Local government fragmentation refers to the fact that local governments are broken into many, often overlapping, jurisdictions. In combination, local governments spend a great deal of money. It is reasonable to ask if the public’s interest would be better served by better coordination of local government.

Financial Foundations for Thriving Communities shows that there are substantial gains available from wide-scale cooperation, and coordination is needed for the best use of shared resources. Going further, other challenges that communities face often cannot be addressed by a single government. A single local government may not have the authority, capacities, and/or resources needed. This is especially true as local governments contend with tighter budgets and more complicated problems like child literacy or drug addiction. For these reasons, Financial Foundations advocates that local governments form “networked enterprises.”

A networked enterprise connects separate actors in the pursuit of a shared vision and objectives and multiplies their collective power to achieve that objective by tying them together in a system of mutual accountability.

Local governments are starting to rely on networked forms of organization to solve community problems, without growing public budgets. These local governments have realized that: there are financial limits to what they can do within their own authority and resources; many problems of greatest concern to the public require the efforts of multiple sectors and may not fall squarely within the locus of responsibility of one local government jurisdiction; and individual communities are better off when the whole region prospers. In this report, we will examine four instances of local governments that have formed successful networked enterprises.

• Publication date: November 2020
• Author: Shayne Kavanagh