Wealth Building: Keeping It Local

“Redefining Rust Belt” is a four-part videoconference series that was conceived by the Cleveland Fed, in partnership with the Federal Reserve Banks of Chicago, Philadelphia, and Richmond. Each videoconference is an opportunity for community leaders in Baltimore, Cleveland, Detroit, and Philadelphia to talk with each other about their experiences developing and implementing strategies to attract new residents and new investment.

The first videoconference, which took place in June of last year, covered an array of strategies being deployed today to grow the four cities. Many topics and themes emerged from the introductory discussion, and the second videoconference delved into a blend of two topics — anchor institutions and the arts. This episode of the series featured Ted Howard, founder and Executive Director of the Democracy Collaborative at the University of Maryland and Steve Minter, fellow at the Cleveland Foundation. Ted introduced to the group assembled in four locations the Collaborative’s “Anchor Dashboard: Aligning Institutional Practice to Meet Low-Income Community Needs,” a paper that proposes a framework of metrics for anchor institutions to assess their impact on their surrounding communities.

The paper defines anchor institutions as “place-based entities such as universities and hospitals that are tied to their surroundings by mission, invested capital, or relationships to customers, employees, and vendors.” Anchor institution strategies are driven by missions to “address tenacious community challenges, and implemented to permeate an institution’s culture and change the way it does business.” Strategies to benefit communities involve redevelopment of physical places as well as people-based efforts to build wealth. Because the focus is on the surrounding community, particularly its low-income residents, there is an emphasis on keeping wealth local, for example, by institutions hiring and buying local. The University Circle initiative in Cleveland takes this a step further and features employee-owned cooperatives that employ neighborhood residents.

Anchor institution strategies seem to be particularly relevant in cities that enjoy the presence of so-called “eds and meds”—universities and medical centers. What about communities that lack such anchor institutions, particularly rural communities? The Cleveland Fed’s district includes a significant amount of rural Appalachian territory, much of it now impacted by natural gas extraction. How can local and regional economic development efforts successfully keep wealth local for the long term? I recently attended a forum convened by the Aspen Institute Community Strategies Group and the Delta Regional Authority in Little Rock, Arkansas, called “Rooting Wealth that Sticks: Emerging Partnerships for 21st Century Regional and Rural Prosperity.” It featured a wealth-building model, “WealthWorks,” that I would like to learn more about. From the examples given — a biofuel sector in the Arkansas Delta that brings together family farmers, town leaders, and university resources, and a group of African American farmers in Mississippi and Alabama working together to market, sell, and produce more to make farming pay off — the model, through its emphasis on creating partnerships and supply-demand chains, seems to be a way for communities to create their own anchors tapping underutilized community assets.

Would an anchor institution or “WealthWorks”approach work to further the prosperity of your community or region? We’d love to hear your thoughts on what works, what doesn’t, and why.