Commentary: Is TIGER a hedge fund?
The TIGER grant program is very popular among freight transportation advocates and at various levels of government because it provides funding for multimodal, cross-jurisdictional projects with good economic benefits that aren’t eligible for federal transportation dollars, most of which are funneled to states through blunt formulas for highway restoration and construction.
TIGER gives the Obama administration the ability to target money it views as well-deserving. Some believe “well-deserving” is in the eye of the beholder. But what gives TIGER credibility, despite its shortcomings, is that it strives to base grant decisions on solid metrics.
It’s an example of private sector management practices seeping into government. And, watching a piece on CBS’s 60 Minutes the other day made it clear that the Department of Transportation program is at its core a hedge fund — but instead of investing in companies to make a profit it invests for the greater public good.
The similarity between TIGER and Wall Street is the rigorous application of analytics, although in the case of TIGER it’s leavened with a bit of politics, for sure. And that analytical approach can be applied to things other than finance.
The 60 Minutes feature profiled billionaire hedge fund manager Paul Tudor Jones who formed the Robin Hood Foundation 25 years ago to help fight poverty. He’s given away more than $1.25 billion to charter schools, job training and food programs in New York City in that time, but poverty still persists.
He started out by adopting a school and pouring money into it to improve the teaching environment, lessons and outside activities, but after five years the students’ grades were no better than average compared to other schools.
The lesson? You have to mix good intentions with hard-nosed business practices to get results.
So the Robin Hood Foundation was formed to let charities with the best ideas compete for support. It hires analysts and accountants that measure the progress of each program with cold numbers.
A local soup kitchen, for example, had to provide data — who was being served, how many, what was the cost, did the data support expansion? — as well as a five-year business plan before it could receive any money.
The idea is to hold grantees accountable for their goals, while at the same time providing them management expertise, administrative and legal help.
And, when programs don’t perform, Robin Hood defunds 5 to 10 percent of its projects.
TIGER applicants similarly have to demonstrate some concrete data showing how advanced a project is in the planning process, what are the expected benefits in terms of economic development, reduced congestion and smog, and creating more livable, self-contained communities.
TIGER also wants post-project data to see if the benefits materialized. It can’t get its money back, but it can learn how to better target future grants. (Eric Kulisch)
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