How For-Profit Companies Can Act as Anchor Institutions

Anchor institutions are large or otherwise influential organizations that participate in community engagement activities and have relatively deep roots in (are unlikely to move from) their communities. In a new report, The New Anchors: Corporate Engagement with Lower-Income Communities in Smaller Cities, we explore the motivations and strategies of for-profit corporations’ engagement as anchor institutions with lower-income communities in four smaller cities:

• Amarillo, TX
• Fort Wayne, IN
• Richmond, VA
• Syracuse, NY

Using case studies, the report presents detailed findings about companies’ motivations and strategies in engaging with lower-income communities that are either home to or located near their facilities. This report suggests ways in which local practitioners and policymakers in government, philanthropic, and nonprofit organizations can encourage more for-profits to engage as anchor institutions with lower-income communities. The report also makes recommendations for for-profit companies themselves to deepen, expand, or begin initiatives to support lower-income communities.

Community engagement includes all activities that organizations intend to create benefits for their communities. Lower-income community engagement is community engagement intended to create benefits for lower-income communities. This definition encompasses a wide range of activities that include but are not limited to sponsoring public events, making charitable donations, funding or undertaking community and economic development initiatives, intentionally locating
a factory in a lower-income community and hiring local residents for middle-wage jobs there, and funding programs to feed children in need.

GENERAL OBSERVATIONS

• For-profit companies are often anchored in and engage with a broader geographic area than their nonprofit counterparts.
• The perceptions of anchor leadership shape community engagement activities, especially in lower-income communities.
• Banks, utilities, and companies that are privately held, larger, or have a headquarters in a region seem to be most engaged with lower-income communities in their regions.
• Companies whose CEOs or owners grew up in or have similarly deep ties to lower-income communities are often more engaged with lower-income communities.
• Very few of the anchors we interviewed formally track the impacts of their community engagement efforts and neither do their nonprofit, foundation, and government partners.

MOTIVATIONS

• Creating a pipeline of workers is a common motivation for companies.
• Banks, utilities, and some other business-to-consumer companies, such as retail stores, often care about the visibility of the community engagement initiatives that they support more than do other types of companies.
• The connection between community prosperity and long-term business success motivates some for-profit anchors to engage with lower-income communities.
• Identity is a distinct motivator for many for-profit anchors.

STRATEGIES

• For-profit anchors have different methods of choosing the subjects on which they engage with lower-income communities but usually shape their strategies based on leaders’ or employees’ perceptions about what is important.
• Some for-profit anchors leverage their subject-matter expertise to develop community engagement programs.
• Some for-profit anchors implement shared value strategies for lower-income community engagement.
• Some companies deliberately create new jobs in lower-income neighborhoods and hire local residents to fill them.
• For-profit anchors rarely collaborate with other for-profit anchors on community engagement efforts even though they believe that such collaboration would make those efforts more effective.

RECOMMENDATIONS

Both local policymakers and practitioners in government, philanthropic, and nonprofit organizations and for-profit companies themselves have a role in increasing companies’ engagement with lower-income communities.

Recommendations for for-profit companies

• Companies should recognize that they have a stake in the prosperity and health of lower-income communities where they do business and from which they draw workers. Acting on that awareness, they should undertake community engagement activities to benefit those communities.
• Companies should consider the perspectives and insights of key external stakeholders, including policymakers, practitioners, and other local experts, in designing and implementing their community engagement strategies.
• Companies should emphasize shared value approaches that align with their core business.
• Companies that are planning to expand should consider locating new facilities in lower-income neighborhoods and hiring their residents.
• Companies should look to partner with community organizations, nonprofits, and/or local government to engage with lower-income communities.

Recommendations for policymakers and practitioners in government, philanthropic, and nonprofit organizations seeking to encourage for-profit companies to engage with lower-income communities

• Citywide and regional nonprofits and governments should take the lead in encouraging for-profit companies to collaborate on lower-income community issues.
• Local policymakers and practitioners should begin by approaching the kinds of for-profit anchors that are most likely to be interested in engaging with lower-income communities.
• Local policymakers and practitioners should often start by encouraging for-profit companies to engage with workforce development in lower-income communities.
• Local policymakers and practitioners should appeal to individual for-profit companies differently depending on how the companies think about lower-income community engagement.
• Local governments, foundations, and other influential organizations should help incentivize and support collaboration among for-profits.
• Government, philanthropic, and nonprofit organizations that fund collaborative community engagement initiatives in which for-profit companies participate should require independent evaluations of the impacts of those initiatives.

Download the full report to read the complete findings and recommendations.

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