“Engaged Scholarship, Reflective Practice” Leveraging Anchor Institutions for Local Job Creation and Wealth Building Ted Howard The Democracy Collaborative June 16, 2011

“Engaged Scholarship, Reflective Practice” What is an Anchor Institution?  Sticky capital” that doesn’t 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

“Engaged Scholarship, Reflective Practice” 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

“Engaged Scholarship, Reflective Practice” 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: >$600 billion annually  Endowments total close to $1 trillion  4,000+ colleges and universities  6,000+ hospitals

“Engaged Scholarship, Reflective Practice” One Measure of 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 services—nine times greater than federal direct spending on urban business and job development in the same year. - Michael Porter, Harvard Business School, 2002

“Engaged Scholarship, Reflective Practice” Anchor Local Procurement & Hiring Strategies  University of Pennsylvania (Philadelphia)  A comprehensive effort targeted at West Philadelphia neighborhood  Increased local purchasing from $1.3M to >$100M  Spurring >$400M 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

“Engaged Scholarship, Reflective Practice” Anchor Endowment Local Investment Strategies UniversityCityUse of EndowmentAmount ClarkWorcester, MAEducation/Community building$7M DukeDurham, NCLatino credit union finance$5M HarvardCambridge, MAAffordable housing loan fund$20M Ohio StateColumbus, OHMixed-use development$28M TrinityHartford, CTEducation/Community building$5.9M U. of CincinnatiCincinnati, OHMixed use development$148.6M

“Engaged Scholarship, Reflective Practice” BUILDING COMMUNITY WEALTH TO TRANSFORM CLEVELAND AND CHANGE LIVES EVERGREEN COOPERATIVE INITIATIVE Create Jobs Generate Wealth for Residents Stabilize Neighborhoods

“Engaged Scholarship, Reflective Practice” 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 doesn’t 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? Issues we seek to address:

“Engaged Scholarship, Reflective Practice” Cleveland Clinic 4. Cleveland Museum of ArtVeteran’s Affairs Medical Center University Hospitals ANCHOR PARTNERS

“Engaged Scholarship, Reflective Practice” Our Strategy 1.Focus anchor institution purchasing locally (big 3 represent $3 billion annually) 2.Create new community-based businesses 3. GREEN 4.Link to expanding sectors of the economy (e.g., health, aging, energy, food, waste & green technologies) 5.Access to low-cost capital for local business development

“Engaged Scholarship, Reflective Practice” 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)

“Engaged Scholarship, Reflective Practice”  Create new jobs for neighborhood residents  500 > 5,000  Anchor capital so it doesn’t 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 Goals

“Engaged Scholarship, Reflective Practice” 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

“Engaged Scholarship, Reflective Practice” National Trends Among Anchors That 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