The Gatekeeper Economy

Who profits, who pays, and who gets locked out.
Merchant Ship Collective | The Launch Dock

The Launch Dock is your weekly launchpad for building businesses that last—through strategy, community relevance, and real-world execution. This issue calls out an uncomfortable reality: some economic development councils claim they exist to benefit the public, but operate in ways that primarily benefit insiders. When a community is told a committee is working “for growth,” but the only visible growth is private wealth among the same decision-makers, it becomes clear that the mission has been compromised. Transparency is not optional—it is the foundation of public trust.

If the Community Isn’t Growing, Then What Are You Developing?

There’s a certain type of press release we’ve all seen.

A smiling photo.
A handshake.
A ribbon cutting.
A headline full of words like progress, partnership, and opportunity.

And yet… the community still feels stuck.

Local wages aren’t rising.
Local small businesses are still struggling.
Young adults are leaving.
Housing is strained.
Infrastructure is aging.
Families are still living paycheck to paycheck.

So at some point, the community has to ask the question nobody wants to ask:

If economic development is working… why does it only feel like certain people are winning?

Because if your organization claims it exists to develop the local economy for the public good…

…but the only people benefiting are the people sitting at the table…

Then you’re not doing your job.

You’re running a pipeline.

Let’s Say It Clearly: Nonprofit Status Does Not Automatically Mean Public Benefit

One of the biggest misconceptions in local politics is this:

If something is labeled “nonprofit,” people assume it must be ethical, community-driven, and designed for the public good.

But nonprofit status is a tax classification, not a guarantee of integrity.

Nonprofit organizations can still operate in ways that benefit insiders, fail to meet their mission, or lack transparency (Internal Revenue Service, 2024).

A nonprofit can also legally pay executives, board-connected contractors, or consulting firms substantial amounts of money—so long as it can justify those payments as “reasonable compensation” (Internal Revenue Service, 2024).

That means the public should never confuse nonprofit status with community accountability.

If a council claims to represent the public, it must prove it through measurable outcomes.

The Hard Truth: If You’re the Only Ones Winning, Your Mission Has Failed

Economic development committees often claim their mission is to:

• bring opportunity

• strengthen the economy

• improve the quality of life

• attract business investment

• increase long-term prosperity

But when the public watches the same pattern unfold repeatedly…

• insiders gain influence

• insiders gain contracts

• insiders gain property value

• insiders gain development opportunities

• insiders gain access to decision-making

• insiders gain financial advantage

…while residents gain higher costs and fewer resources…

then the truth is simple:

That isn’t community development.
That is private advantage under a public banner.

And it is visible to anyone paying attention.

The “Closed Circle” Problem: When Economic Development Becomes a Private Club

In many communities, economic development councils and boards become closed systems.

They are often dominated by:

• local investors

• commercial real estate developers

• construction contractors

• banking interests

• legal professionals tied to development work

• long-standing community power brokers

Again, these industries are not inherently wrong.

But when they dominate decision-making, development can become shaped around what benefits development as a business, rather than what benefits residents as people.

And the public rarely gets a seat at the table.

Instead, the public is invited to celebrate after decisions are already made.

The Transparency Issue: Public Trust Requires Public Information

Economic development decisions are not small.

They affect:

• housing availability

• school capacity

• traffic and infrastructure strain

• environmental impacts

• utility demand

• public revenue

• local tax burdens

If these decisions are made without transparency, the public is essentially being asked to finance and accept change without informed consent.

This matters because public trust requires accountability, and accountability requires access to information (U.S. Government Accountability Office, 2012).

Communities have a right to ask:

• What deals were made?

• Who benefits?

• What incentives were given?

• What did the community receive in return?

• What happens if the business leaves?

If those questions cannot be answered publicly, that is not leadership.

That is control.

Red Flags Communities Should Not Ignore

Here are common warning signs that an economic development council may be functioning as a private pipeline instead of a public resource:

1. The Same Names Keep Appearing

The same people hold seats across multiple boards, committees, and councils.

This concentrates influence and reduces diverse representation.

2. Decisions Are Made Behind Closed Doors

The public receives announcements, not participation.

3. Corporate Recruitment Is Prioritized Over Local Entrepreneurship

Millions are offered to attract outside corporations, while local entrepreneurs receive little to no direct support.

This is concerning because research consistently recognizes the importance of small business growth as a driver of local economic stability (U.S. Small Business Administration, 2023).

4. Transparency Requests Are Treated as Hostility

If asking questions is seen as “attacking leadership,” it signals that leadership is not prepared to justify its decisions.

Transparency is not an attack.

Transparency is a public requirement.

5. The Community Can’t See Measurable Results

If the organization cannot clearly show improvements in:

• job quality

• wage growth

• local ownership

• small business success

• community affordability

• infrastructure sustainability

…then the mission is not being fulfilled.

Facts & Statistics: Why Local Small Business Development Matters

Small businesses represent a significant share of employment and are widely recognized as critical to local economic resilience (U.S. Small Business Administration, 2023).

At the same time, research and policy analysis have shown that economic development incentives and subsidies are often difficult to evaluate and may fail to produce the long-term public benefits communities expect (Pew Charitable Trusts, 2019).

That means communities should not treat incentives as automatic progress.

They should treat incentives as a contract—one that must be transparent, measurable, and enforceable.

What Economic Development Councils Should Be Doing Instead

If an economic development council truly exists for public benefit, it should not operate like an exclusive network.

It should operate like a community builder.

That means investing in:

1. Local Entrepreneurship and Small Business Support

If your town can spend millions recruiting corporations, it can invest in local entrepreneurs.

Local business development creates long-term stability, because local owners do not leave when incentives expire.

2. Public Entrepreneurship Education

Economic development councils should partner with high schools and adult education programs to teach:

• how to start an LLC

• how taxes work for business owners

• how profit works

• how to avoid debt traps

• how to build business credit

• how to market locally

• how to reinvest and scale

Communities should not have “knowledge locked behind board membership.”

Knowledge should be shared.

3. Micro-Grants and Startup Funding

Micro-grants can change lives.

A few hundred dollars for licensing, equipment, or marketing can be the difference between stagnation and success.

4. Transparent Annual Reporting

If a council claims public benefit, it should publish annual reports that clearly explain:

• projects supported

• incentives provided

• measurable outcomes

• job creation numbers

• long-term projections

• public return on investment

Public service requires public accountability.

Real World Solution: The Public Benefit Test

Here is a simple accountability tool communities should require from any economic development council:

The Public Benefit Test

Every major project should publicly answer:

1. How does this benefit the average resident?

2. How does this strengthen local small businesses?

3. How does this increase local ownership and opportunity?

4. What is the long-term return for taxpayers?

5. Who profits financially from this deal?

6. What safeguards exist if the company leaves?

7. What will the community gain that cannot be taken away later?

If those questions cannot be answered clearly…

then the project is not community development.

It is marketing.

Call to Action: If You Represent the Community, Act Like It

If you sit on a committee or council that claims to represent public economic development, understand this:

You don’t get credit for your mission statement.

You get credit for your outcomes.

And if the only visible outcomes are private wealth, private contracts, and private influence…

then the community has every right to question the legitimacy of your mission.

If your organization exists for public good, you should welcome transparency.

Because honest leadership is not afraid of daylight.

Closing Reflection: The People Can Tell When They’re Being Played

Communities are waking up.

Citizens are asking questions.

Residents are connecting the dots.

And the truth is:

If you are truly building something for the public, transparency will not threaten you.

But if transparency threatens your credibility…

then the process was never about the public in the first place.

Economic development should not be a private pipeline for insiders.

It should be a public tool that strengthens families, creates opportunity, and builds long-term stability.

And if the public is asking questions…

that isn’t hostility.

That is accountability.

And accountability is what healthy towns are built on.

In solidarity,
Lyndsay LaBrier
Merchant Ship Collective | The Launch Dock

References

Internal Revenue Service. (2024). Charities and nonprofit organizations. https://www.irs.gov/charities-non-profits

Pew Charitable Trusts. (2019). How states are improving tax incentives for jobs and growth. https://www.pewtrusts.org/en/research-and-analysis/reports/2019/08/how-states-are-improving-tax-incentives-for-jobs-and-growth

U.S. Government Accountability Office. (2012). Tax expenditures: Background and evaluation criteria and questions. https://www.gao.gov/products/gao-13-167sp

U.S. Small Business Administration. (2023). Small business economic profile. https://www.sba.gov/document/report-small-business-economic-profile