Measuring Anchor Impact: Q&A with The Democracy Collaborative’s Ted Howard

Written by Ted Howard, Democracy Collaborative

Organizations that are committed to operating in a particular community long-term have a direct interest in seeing that community thrive.  More and more, these “anchors” have begun to recognize their community ties and that they can do well while doing good.  In cities across the country, anchor organizations are implementing strategies to improve their communities’ economic and social conditions while also increasing their own competitiveness.

ICIC’s upcoming What Works Webinar  will help communities and their anchor organizations take the next step in developing engagement strategies.  The webinar will share metrics and best practices for measuring the returns of engagement strategies – both for the anchor and for the community.

ICIC’s Kim Zeuli will be joined on the webinar by UPenn’s Anthony Sorrentino and the Democracy Collaborative’s Ted Howard.  Below, we’ve asked Ted to share insights about his work with measuring anchor impact.

How do you define an anchor organization?

Anchor institutions are nonprofit or public institutions that are critical community assets and unlikely to relocate because of their mission, invested capital and customer relationships. The most prominent types of anchors are “eds and meds” (universities and hospitals), but others that are included in the mix include local governments, community foundations, and cultural and faith-based institutions.

Unlike many corporations that come and go from communities, anchors are rooted in place and tend to stay put. They are “sticky capital.” As a result, anchors have greater incentives to focus on the long-term vitality of the place in which they reside.

Hospitals and universities often draw the most focus because they have become important economic engines — often ranking among the largest nongovernmental employers — in their respective city. Together, hospitals and universities employ more than 9 million people and procure more than $500 billion annually.

In recent years, there has been much discussion about broadening the definition of anchors to include privately-held or stockholder-owned companies that may have been based in a community for a long time. My own view is that ownership matters. Ultimately, if the owners of these enterprises determine they can maximize shareholder value by relocating, then these firms often do move. While such companies can exhibit types of “anchor behavior” I do not personally think they qualify as true anchors.

What are one or two examples of anchor organizations you believe are transforming their communities? Tell us a bit about what they are doing.

University Hospitals

University Hospitals (UH) is a national leader in embracing what it means to be an anchor institution. The second largest employer in Northeast Ohio with more than 20,000 employees and $800 million in purchasing, it intentionally strives to leverage its economic impact to improve the local economy. With its $1.2 billion Vision 2010 initiative, it set voluntarily imposed procurement targets for local and minority- and women-owned businesses. Hiring a third-party organization to verify its numbers, it exceeded all of its targets, driving more than 92 percent of its spend into Northeast Ohio. UH is now working to adopt innovative practices across its broader supply chain that prioritizes supporting the local economy.

Most recently, UH helped use its purchasing power to persuade its supplier Owens & Minor to move its operations into Cleveland proper, and to bring jobs for Cleveland residents with it. It has also been a lead supporter through purchasing and community investment of the Evergreen Cooperatives, a network of environmentally friendly, employee-owned businesses linked to the purchasing power of area anchor institutions that hire from the historically disinvested neighborhood surrounding University Circle. UH has also piloted a new hiring initiative called “Step Up” to help residents in the surrounding neighborhoods find jobs at the hospital by leveling the playing field, employing 28 to date.

Syracuse University

Since 2004, Syracuse University has reimagined its relationship with the city for which it is named. In addition to using it purchasing power to increase support for minority- and women-owned purchasing and working to institutionalize community engagement in every school and college, the university has engaged in intentional partnerships with two neighborhoods in need of revitalization: the Near West Side and the South Side Initiative.

When the state of New York in 2007 agreed to forgive universities’ loans if the money were invested in an urban economic project, many institutions used the money to build new campus buildings. Then Chancellor Nancy Cantor instead used their $13.8 million in forgiven loans to seed a comprehensive neighborhood revitalization project that seeks to use the power of art, technology, and innovation, in keeping with neighborhood values and culture, to revitalize the ninth poorest census tract in the United States. Together this money has leveraged many millions more. On the Southside, the University has been a critical player in a project to bring a food cooperative to the city’s South Side, providing a $207,000 grant and allowing students and faculty to participate as part of their academic work. This project, which broke ground in May 2012, marks not just an attempt to eliminate a food desert, but also the first new construction in that neighborhood in the last 30 years!

Why is it important for anchor organizations to measure community impact when in many cases their impact is visible?

There are several reasons anchor institutions should measure community impact. The Democracy Collaborative developed the “Anchor Dashboard” precisely because so many anchors are now engaged in some sort of community and economic development locally. But how do they know if they are truly benefiting local residents, particularly those who are most disadvantaged, or if their initiatives are simply leading to unintended consequences that can be enormously harmful to communities, such as gentrification and the removal of historic populations? Having metrics and indicators to track the impact of their engagement is tremendously helpful in order to ensure that both the institution and the community are benefiting.

Another reason concerns the uneasy history many anchors have with their surrounding community. The trust between community and institution can only be restored through a sustained commitment to rebuilding that relationship in an equitable way. Measuring community impact and publicly reporting the results is one way an institution can demonstrate that it believes that the community matters and it will hold itself accountable to be a responsible citizen.

Third, measuring community impact allows for institutions to learn from each other by capturing the challenges and successes from their experiences. Although the data that is captured reflects the goals of the local community, measuring impact allows for a level of standardization across institutions that is important for realizing and advancing a comprehensive anchor mission.

Why haven’t more organizations implemented significant anchor strategies in their communities? What are the main barriers?

The main barrier is the internal culture of these large bureaucracies and being educated to the range of effective work and innovation that anchors are doing in other communities. Knowing what an institution can do that it is not yet doing is the first step. As University Hospital CEO Tom Zenty has said, this requires “rethinking how we do business” to maximize our impact both for the community and the bottom line. It is about clarifying that value proposition, especially since the long-term success of these institutions is very much interconnected with the long-term well being of their surrounding communities.

Anchor institutions are vast organizations. It is hard to change the culture overnight and it is difficult to build authentic and equitable relationships with your community quickly, too. All of this takes time. It requires midlevel management and frontline employees to understand the goals, as well as senior leadership to drive it. It is a sea change, but we are beginning to see it steadily building across the country.

Why should anchors and community development professionals join the upcoming What Works Webinar: Measuring the Shared Value of Anchor Community Engagement?

I believe that the long-term viability of hospitals, universities and other anchors is directly tied to the success of the communities in which they are rooted. Beyond the social and ethical concerns, simply as a business proposition anchors will be more successful as businesses (albeit largely nonprofit businesses) if they conduct themselves in ways that helps ensure safer, healthier and more resilient localities. For those in community development, anchor institutions represent an enormous economic asset that can be leveraged for community-benefit. In these challenging times when public resources for community development are increasingly constricted, anchor institutions nationally represent more than $1 trillion in economic activity (6% of the GDP!) that is rooted in our communities. Activating these resources in a way that is a win-win for both the institution and the community can be a powerful strategy for every community.

Ted Howard is the co-founder and Executive Director of The Democracy Collaborative. He is a national authority on anchor institution strategies who is regularly called upon by universities, hospitals, community foundations and City governments to assist them in creating anchor institution engagement strategies.