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 parttime 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)
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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
University
City
Use of Endowment
Clark
Worcester, 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
Trinity
Hartford, CT
Education/Community building $5.9M
U. of Cincinnati
Cincinnati, OH
Mixed use development
“Engaged Scholarship, Reflective Practice”
Amount
$148.6M
EVERGREEN COOPERATIVE
INITIATIVE
Create Jobs
Generate Wealth for
Residents
Stabilize Neighborhoods
BUILDING COMMUNITY WEALTH TO
TRANSFORM CLEVELAND AND CHANGE LIVES
“Engaged Scholarship, Reflective Practice”
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 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?
“Engaged Scholarship, Reflective Practice”
ANCHOR PARTNERS
Cleveland Clinic
University Hospitals
Veteran’s Affairs Medical Center
4. Cleveland
Museum of Art
“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”
Goals
 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
“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:
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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
“Engaged Scholarship, Reflective Practice”