing. These firms are independent companies who specialize in providing financing to municipal governments. The agreement would be made through the local government and the finance company independently of Spacesaver and the Spacesaver Group Area Contractor.
Be on the lookout for next week’s Challenger Insight, where we’ll be taking a deeper look into methods for finding funding.