Federal Reserve Governor Sarah Bloom Raskin gave a powerful keynote last Friday, March 22nd, in front of an enthusiastic crowd at the National Community Reinvestment Coalition’s (NCRC) annual conference. Her speech focused on the obstacles faced by low- and moderate-income Americans as they struggle to achieve a degree of financial security in their lives. Decreases in access to credit and increases in unemployment and contingency work (part-time employment without benefits), exacerbated by the Great Recession, still affect many, obscuring the current “recovery” in many households. In addition to recognizing the role of community-based organizations, local and federal government, and policymakers and regulators to tackle some of these increasingly systemic problems, Governor Raskin emphasized the role that private business must play — specifically, anchor institutions — to stabilize communities, create better jobs, and stimulate local economies.
Anchor institutions — most prominently, nonprofit hospitals and universities — are rooted in their communities because of their mission, invested capital and customer relationships. Together, they have expenditures of nearly $1 trillion annually, assets of more than $1 trillion, and employ more than 7.5 million people. (If you add in federal, state and local hospital employment, this number would be even greater.) Other anchors include local governments, community foundations, faith-based institutions, public utilities and cultural institutions, such as zoos and museums.
If just a portion of these institutions’ purchasing power were directed to improve and stabilize the disinvested communities in which many reside, the impact would be significant because of the increased economic multiplier effect of keeping resources within the community. Governor Raskin highlighted the Evergreen Cooperatives in Cleveland as an example of a project that is trying to capture as many of the community benefits as possible from a strategy of targeting anchor spending locally. By shifting their procurement locally, anchors such as Cleveland Clinic, University Hospitals and Case Western Reserve University are stabilizing the local neighborhood by helping create livable-wage jobs, ownership opportunities for local residents and supporting greenest-in-class businesses.
Cleveland Clinic and University Hospitals recognize the benefits of such an approach for their mission and bottom line. In addition to increasing the resiliency of their supply chain, improving the attractiveness of the surrounding community to customers and employees, and reducing the number of uninsured that impact their bottom line, an anchor mission is critical to a hospital’s mission of promoting health. Social, economic and environmental factors are responsible for at least 50 percent of premature death and poor quality of life in general. In contrast, poor access to healthcare accounts for only 10 percent. Health is inherently place-based and determined by factors outside a hospital’s walls. To truly impact health, hospitals have to rethink their strategies for health improvement by engaging their local communities.
Case Western Reserve University also understands the benefits of such a strategy. In addition to helping Case Western address sustainability goals in a more controlled manner, Case Western also recognizes that its students and employees want to be part of a community perceived as vibrant and safe. Additionally, a university’s mission to serve its community must equally extend beyond the edges of its campus. Community engagement can serve to repair strained relations that often exist between anchors and their surrounding communities and local governments.
For example, University of Pittsburgh Medical Center is currently being challenged by Pittsburgh Mayor Luke Ravenstahl over its tax-exempt status because of its lavish salaries, robust profits and limited community benefit. Although UPMC should be doing more in the community, removing its tax exemption will only serve to increase bottom-line incentives that are currently driving UPMC’s limited community engagement. A more proactive and beneficial strategy would be to leverage the full resources of this community institution to benefit the surrounding low-income neighborhoods and existing residents of the Hill District and elsewhere. This will take community and local government pressure, along with enlightened leadership at UPMC, but the benefits would be far greater than if Pittsburgh forced UPMC to pay taxes but lost the ability to leverage the other human and financial assets of this $10 billion health system with nearly 60,000 employees.
It should be noted the reinvestment by anchors in a community, while important, can have detrimental effects if not conducted in a way to improve the lives of current residents. Anchors can contribute to gentrification as they seek to revitalize neighborhoods, consequently pushing out existing residents and replacing the existing neighborhood instead of strengthening it. To prevent this from occurring, an anchor mission should include active community participation and a conscious strategy to preserve affordability (such as creating a community land trust) and build community wealth for area residents.
JOIN US! Community forum (including livestream) May 8th from 4-6pm at MIT to explore University Hospitals' innovative commitment to the anchor mission in Cleveland, Ohio