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Using Anchor Institutions to Create Sustainable Communities–The Cleveland Experience

Scott Cooney | Friday April 30th, 2010 | 0 Comments

At the Social Enterprise World Forum in San Francisco last week, attendees were treated to insights and resources from successful social enterprises around the country.  One of the most interesting workshops I attended was put on by the Democracy Collaborative, a research and consulting firm that is helping Cleveland, Ohio, recover from significant job losses from rust-belt-esque loss of manufacturing jobs.

Their story of ongoing success, which is building significant momentum in reshaping Cleveland’s economy, holds many lessons for other municipalities looking to generate green jobs and build community wealth that is what the Democracy Collaborative referred to as “sticky capital”:  money that is likely to be recycled into the community and stick around a while, as opposed to a corporation which can choose to relocate its offices and headquarters pretty much anytime it feels like it.  The former has obvious benefits to the community, and is one of the keys to the success of the entire endeavor.

Cleveland has taken a fairly substantial tumble as an economic powerhouse.  At one point, the city boasted the second-most number of Fortune 500 companies in a city (New York City was #1).  Now there is one left.  As part of the rust belt, significant job losses in manufacturing have left a swath of workers underemployed or working in low paying jobs.

While other initiatives in Cleveland have helped launch businesses, the Democracy Collaborative’s initiative has resulted in unprecedented community support for green jobs, including business, NGOs and governmental offices.

The plan started with buy-in from anchor institutions.  These are major economic players that can’t get up and leave like a big corporation can.  Think University, Hospital, and Non-profit.  Typically they may be the largest employers in many metro areas.  They have a vested interest in surrounding communities.  This group represented a large, untapped potential for Cleveland.  Together, University Hospital, Case Western Reserve University, and several other anchor institutions represented $1 trillion per year in spending, and 5% of all employees in the area.

By getting buy-in from these groups, substantial local and green benefits are achieved.  For instance, University Hospital, which spends $800 million per year on medical supplies, has started transitioning to a locals-first procurement policy.  It has more than doubled its local procurement, to $240 million last year, with a goal to quadruple its baseline spending, to $400 million, in the local community by the end of 2010.

The benefits to the local community are obvious.  But why would an anchor institutions buy into a program like this?  The Democracy Collaborative found that there were several reasons.  First, it helped the area maintain a more qualified worker base, helping reduce turnover.  Second, it helped foster the community on which the anchor institution depends for a lot of intangibles, such as local crime rates.  And perhaps most importantly, it helps to ensure a long term local demand for goods and services which those anchor institutions will potentially rely on as a customer base and for long-term partnerships with local municipalities and NGOs.

Scott Cooney is the author of Build a Green Small Business (McGraw-Hill), and is covering the Social Enterprise Summit for Triple Pundit.

Follow Scott on Twitter:  @scottcooney


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