A Wealth Creation
Approach to Community
& Economic Development
Mann Library, Cornell University
April 17, 2013
Shanna Ratner
Yellow Wood Associates
A Presentation in 5 parts
1. Introduction to
2. Defining Wealth
3. WealthWorks Value Chains
4. Components of the Practice on the Ground
5. Opportunities for Engaged Research and Learning
Part 1: Introduction to
What is it?
WealthWorks is a bridge between Community
Development & Economic Development
Community Development
Community Development is about voice and
empowerment and uses organizing strategies to
achieve these outcomes. It tends to be issue-based.
Economic Development
Conventional economic development is about
creating jobs by:
● Attracting businesses
through tax breaks and
incentives and
sometimes
● Encouraging
entrepreneurs and
● Strengthening existing
businesses
Limitations
Neither one
● Takes a systems approach to development of
communities and economies
● Addresses the underlying dynamics of economic
exploitation by offering an alternative approach to
market connections
● Explicitly connects economic, social and
environmental conditions and opportunities
Community assets
Market demand
Lasting livelihoods
improving the livelihoods of low-wealth
people and communities by creating
wealth through market interactions that is
owned, controlled, and reinvested in place.
Where are we working on the ground?
WealthWorks Value Chain Grants in:
Central Appalachia
Energy efficient housing construction, energy
efficiency retrofits, renewables, food, forestry
Alabama Black Belt and Mid-South
Renewable energy, social impact investment,
forestry, food, Community Based Tourism (CBT)
Lower Rio Grande Valley region in Texas
Green housing/neighborhoods
Guiding Principles
#1 Wealth creation is demand driven.
#2 Wealth creation is intentionally inclusive.
#3 Wealth is tied to place by WealthWorks value
chains.
#4 Measurement is integrated into the entire
process as a tool for planning and adaptive
management.
#5 Wealth sticks in places through attention to
structures of ownership and control.
#6 The wealth creation approach is strategically
flexible while doing no harm.
Basic Assumptions (1)
●
●
●
Wealth, broadly defined, is the foundation for
prosperity.
Poor people and places will stay poor unless they
are connected to larger economies.
Poor places have assets which, if properly
developed, can contribute to larger regional
economies.
Basic Assumptions (2)
●
●
●
Those assets can be developed and linked to
markets in ways that create multiple forms of
wealth.
Structures exist and can be created that will
cause that wealth to stick in low-wealth areas
instead of being extracted.
Wealth that sticks in place leads to sustainable
livelihoods.
A systems approach
Allows us to
● View the world from multiple perspectives and
work with uncommon partners
● Develop systems of measurement that provide
feedback needed to make better decisions
throughout the system
● Pay attention to the positive and negative
interactions among the different forms of wealth
needed for sustainable livelihoods and well-being.
Part Two: Defining Wealth
Why is it important to define wealth
broadly? (1)
We need to be able to understand all the impacts of
development to figure out the best ways to use our
limited resources.
Ex:
Industrial recruitment
that generates jobs in
the near term but
undermines longer term
growth by damaging
natural amenities
Why is it important to define wealth
broadly? (2)
By defining wealth broadly, we introduce:
● a systems approach that recognizes the
interactions among different forms of wealth
● potential to develop policies and programs to
address poverty and improve livelihoods that build
on and build up the wealth of low-wealth people
and communities
● potential to aggregate resources from partners
with different value propositions
How is wealth typically defined?
How is wealth typically defined?
Wealth connotes power for those that have it.
Wealth is commonly understood as an attribute of
individuals and families or communities comprised of
“wealthy” individuals and families.
We often overlook the individual and shared wealth
the rest of us have. We talk about shared wealth as
“community wealth”
On what do we base an alternative
definition?
A recent ERS literature review found many scholars
defining and measuring broader conceptions of
wealth:
● Several Nobel prize laureates in economics
incorporated “human capital” into economic
theory and empirical work
● Knowledge and innovation as a type of capital are
at the center of modern economic growth theory
On what do we base an alternative
definition? (2)
● “Natural capital” is now an established concept in
ecological and natural resource economics
● There is a large and rapidly growing literature on
“social capital”
● “Community capitals” and “asset-based
development” are well-established concepts in
community development
On what do we base an alternative
definition? (3)
● The World Bank and other economists broaden
the measure of wealth towards “genuine savings”
or “comprehensive wealth”
● Similar frameworks have been developed in the
international development literature, including
“inclusive wealth”
What is wealth?
We define wealth broadly as the stock of all assets,
net of liabilities, that can contribute to the wellbeing of an individual or group.
As a stock of assets, wealth is durable and can be
accumulated or depleted through investment and
consumption decisions.
Wealth stocks generate flows of goods and services
(“income” or “earnings”) that contribute to wellbeing, though not all of these flows can be
monetized.
What isn’t wealth? (1)
Wealth is not:
● A flow of goods or services, such as income or
employment, though it contributes to such flows
and can be affected by such flows
● Resources beyond the control of the individual or
group whose wealth is being considered (if you
don’t own or control it, it is not part of your
wealth, though it may affect you)
What isn’t wealth? (2)
If we fail to understand the difference between
wealth and income, and between consumption and
investment, we will continue to spend resources in
ways that do not solve the underlying causes of
poverty.
What are the forms of Wealth that are
the focus of WealthWorks?
Intellectual
capital
Political
capital
Natural
capital
Individual
capital
Social
capital
Built
capital
Financial
capital
Creating wealth that sticks is rarely an intentional goal
of development even when we define wealth broadly.
Intention matters.
A Word about Cultural Capital
Culture, the values and identity rooted in people and
their places, provides the foundational context for all
community and economic development work.
Cultural capital influences the ways in which individuals
and groups access (or fail to access) other forms of
capital
– Accessing educational opportunities regardless of
your race or ethnicity
– Accessing community leadership regardless of your
age or newcomer status
– Accessing financial resources in a community free
of redlining
Cultural Capital in the
WealthWorks Framework
In the WealthWorks framework, cultural capital is built
or preserved investments in the other 7 forms of
capital – e.g., a valued cultural tradition such as quilting
in Gees Bend, AL is maintained and increased by
building the artistic skills of the next generation
Part 3: WealthWorks Value Chains
What do we mean by a
“WealthWorks Value Chain?”
A WealthWorks value chain is:
a business model based on
shared economic, social, and environmental values,
in which buyers, processors, producers and others
work together for mutual benefit
to create value
in response to market demand
while building community wealth.
A WealthWorks Value Chain…
●
Brings buyers, processors, producers and other
transactional partners together for mutual
benefit to create value in response to market
demand.
●
Includes direct engagement by supporting
players who may not be direct transactional
partners – educators, researchers, technical
assistance providers, financers, policy-makers,
etc.- but who are critical to creating and
maintaining wealth that sticks with poor people
and their communities.
WealthWorks Value Chains vs. Supply
Chains
Traditional Supply Chain
● Chain starts with producer
supply
● Measured by net income
produced
● Everyone is in it for him/herself
● Power determines who gets paid
how much for their role
● Participants try to pass on costs
to others within or outside of
chain
● Tries to influence policy to create
advantage and maximize shortterm income
WealthWorks Value Chain
● Chain starts with consumer
demand
● Measured by wealth
created/retained
● Everyone is in it together
● Intentionally balances mutual
benefit of all in chain
● All known costs are considered
and addressed
● Tries to influence policy to level
the playing field and maximize
long-term and widely shared
wealth
Generic WealthWorks Value Chain
What’s Different about a
WealthWorks Value Chain?
Begins with demand — Responds to demand at two
levels:
– Demand for the product/service
– Demand for secondary benefits created
Builds relationships — Information, self-interest,
opportunities for mutual benefit openly shared, managed
by a coordinator.
Focus on building wealth — Intentional focus drives
how the chain gets built, who benefits, and how impacts
are measured
Creates sustainable capacity — Potential for the social,
intellectual, and political capital built through this process
to be applied to other sectors over time
Four roles for low-wealth people in
WealthWorks value chains
● As producers/entrepreneurs adding value to a
good or service connected to equitable markets
● As employees of businesses engaged in producing
goods or services, or organizations supporting
WealthWorks value chains
● As consumers of higher quality/lower cost goods
or services produced by WealthWorks value chains
● As co-producers able to access goods or services
that increase productivity, and/or reduce or avoid
cost (e.g. energy efficiency, group certification)
Part 4: Components of
WealthWorks Practice on the
Ground
It takes Practice(s):
Connecting
Community
Assets
1. Identify an Opportunity Sector
and product.
To Market
Demand
2. Explore market potential and
anchor demand.
For Lasting
Livelihoods
3. Construct a WealthWorks
Value Chain and make wealth
stick.
Opportunities for Engaged Learning
and Research
1. Identifying Opportunity Sectors
and Sub-sectors
2. Exploring Demand-side
Relationships
3. Constructing WealthWorks value
chains
4. Making wealth stick
Characteristics of engaged learning
● Researcher as co-learner
● Researcher as facilitator of inquiry not director
● Research questions framed jointly
● Interpretation of findings is a shared endeavor
● Relationships matter and are subject to subject,
not subject to object
● Research adds value to practitioners instead of
extracting value from them
Possible roles for the University in
Engaged learning
● Direct contributors to multiple forms of wealth –
e.g. built, intellectual, individual, social, political,
financial, natural
● Academic Intermediary working with place-based
intermediaries – across disciplines
● Convener/facilitator/networker
● Co-Creator of framing measures and
measurement systems
Identifying Opportunity Sectors and
Sub-sectors
● Understanding trends in demand
● Creating baseline measures
● Identifying policy drivers
● Understanding underutilized resources and their
potential contributions to demand
● Framing investment opportunities
Exploring Demand-side Relationships
● Identifying demand side partners
● Understanding value propositions
● Framing inclusive business
● Building reciprocal relationships over time
● Developing agreements that make wealth stick
● Presenting investment opportunities
Constructing WealthWorks value chains
● Technical assistance
● Training & certifications
● Product development, Marketing
● Training, Best practices in building different forms
of wealth
● Identifying partners, making introductions
● Measuring baseline conditions and developing
information systems that add value
Making wealth stick
Research, design, and guide implementation of
innovative structures
for ownership and control of wealth such as:
● Cooperatives
● Community land trusts
● Community Benefits Agreements
● Municipal Land Trusts
● Balanced contracts that include shared risk
● And more...
Contact Information
For more information, contact
Shanna Ratner
802-524-6141
shanna@yellowwood.org
Or visit
www.ruralwealth.org
www.yellowwood.org/wealthcreation.aspx