What’s an Earmark?

by | Jun 22, 2021 | Business

An earmark refers to designating funding for a specific purpose and is used as a generic term in budgeting in many situations beyond federal funding. A Congressional earmark generally refers to federal spending directed to a locally identified need or issue. Presumably, members of Congress know more about why federal funding within their district or state is warranted.

Congress’s power of the purse derives from Article I of the constitution. The power of the purse refers to spending and taxing. It’s given to Congress by the framers to control the executive. The framers did not want the executive, the president in our case, to be able to spend indiscriminately or without any controls. The executive branch, overseen by the president, can only spend up to the limits set by Congress.

The concept of earmarks evolved to allow spending to be brought to very specific local situations that a member of Congress might have particular firsthand knowledge of. It could be a housing issue. It could be a flood issue. It could be something specific about an industry or something unique that would help a community lift itself to another level. It could be something about infrastructure. There was a time when there might be a specific company within a district that had a capability, and members of Congress could earmark funds to a company by name.

When I was a corporate lobbyist in the early 2000s, earmarking had risen to an art form with companies maneuvering to position for a favorable review of their proposals to receive earmarks. In 2011, when fiscal conservatism had reached a fevered pitch in its day, Congress decided earmarking was a system that had gotten out of control. Earmarks at the time consumed about 1% of the entire federal budget. One could argue if that was out of control spending? Additionally, there were some abuses of power. Some Members of Congress and lobbyists were personally benefiting from earmarks and broke the law, and some went to jail. As you would hope that would be the case, justice is delivered when somebody violates the law.

The messaging and public storytelling of how that went down put a cloud over what earmarks were. We’ve endured about ten years where specific directed spending has not been allowed. A few exceptions include university research or research labs, where the mission is not about commercial or for-profit activity.

In 2021, Congress came to more publicly recognize that they do like to have earmarks, and they want to have the ability to make some marginal adjustments. They also recognize the secondary benefit of earmarks is the ability to help garner votes for sticky issues. It’s no secret over the last 20-plus years that ideological differences have become more polarized, and they have prevented significant legislation from moving forward several times. It’s not that different from how it’s been for the last couple of hundred years, believe it or not, but we tend to know more about it now because of how information flows.

Congress is your friend in federal sales because they fund everything that you're doing when you're selling to the federal government. Click To Tweet

Congress has now come back with a rebranded form of earmarks referred to as Community Project Funding. Community Project Funding is about helping communities with particular issues with a clear need and clear public support for the case. It’s not necessarily about helping for-profit companies. Still, it’s about getting federal funding down at the local level where there’s general agreement, not just a couple of people making a decision. These are cases where public officials at the local level are willing to publicly put their name on a request for this type of funding. A public review process for a shared commitment to an effort makes a project eligible for federal Community Project Funding.

A total of 1% of Fiscal Year (FY) 2022 discretionary funding will be devoted to Community Project Funding projects as defined by the House. This proposal has strong bipartisan support, as evidenced by a majority voting in favor during closed-door meetings of the House Republican Conference.

What If My Project Is Not eligible for Community Project Funding?

Programmatic adjustments have survived throughout earmark reform. Programmatic adjustments are executed by speaking to members of Congress who care about the issue that you’re addressing and committee professional staff members who know what you’re trying to address. It can be helpful for agency representatives to indicate that, if we had more funding, that adjustment would be something of importance to us. Remember, agency officials technically cannot publicly endorse something different from what the president has requested. But they can answer questions in the frame of, “If we had more funding, we would support that sort of an outcome.”

Despite the earmark moratorium, there has been the opportunity to request and ask Congress to make programmatic adjustments that might favor your program. They might even prefer your specific technology or capability solution.

What Does an Earmark and a Program Adjustment Mean for My Business?

It’s helpful to understand the nuance of what’s happening in Congress and the committees concerning earmarks, community funding, programmatic adjustments, and legislative language changes. The nuance of the rules and practices can help you better understand what’s happening and what piece of the process you can influence.

You have an equal opportunity to participate in all aspects of government. It’s a fundamental right that the framers bestowed within the constitution. Suppose you look throughout the Federalist papers that describe why the constitution was such a good thing to endorse. In that case, there are numerous references to citizens’ right to participate and help evaluate decisions.

We don’t always agree on what Congress will fund or not but know that you can participate in the process. You can participate in the entire process. You have to understand the terms, you have to understand with whom you’re dealing, and you have to know when and where to have the conversation. It’s an open process. It should be that way. Companies of all sizes have equal opportunity.

Smaller companies tend to surrender that opportunity by not participating because they think they can’t or because they don’t understand it. It’s worth taking the time to learn. Earmarks can be your friend; directed spending can be your friend; programmatic adjustments can be your friend.

Congress is your friend in federal sales because they fund everything that you’re doing when you’re selling to the federal government.

Need help receiving federal funding for your product or service? Schedule a call with Gene today. 

To get your copy of Pitching the Big Top: How to Master the 3-Ring Circus of Federal Sales, click here

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