Daniel Stid: The Laboratories of Democracy Need New Infrastructure
Newsletter 412 - January 5, 2026
This essay was originally posted on Daniel Stid's Substack The Art of Association on December 12, 2025. We thought it was particularly important for many of the initiatives we have been reporting on here, so we are glad Daniel agreed to our request to reprint it. Thanks, Daniel!
For more than two decades, I have supported efforts to improve our government’s faltering capacity to act in the public interest. Surveying its current state of disrepair, the need to strengthen government has never been more pressing. That could be discouraging were it not for the wave of ideas, talent, organizations, and funding now mobilizing in civil society to tackle this problem.
One of the more subtle but critical challenges facing this revitalized government-reform community involves shifting our focus. The federal government will not be the vanguard for the next wave of reform. Instead, leadership must come from states and localities – the venerable laboratories of democracy in America. To realize their promise in our distributed system of government, one fit for a republic cast on a continental scale, we will need new forms of civic infrastructure.
A burgeoning field
Let’s start with the good news. There is increasingly ample capacity and a growing number of thinkers, doers, and funders in civil society dedicated to government reform – at the federal level anyway. Their ranks include dedicated nonprofits like the Partnership for Public Service and the Volcker Alliance along with rejuvenated stalwarts like the National Academy of Public Administration and the American Federation of Scientists.
Recent years have also brought fresh thinking across the political spectrum about what has gone wrong with government and how to fix it. On the center-left, telling accounts from Paul Sabin, Marc Dunkelman, Ezra Klein and Derek Thompson trace how liberal advocates and activists have inadvertently hamstrung government’s ability to act effectively.
For her part, Jennifer Pahlka has worked within and around this hobbled apparatus as Deputy Chief Technology Officer in the Obama Administration and as the founder and former executive director of Code for America. She has plenty to say as a result in her great book, Recoding America: Why Government is Failing in the Digital Age and How We Can Do Better and in her indispensable Eating Policy newsletter.
There has been similarly bracing work from the center and right. The Niskanen Center has helped lead the charge on the need to rebuild state capacity. The libertarian R Street Institute has focused for more than a decade on fostering “limited, but effective government.” On the new right, the Foundation for American Innovation is all in on governance questions (hosting, among others, the stellar Kevin Hawickhorst).
All these actors share a willingness to be candid about the causes of ineffective government and how to remedy them – even when that antagonizes their co-partisans. It is healthy for prominent voices on the left to point out how liberal efforts to constrain government have undermined its effectiveness and legitimacy. Likewise, it is constructive when respected libertarians and conservatives call for government to work better, rather than for shrinking it so that Grover Norquist can finally drown it in his bathtub.
Nonprofits working to improve government capacity have long suffered from a scarcity of philanthropy. Too many funders think they can bankroll intense inputs to government in the form of relentless advocacy without worrying about government’s ability to absorb that input – and then to make and implement policy in light of it. Regulars here will have heard my running lament about this penny-wise, pound-foolish approach (ICYMI, here is the most recent installment in the latest Stanford Social Innovation Review).
Fortunately, there is good news on this front too: the recent launch of the Recoding America Fund (RAF), “a six-year, $120 million philanthropic initiative aimed at reforming governments at both the federal and state levels.” Early backers include Arnold Ventures, Alta Futures, and the Packard Foundation. Jennifer Pahlka orchestrated the development of this pooled fund and chairs its board. The tens of millions in new philanthropy along with the experienced leaders and organizational partners the fund has already enlisted hold great promise, with more to come.
Two gatherings, one blind spot
I serve on RAF’s Advisory Council and recently attended its launch event in Washington. The room was full and buzzing; people were calling out to friends across the crowd, and conversations spilled onto a balcony overlooking the Capitol during a beautiful sunset. I caught up with colleagues from multiple nonprofits doing mission-critical state capacity work and left encouraged. I thought, this just might work!
On my Metro ride home, however, I sobered up thinking about another meeting I’d attended not long ago. A governor from one of the country’s largest states had convened a workshop on how to improve the administration he led and harness AI to support his policy agenda. I was among several outside advisers invited to a day-long meeting at the governor’s mansion.
Two things struck me. First, the governor was deeply engaged in improving government and deploying new technologies. Second, there was no representation from any in-state think tank or advocacy group that could help him carry out the reforms he was contemplating.
During a break, I asked an aide whether local government-reform groups had met with the governor earlier and this session was just for national advisers. The aide looked puzzled: What state-based groups? There weren’t any.
I compared notes with fellow participants on the train to the airport that evening. We were all struck by the magnitude of the improvements the governor envisioned—and by the total lack of local civil society infrastructure to support an elected leader seeking serious reform. And this was in one of the country’s largest state capitals.
To be clear, RAF plans to support states as well as the federal government. They will have broad-gauged leaders working at the state level. That is very welcome. But apart from their nascent team, every other person I spoke with at the Fund’s launch event is focused on the federal level. Therein lies the rub.
The Willie Sutton Rule, but for state capacity building
When asked why he robbed banks, Willie Sutton replied, “Because that’s where the money is!” Applying Sutton’s rule to government reform, state-capacity builders would do well to concentrate on state and local efforts—because that’s where the bulk of governing actually occurs.
For all our attention to Washington, most domestic policies – e.g., education, policing, housing, economic development, public health, transportation, etc. – are largely run by states and localities. As the Hoover Institution’s Paul Peterson notes, while the federal government underwrites roughly 25% of state and local government spending,
“Eighty-five percent of public employees work for state and local governments. Over 14 million are hired locally, 5 million by state governments, and less than 3 million by the government located in Washington, D.C.”
Moreover, strengthening federal capacity in the years ahead will be extraordinarily difficult. The decimation and demoralization that have already occurred across much of the federal civilian workforce in the Second Trump Administration will require years of recovery. Looming fiscal imbalances will also put intense pressure on the federal budget as Social Security and Medicare trust funds approach depletion in 2033-34.
Adding to the challenge, Americans retain a profound distrust of the federal government. Without a new public philosophy capable of sustaining governing majorities, federal policymaking will continue to oscillate between gridlock and partisan railroading. This does not bode well for thoughtful capacity building.
In these adverse conditions, the most feasible federal goals may be cutting through some of the accumulated red tape that both parties say they abhor and preventing further thoughtless harms to the existing workforce.
In contrast, at the local and state level, capacity builders can start from a place of relative trust and legitimacy. Pew Research finds that 3 out of 5 Americans hold a favorable view of their local government, and 1 out of 2 do of their state government—compared with just 1 out of 4 for the federal government.
Some dedicated civil society actors are already pushing against these open doors to improve government from the bottom up. Code for America does most of its work at these levels of government. Results for America and Third Sector Capital Partners help state and local government agencies implement evidence-based policies and programs. My friends and former partners in the Leading to Govern Network provide training and educational programs for pragmatic and solutions-oriented mayors, county commissioners, and state lawmakers. Among funders, Bloomberg Philanthropies has long supported government innovation in cities. And the Pew Trusts have likewise steadily worked to strengthen state governments.
These bright spots are encouraging. But they also just scratch the surface of the need and thus highlight how much more is required.
Revitalizing the laboratories of democracy
“It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” —Justice Louis D. Brandeis, dissenting, New State Ice Co. v. Liebmann (1932).
State and local governments need support from civil society actors to bolster their capacity to make and administer policy effectively. The relatively higher levels of trust in these institutions tend to reflect proximity as much as if not more than performance.
Ultimately, improvements must be embodied in state and local workforces, agency cultures, and results. But civil society can jump-start progress by supplying ideas, advocacy, funding, and implementation support. Reformers can partner with like-minded officials – and cultivate more of them – much as good-government groups did with the National Civil Service Reform League back in the Gilded Age.
In recent decades, left-leaning and right-leaning funders have supported competing state-level policy networks: the State Priorities Partnership and the State Policy Network, respectively. There is no equivalent 50-state network focused on nonpartisan or bipartisan improvements to state governance. But there could be.
Local government capacity is even more uneven. A few years ago, I was advising a funder that had invested millions in an elusive quest to improve the long-suffering mid-size city in which they were based. I encouraged them to invest in building up the city’s government. They responded that the poor quality and spotty staffing of the municipal agencies would make such an investment a fool’s errand. Perhaps so, but I couldn’t help but wonder what those same gaps entailed for all the grants they were making to nonprofits trying to strengthen the city’s failing schools and social services.
We also need augmented clearinghouses and cross-pollinators: entities that can identify, vet, and spread promising approaches from one state or city to others seeking good ideas. If our aim is less about lifting reforms up to the federal level and more about re-seeding them across the country, we will need many more Johnny Appleseeds than we have today.
In addition, this horizontal seeding requires field catalysts capable of convening and supporting agencies and civil society partners within and across states and localities.
Finally, we will need more philanthropists – especially state and regional funders and community foundations – to help underwrite this work in the places they care about.
To observers outside the state capacity field, it may seem odd that civil society should fund and support efforts to improve how government operates. But those working in the field know that without such external assistance, committed reformers inside government will struggle to overcome the inertia of the status quo.
Note: This post has surveyed a lot of terrain, and I may have overlooked key ideas and players. If so, please identify them and their work in a comment [on the original post page.] And if you think I’m too bearish on federal reform prospects, or too bullish on state and local opportunities, let me know. As always, I could be wrong!
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