Leveraging Anchor Institutions for Local Job Creation and Wealth Building

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Leveraging Anchor Institutions for Local Job
Creation and Wealth Building

• Ted Howard
• The Democracy Collaborative
• June 16, 2011

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What is an Anchor Institution?

• Sticky capital that doesnt get up and leave
• Local economic engines
• Typically among the largest employers in most
  major metropolitan areas
• Purchase large amounts of goods services
• Vested interest in surrounding communities
• Typically non-profit with public mission not
  outside investor-driven
• Largely untapped potential

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Types of Anchor Institutions

• Universities
• Hospitals and nursing homes
• Museums
• Performing Arts Centers
• Other cultural institutions (theaters, zoos,
  etc.)
• Churches/Mosques/Temples/Synagogues
• Local philanthropy (community foundations, etc.)
• Municipal utilities
• City government

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Economic Impact of Anchor Institutions

• Employment
• 20 largest US cities universities and hospitals
  account for 35 percent of the workforce employed
  by the top 10 private employers
• Universities employ more than 2 million full-time
  workers and 1 million part-time workers
  Hospitals more than 5 million employees
• 5 of all US workforce
• Procurement
• Universities 400 billion annually
• Hospitals gt600 billion annually
• Endowments total close to 1 trillion
• 4,000 colleges and universities
• 6,000 hospitals

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One Measureof Local Economic Impact

• In 1996, the latest year for which data is
  available, the more than 1,900 urban-core
  universities spent 136 billion on salaries,
  goods, and servicesnine times greater than
  federal direct spending on urban business and job
  development in the same year.
• - Michael Porter, Harvard Business School,
  2002

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Anchor Local Procurement Hiring Strategies

• University of Pennsylvania (Philadelphia)
• A comprehensive effort targeted at West
  Philadelphia neighborhood
• Increased local purchasing from 1.3M to gt100M
• Spurring gt400M in new private investment
• 190 additional local jobs 6 million in local
  wages
• University of Southern California (L.A.)
• Targeted hiring in 3 zip codes near campus
• Health Alliance (Cincinnati, OH)
• Set and exceeded a 23 million target for
  purchasing from local minority suppliers
• Henry Ford Hospital (Detroit)
• Incentivized local hiring (7 of exec bonuses
  linked to these goals)
• "Live Local, Buy Local, Hire Local" initiative
  400,000 to date
• University Hospitals (Cleveland)
• Doubled its spend in Cleveland in last three
  years
• 91 of construction purchasing (1B project)
  sourced locally

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Anchor Endowment Local Investment Strategies
University City Use of Endowment Amount Clark W
orcester, MA Education/Community
building 7M Duke Durham, NC Latino credit
union finance 5M Harvard Cambridge,
MA Affordable housing loan fund 20M Ohio
State Columbus, OH Mixed-use development 28M Tr
inity Hartford, CT Education/Community
building 5.9M U. of Cincinnati Cincinnati,
OH Mixed use development 148.6M
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EVERGREEN COOPERATIVE INITIATIVE
Generate Wealth for Residents
Stabilize Neighborhoods
Create Jobs
BUILDING COMMUNITY WEALTH TO TRANSFORM CLEVELAND
AND CHANGE LIVES
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Issues we seek to address

• How do we create good quality jobs at a time of
  growing job dislocation and disinvestment in our
  urban areas?
• How do we anchor capital so that it doesnt get
  up and leave?
• How do we stop money from leaking out of our
  area?
• How do we turn the vision and promise of green
  jobs into real employment opportunities that are
  available to urban workers today?
• How do we stabilize and revitalize disinvested
  neighborhoods?

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ANCHOR PARTNERS
Cleveland Clinic
University Hospitals
4. Cleveland Museum of Art
Veterans Affairs Medical Center
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Our Strategy

• Focus anchor institution purchasing locally
• (big 3 represent 3 billion annually)
• 2. Create new community-based businesses
• 3. GREEN
• Link to expanding sectors of the economy
• (e.g., health, aging, energy, food,
  waste green technologies)
• Access to low-cost capital for local business
• development

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• Design Criteria
• For-profit
• Hire locally located in community
• Matched to anchor needs
• Living wage benefits
• Green
• Employee-owned (worker cooperatives)
• of profits to help start new businesses in the
  community (social mission)

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Goals

• Create new jobs for neighborhood residents
• 500 gt 5,000
• Anchor capital so it doesnt get up and leave
• Promote asset accumulation (65K/8 years)
• Stop from leaking out of NE Ohio
• Stabilize and revitalize neighborhoods
• Develop a replicable model for national impact

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Saturation Strategy

• Systematic attempt to shift procurement and
  investment among many local anchors for a
  municipal-wide job creation impact
• By way of example, in Cleveland
• 62 hospitals
• 200 nursing and retirement homes
• 20 universities and colleges
• 3 sports teams
• Municipal and county governments
• Cleveland Public Power utility
• Cleveland Port
• Rapid Transit Authority
• Cleveland Foundation (2 billion in assets) and
  other local philanthropy

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National Trends Among AnchorsThat Support
Localizing

• Growing recognition that fate of the institution
  is tied to health, safety, vitality of
  neighborhoods not just in principle, but as it
  effects anchor business model
• Institutional greening go local
• Post-Katrina security concerns
• PILOTs, Senator Grassley, etc.
• Mission-related endowment movement (both pressure
  and demonstrated MRI success)
• Health care costs of uninsured