The New Idea

Franz Dullinger is building ways for citizens to take part in making public policy, reversing the top-down style which only fosters apathy among people and needless bureaucracy in government.

Franz works with both communities and the government. He promotes a competitive spirit among villages, encouraging mayors to stop relying on the state for help and instead find local resources. He has them systematically gather together people who are innovative, active, and creative in business, education, environment, agriculture. Franz calls those changemakers “Kümmerer”—people who care. Kümmerers drive networks of citizens, local mayors, and small- and medium-size entrepreneurs to participate in a joint planning process for regional development.

Working with government, Franz reforms EU and state funding policy by empowering these local networks to directly apply for the distribution of EU funding, skipping the state and federal levels through which the money normally travels (often never reaching where it needs to). As it was not forbidden, Franz set up the first ever demand-driven proposal by local mayors and citizens for EU-funding. Against all odds, he bid for the money and won.

Franz is spreading his model to other structurally weak regions in Germany and other parts of the European Union. While state administrations are not pleased, the EU administration heralds his approach as “exemplary.”

The Problem

Fourteen million Germans live in rural areas, including more than 50 percent of the population in East Germany. In the whole of Europe, rural areas cover 90 percent of the territory and are home to nearly half of its population. Many rural areas suffer from economic and social stagnation. Eastern Bavaria is an example of one of these economically underdeveloped areas—overdependent on agriculture, with little industry, low productivity, and high unemployment—reaching as high as 20 percent. Unemployment among youth in particular has been rising. Companies prefer to invest in the nearby Czech Republic as labour is cheaper and productivity higher. More and more people flee the region and move to cities where there is greater hope for finding work. This results in significant “brain drain”, as well as other social problems.

Politicians in Europe react to these problems by drawing on EU funds granted for these regions. Between 2000 and 2006 the EU spent 1 billion Euros for regional development in Bavaria. The money tends to be given to big companies for mega-projects, or it is not spent at all. The Bavarian Ministry of Economy has designed special departments in charge of administering EU funds without systematically taking into account actual demand in the regions. As regional policy in many cases has been unchanged since the 1970s, the EU still focuses on the needs of the manufacturing industry, rather than shifting focus to the more current demands of small and medium enterprises.

The mechanism for allocating EU money works like this. The original target goals and frameworks defined by the EU are forwarded to the state administration of the eligible regions. There, new requirements are added, which are again amended by the next level of administration. In the end, guidelines often consist of 90 pages in bureaucratic language and focus on large infrastructural projects requiring a minimum investment sum of between 250,000 and 500,000 Euros. This system has developed in part because national and regional governments want to minimize their administrative work while creating politically attractive projects. Small and medium enterprises needing only small grants are usually not considered. And even when small grants appropriate to small businesses, for example 50,000 Euros, are proposed, the government tends to push for larger investments of about 250,000 Euros. This results in misallocation and waste of money as well as in the decline of small and medium enterprises.

In addition, applicants are often only assessed on their written form. If the formal criteria are fulfilled, the money is allocated. There is no evaluation of the person behind the project, or potential benefits to the region. There is no long-term performance measurement. There are examples in Germany where EU money has built factories, and then only a few years or even months later, the firms shift production to Eastern Europe, leaving the new facilities empty and useless.

Due to this top-down approach, politicians on the municipal level spend their time lobbying for money rather than focusing on the needs of their region. Their own political leeway is limited, their engagement low. Entrepreneurs in the region see politics as insufferably bureaucratic, stifling innovation. This leads to resignation and apathy and a disconnection between the electorate and local politicians.

The Strategy

Franz begins by helping communities build entrepreneurial networks and create their own development concept. As part of this effort, in 2002 he founded “X-per Regio: Platform for new Ideas” (X-per Regio is the abbreviation for “experts for the region”). Franz starts by taking mayors on a “discovery” tour through the villages in their districts, showing them examples of Kümmerers and the constructive power of local changemakers. Mayors see diverse examples of local innovation at work: from novel kindergarten teaching methods to skateboard manufacturers to new ways of marketing asparagus. They recognize that by supporting these entrepreneurs they can foster growth, save jobs and thus gain popularity. Their mindset shifts from complaining and expecting support towards active engagement.

Franz then encourages these mayors to identify and reach out to entrepreneurial people in their region, the Kümmerers. By leaving their offices—getting into their car, driving around and talking to people—they start getting a better feel for the region. As the dialogue between mayors and citizens grows, the mayors become motivated and feel like they can take positive action to encourage development of their region.

In the next meeting, these Kümmerers are asked to outline their specific needs, but also requested to find more of their kind. This soon inspires a positive competitive atmosphere in the neighbouring municipalities of finding and inspiring more and more people to raise their voices, speak about their expectations and needs, and get engaged. Soon a network is built and regular workshops and meetings begin taking place—allowing for exchange of knowledge and ideas, cooperation, coaching and inspiration across professional borders. For example, a group of experts in forestry may join forces with those who work in agriculture or hostelry to talk about the future of tourism in the area. As people share best practices and develop new ideas together, a bottom-up concept of regional development starts emerging.

Franz also works at a higher level to break through the bureaucratic structures of regional funding. He uses this new network, including the citizens and the mayor, to draw up a regional development concept note. This concept note is then directly handed in at the EU level, thus skipping the regional and state hierarchy. Indeed, Franz was the first one to realize that it is nowhere forbidden that citizens of a region apply directly for EU funding—but no one had ever done so before.

In order to create a lasting structure, to ensure there is fair representation and to fulfil the legal prerequisites when applying for EU-funding, Franz has set up the vehicle of a regional management company ltd. What is special about the regional company is that it is set up in such a way that the citizens can steward and influence its activities while the mayors sit on the board and are shareholders.

When the money is assigned, an audit commission is formed, consisting of representatives who know the people, the region and its problems, as well as mayors as the elected representatives. In contrast to the conventional procedures, projects are not solely assessed on their written applications. If the formal criteria are fulfilled, the applying citizen puts his project forward in a five-minute presentation. The audit commission not only decides on funding based on the specific requirements of the region—with a maximum grant of 100,000 Euros and minimum down to micro grants of 5,000 or 10,000 Euros. Even more important, Franz uses the network of the audit representatives to link projects and individuals to create synergies. They also act as mentors if necessary. The rule is that only 10 percent of funding comes from X-per Regio, and 90 percent has to be acquired elsewhere.

The pilot project X-per Regio was endowed with three million Euros funding by the EU in January 2005 and is a flexible instrument for financing and supporting innovative concepts to foster employment, development and quality of life in rural areas.

As of today, it has grown to include 14 village districts in Eastern Bavaria and propelled the development of approximately 160 new and innovative projects, from a farmers’ environmental tourism initiative to training kindergarten teachers in new methods to training factory workers in information technology. It has leveraged additional funding of 14 million Euros—almost five times the original funding—and created at least 50 new jobs, not counting the jobs which otherwise would have been lost because of insolvency or relocation of firms.

Much more than money, the X-per Regio has established a network of engaged people and has created a new atmosphere of activity and innovation. The money is only used as an incentive to make entrepreneurs present their ideas to the public and as a tool to put them in contact with each other. Moreover, it creates credibility for the project and can be used as a marketing tool. But it is not the necessary condition for success, as evidenced by the fact that the fund was only granted three years after X-per Regio had started, and also by the fact that there are ten communities eager to join the network even though there is no money allocated to them. Franz stresses that he does not work together with people who see the primary goal of the project to receive EU-funds, as these are not fully committed to setting the entire system in place and thus will not succeed in creating the necessary entrepreneurial spirit.

Franz's system is refined by the fact that the newly established regional company also has the possibility to contract so-called “networkers” who are in charge of finding people, grouping ideas, setting up new development concepts and, if needed, finding funding. Franz is also reaching out to regional universities where he motivates students to get involved as coaches and interns in the local projects to strengthen their bonds with the regions and avoid their leaving after graduation.

All together this has led to a democratisation of regional policy as it empowers the electorate to actively shape their local policy. It also fights bureaucracy, as it skips the lengthy application procedures and administration.

When starting to prepare the bidding process in 2004, Franz encountered strong opposition However, the EU-administration—enthused by Franz's approach following a ground visit by the EU director—now heralds his work as exemplary, backing his undertakings to spread the word to other regions and advertises his concept. Moreover, the EU has committed to continue the direct funding after the initial grant of three million Euros.

Franz has identified and trained the first multipliers and has started to spread his concept in the state of Saxony in Eastern Germany for which he has gained the backing and manpower support of the BMW Kuenheim Foundation. Furthermore, he regularly speaks at trans-national regional development conferences, which has generated interest in his approach from other countries, notably the UK.
 

The Person

Franz has long been active in changing regional development structures. When still a teenager, he started a citizen movement in his home district that prevented the privatization of the local water sources and introduced ecological water management. At 22, he was elected as the youngest municipal council member in Bavaria. After studying regional development in Freising (Bavaria), he started his first job as a research assistant at an institute for alpine research; he soon realized that it is not defining goals and strategies or analyzing needs that make regional policy successful. Instead, it is finding engaged, active people who care about the problem.

In 2000 Franz founded his own business for regional consulting. He has set up several projects, all based on linking different regions or cities together and inspiring them to share knowledge and profit from each others’ strengths. In one example, Donau-Hanse, he encouraged cities from Passau over Vienna to Budapest start cooperating on common problems, sharing their knowledge and forming a network. He also started a European Cooperation of river-management in the Alpine and Danube area, convincing water authorities and communities to join forces in order to work together for clean water and against flood, creating cooperation and sharing best practice approaches.

When he talked to a local mayor of his home region on how to develop Eastern Bavaria, Franz summarized the important lessons he had learned: there should be the will to create a self-determined development concept for the region, based on Kümmerers. Thus began his current effort, against huge resistance and without funding. Dullinger has developed his concept and X-per Regio on an entirely honorary basis, earning his income with consultancies on the side.

He says that actively changing problems instead of waiting for someone to change them has been his command since he was 12 and his mother died, leaving him and his 8 year old sister alone.