Since Smart Incentives started in 2013, state and local economic development organizations have significantly improved their ability to track incentive program performance and monitor compliance with the terms of incentive deals. 

During our first year, we regularly wrote about data shortcomings identified by auditors and evaluators trying to assess the effectiveness of economic development incentive programs. Economic development organizations often lacked the internal systems and resources to track the performance of incentivized projects. For example, one state assessment we reviewed that year criticized the lack of consistent, quality reporting on projects. This year, a similar evaluation in that same state described how it used program-specific data required by the state economic development organization to calculate incentive costs, benefits, and outcomes. Our experience suggests that this is not an isolated instance. 

What is incentive compliance?

Compliance is one of the four key elements of the incentive process in our 4×4 framework. It is an essential part of good incentive management. Compliance enables economic development organizations to see the results of their efforts and to provide transparency and accountability for incentive programs.

Smart incentive use is about supporting investments that create benefits over time for people, businesses and places. Incentive compliance is how we track and report on those benefits. 

Compliance empowers economic development leaders

Incentive compliance is not just a bureaucratic exercise. It empowers economic development leaders in several ways.

  1. Confident Reporting. Leaders can confidently report program outcomes to elected officials and other stakeholders. This transparency fosters trust and shows that incentives are being managed effectively.
  2. Informed Decision-Making. Compliance data equips leaders with the information they need to make informed decisions about incentive policies and programs. They can fine-tune strategies and allocate resources more efficiently.
  3. Engaging Stakeholders. Having compliance data in hand allows leaders to engage in meaningful conversations about incentives with external stakeholders, including elected leaders, advocacy organizations, and community groups.


Better compliance data means more accountability. Compliance work can increase trust in the process, inform and improve policy conversations around incentives, and put incentive programs on a better footing for success on behalf of the state.