by ReThink Local Board Member Chris Wood
Thriving communities don’t just happen, there has to be something at work within them that brings about that sense of vibrancy and enthusiasm. This shows up in various ways not the least of which is that the economic actors are informed by a triple bottom line approach which embodies social, economic and environmental factors. Running a business with these factors in mind goes well beyond the viability of the particular business since it works its way into the fabric of the community.
Within any community there will be a variety of economic actors. Some will be young and finding their way, entrepreneurs or start-ups; others will have been around for a while, possibly for many years and will be pillars of the community. Into the latter category fall the Anchors. What distinguishes them is that they play an important part in the life of the community.
Essentially they are place-based institutions that are firmly rooted in their locales and generally take the form of hospitals and health care providers, universities, local governments and utilities. Typically they are nonprofit or public (and thus have a social or charitable purpose). In economic terms they can be described as ‘sticky capital’. Unlike for-profit corporations that may come and go from our communities, and which tend to export wealth to major capital centers, anchor institutions are rooted in place. They have a vested self-interest in helping to ensure that the communities in which they are based are safe, vibrant, healthy, and stable.
Anchor institutions possess considerable human and economic resources that can be leveraged for local development, particularly to improve the well-being of low-income children, families, and neighborhoods that are often proximate to their campuses. U.S. universities, for instance, educate 21 million students annually and employ 3.8 million people. Their annual purchasing power equates to approximately 3% of U.S. Gross Domestic Product (GDP), and they have endowments in excess of $516 billion. The health care industry is even larger: more than 5.5 million people are employed by hospitals and health systems. Health care economic activity exceeds $780 billion annually, and the sector’s investment portfolios total an estimated $500 billion. Hospitals and universities collectively employ about 6% of the U.S. labor force and represent more than 7% of GDP.
In practical terms Anchors provide a stable source of employment and are relied upon to provide a steady stream of goods and services of a standard upon which the community has come to rely. Additionally, these institutions can play important additional roles in directing their purchasing policies to favor local firms as well as making investments locally. Shifting the emphasis to what is known as import substitution, sourcing locally what was previously imported from outside the area, can have a significant impact upon the well-being of the community at many levels. It serves to reduce inequality, improve social mobility, increase community stability and, importantly, works to improve the quality of civic life.
By way of example, according to the American Hospital Association, hospitals spend more than $340 billion each year on goods and services. Redirecting even a small portion of that spending could have a tremendous impact on helping to restore local economic vitality, providing jobs for hard-to-employ people, and rebuilding urban fabrics and rural value chains.
Anchor institutions may not fully appreciate the role that they can play in building community. Indeed they may not have the necessary policies in place to give effect to that role where it is recognized. That is where we, Re>Think Local, believe we have a role to play. We have embarked upon an exciting initiative to develop one or more Social Enterprises and 2016 will see us reach out into the community and the Anchor institutions to progress this community-building effort.