14 cities audited by NIK spent on promotion the total of PLN 370 million in the years 2011-2013 which made up from 0.2 to 1.3 percent of their budgets. Those funds were usually used to finance advertising campaigns in the media, cultural events, business campaigns, printed publications as well as sports events and others.
These amounts, though, do not reflect real promotion expenses because the municipalities often classified funds spent on promotion as expenses for culture, tourism or sport. It also happened that the money was used to finance initiatives that had nothing to do with advertising, e.g. publication of sympathy notes or property sales advertisements in the press. According to NIK legal provisions on the classification of promotion expenses are ambiguous and allow arbitrariness in accounting.
All of the audited cities developed strategic documents defining the promotion objectives and directions (city development or promotion strategies of various kinds, local development plans). Unfortunately, those strategies often remained on paper and were not properly implemented at all times. The main reason was that the documents were often too general and expected results were not defined there.
Only in three cities the objectives set in their promotion strategies were realistic, simple and definite. One could easily estimate their implementation stage, besides they were important for local communities and the deadlines to achieve them were feasible.
Inconsistency of the plans and problems with their execution could be seen in the division of funds. Some cities earmarked most funds (up to nearly 70 percent of yearly promotion budgets) from the ”advertising pool” for city promotion via sport, although theoretically cities should be promoted also in the fields of economy, culture and tourism.
In over a half of audited cities (8 in 14) provisions of the Public Finance Act and of the Public Procurement Act were not observed in contracting promotion services. In that way as much as 12.5 percent of funds designated for that purpose - PLN 46 million - was spent with a breach of the law or of public spending rules.
- in four cities public contracts for promotion services (totalling PLN 24 million) were awarded under single-source procedure, that is without competition. According to NIK there was no reason why that procedure should be used. The great majority of contracts awarded under single-source procedure was related to the city promotion through sport.
- in two cities contractors were selected (for PLN 5.5 million) with a breach of the fair trade rules. For instance, in Łódź tenders for sports clubs were simulated although it was clear in advance which club would receive the money and in what amount. The media revealed that case even before launching the procurement procedures. Besides, the terms of reference were agreed by the clubs and the city authorities. Also in Łódź the city authorities accepted a contractor’s offer as a result of which it was contracted a service worth PLN 18.3 thousand (to support a nationwide campaign). Proceedings in that case were dishonest and compliance with the fair trade rules was feigned. The contract was not included in the public procurement plan. Another Łódź case was related to a contract of PLN 24.6 thousand. It was also awarded at a contractor’s initiative. At the same time in Piotrków Trybunalski the city authorities introduced regulations which clearly provided that promotion services could be rendered exclusively by handball clubs, whereas there were 40 clubs representing other sports disciplines at that time.
- Six cities established the value of contracts dishonestly or did not submit documentation confirming relevant calculations (contracts for over PLN 32 million). For instance, in Katowice the value of two contracts for city promotion through sport was established based on the requests of local sports clubs that requested a contract for advertising services. In addition, the compensation of both teams was included in the financial plan of the city council even before they received the clubs’ requests in that matter. At the same time in Białystok an employee of the City Council put it straight that he did not know on what basis he estimated the contract value at PLN 350 thousand (related to the professional indoor sports games).
NIK also identified other breaches of public spending rules. For instance, Zabrze city rented from a handball club an 11 m2 sports hall (for PLN 1.25 million) for promotion purposes during the tournament of the Polish premier handball league despite the fact that the sports hall belonged to the city.
NIK underlines that the reliability of the evaluation of promotion activities by city officials is questionable because:
- firstly, the cities evaluated themselves,
- secondly, they did not always verify the quality of promotion services provided by contractors,
- thirdly, they wanted to know if the campaign results reflected their plans and were not interested in the opinions of the campaign addressees.
Of 157 completed promotion projects covered by the audit (totalling nearly PLN 135 million), for 50 of them no criteria monitoring the achievement of objectives were defined and no evaluation of their efficiency or effectiveness was conducted. Five cities, though, evaluated the effectiveness of promotion activities by means of objective criteria, such as e.g.: the number and quality of media materials related to the campaigns or the number of participants of a given event. The cities rarely used surveys to check the results of their promotion activities. Only in single cases the relation of financial outlays to achieved goals was taken into consideration. In most cases, though, it concerned campaigns financed from the EU funds (European Regional Development Fund), where the achievement of measurable benefits was one of the conditions for receiving financial aid.
In case of each auditee the promotion tasks were performed by organisational units remaining within the offices’ structure. In some cities part of tasks and competencies in that respect was transferred to municipal organisational units. Six city councils isolated organisational units to deal with promotion only, in others promotion tasks were combined with other types of tasks (e.g. related to sport, culture, information, tourism and international cooperation). The audited city councils hired the total of 271 employees responsible for promotion (19 persons on average).
According to NIK the following measures may streamline the city promotion:
- propagate objective methods of evaluating promotion activities,
- strengthen the control of contracting promotion activities to third parties,
- classify promotion expenses in a reliable manner,
- benefit from the EU funds in city promotion and use criteria (already applied to EU projects) also to create a similar model of accounting for initiatives financed from the city budget.
NIK has pointed to the following good practices:
- some municipalities make sure external objective criteria for evaluating the quality of promotion activities are in place (e.g. in Warsaw the New Year’s Eve concert organised by the city was summed up with data analysis related to viewership, attendance at the event and an external survey of Warsaw inhabitants),
- in some municipalities promotion strategies are consistent with the municipality development objectives adopted by the local government (e.g. in Gdańsk one of strategic objectives was to strengthen the role of Gdańsk as the Amber Capital of the World. Promotion campaigns were designed in a manner reflecting that objective).
