Anchor Institutions
by Griffin Beronio
What’s the Problem?
Anchor institutions, such as hospitals, universities, and airports, are enterprises tied to their surrounding communities through place-based investments and, in most cases, an explicit mission to benefit society. While more mobile industries like finance and manufacturing often demand local communities engage in a race-to-the-bottom involving special tax or regulatory benefits, anchor institutions are tied to their communities in ways that boost local welfare.
Moreover, anchor institutions are ideal partners for high road development because they compete on innovation and human capital, rather than the price of commodity inputs and outputs. To succeed, they require infrastructure and amenities that only the public sector can provide, such as safe streets, a stable, well-trained workforce, high-quality transportation systems, high-value cultural institutions, affordable housing for employees, and reliable public services and utilities. Meanwhile, their local spending, investment, and hiring gives them outsized leverage in the effort to create flourishing local communities. For local leaders to champion anchor institutions and their myriad rewards, strong long-term partnerships must be developed to maximize the benefits for all stakeholders.
What are People Currently Doing?
There are three major areas where partnering with anchor institutions can drive equitable high road development: local employment, local procurement, and place making. These partnerships can be formalized through legislation, administrative rules, and Community Benefits Agreements (CBAs).
Most immediately, anchor institutions can partner with local governments, community groups, unions, and job training centers to set standards for job quality, safety and workplace equity standards for the whole community and demonstrate to other employers what’s possible. By working with existing workforce intermediaries, anchor institutions can leverage existing community resources to develop a high-quality local workforce that is culturally and technically ready to meet their needs — a win-win for local employers and local workers.
Meanwhile, anchor institutions’ procurement policies, especially establishing a “first source” policy that prioritizes procurement through local businesses, strengthens local economies by developing a network of local contractors and suppliers that are ready and able to provide the services and resources anchor institutions need. Local economies retain a higher percentage of those dollars spent at local businesses than those spent at non-local businesses, so when anchor institutions commit to procuring local businesses as the “first source” for goods and services, they are directly investing in their economy. Local governments and NGOs can partner with anchor institutions to set local purchasing goals and coordinate local businesses and contractors.
Anchor institutions also play a critical “place making” role in their local communities: they are major property developers and holders of real estate, require affordable housing for employees, and spinoff new ventures into the neighboring communities. Community organizations and local governments can work with anchor institutions to promote compact, mixed-use development and transit-oriented development in order to ensure that neighborhoods stay affordable and accessible.
To secure these benefits, local governments and community groups need to develop and maintain relationships with key stakeholders of anchor institutions, and to overcome cultural separation and lingering mistrust. Communities can incentivize cooperation through proactive grant making, favorable zoning policies or variances, coalition building and campaigns by community organizations and labor groups, and IRS community benefits requirements.
While agreements between municipal governments and anchor institutions can be finalized by drafting contracts, regulations, and local laws, community organizations can formalize their cooperation with anchor institutions through Community Benefit Agreements (CBAs). CBAs establish mutually agreeable terms for development that can be incorporated into new or ongoing projects. CBAs deliver benefits to both sides: anchor institutions and developers can use CBAs to secure community support, which helps stabilize projects and secure government subsidies and zoning approval. Communities gain a seat at the table that ensures their needs are heard and their goals are achieved.
Taking it to the Next Level
Cleveland serves as a shining model of what successful partnerships with anchor institutions can look like. Its Evergreen Cooperative Initiative is a series of joint ventures launched by the City of Cleveland, the Cleveland Foundation, the Democracy Collaborative, and three leading anchor institutions: Case Western Reserve University, The Cleveland Clinic, and University Hospitals. The Evergreen Cooperatives are a network of employee-owned cooperatives that use a single non-profit holding company, Evergreen Cooperative Corporation, as an umbrella. Evergreen Energy solutions is a regional leader in LED lighting, solar power, and energy efficiency. Green City Growers provides sustainably-grown produce to anchor institutions in Cleveland, as well as restaurants and the groceries and foodservice businesses in northeast Ohio on a year-round basis. Evergreen Cooperative Laundry provides energy-efficient laundry services to healthcare and hospitality companies in Ohio.
These cooperatives have taken advantage of their relationships with anchor institutions to bring green jobs at high wages and made them accessible to workers from some of Cleveland’s poorest neighborhoods. Further, because they are cooperatives, employees build ownership stakes that have real value: it is estimated that after working at an Evergreen Cooperative for eight years, the typical employee will possess an equity stake worth approximately $65,000. There is no doubt municipalities across the country can learn from this kind of shared wealth-building.
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