University of Toronto Scarborough, Toronto, ON Canada. Credit: Nick Kozak
Anchor Institutions
NEVENA DRAGICEVIC
PurposeCommissioned by the Atkinson Foundation, this report from the Mowat Centre is intended to support informed discussion and guide decision-making in the emerging field of community wealth-building. The report is part of a research series, The Prosperous Province: Strategies for Community Wealth.
The Mowat Centre undertook the study as part of its commitment to better understand and communicate trends and innovations in economic development, especially those that promote inclusive growth.
The Atkinson Foundation is supporting the study because of its commitment to evidence-based public discourse on issues related to social and economic justice.
Foreword“It’s time to challenge how Ontarians think about prosperity – who’s responsible for creating it and who benefits from it.”
“It’s time to challenge how Ontarians think about prosperity – who’s responsible for creating it and who benefits from it.”
It’s time to challenge how Ontarians think about prosperity – who’s responsible for creating it and who benefits from it. Over the next ten years, the Province of Ontario will invest $130 billion in public infrastructure and will continue to spend billions annually on goods and services to fulfill its mandate.
It’s time to use this considerable economic power even more deliberately and strategically to address income and wealth inequality. If the Ontario government does this, we can expect to derive significantly more value from public investments and expenditures by 2025. We can also expect other organizations, businesses and even consumers to follow the government’s example.
It’s time, therefore, to engage a much broader base of people to lead Ontario in this direction. Only political power can unleash this kind of economic power. By first raising expectations and then voices, this kind of public policy reform is possible. The passage of Bill 6: Infrastructure for Jobs and Prosperity Act in the spring is proof of this fact and a sign of progress.
“There’s a growing movement of people – inside and outside government – who aren’t content to watch fissures open up and leave our province deeply divided along race, gender and income lines.”
“There’s a growing movement of people – inside and outside government – who aren’t content to watch fissures open up and leave our province deeply divided along race, gender and income lines.”
There’s a growing movement of people – inside and outside government – who aren’t content to watch fissures open up and leave our province deeply divided along race, gender and income lines. They know that these conditions are bad for investment, bad for business, bad for the quality of community life, and unacceptable for their children and grandchildren.
Many of us don’t think of ourselves as anti-poverty activists. We manage public funds at various levels of government, in universities, colleges and hospitals, and in other nonprofit institutions. A few of us lead for-profit enterprises.
What we have in common is that our organizations and businesses are unlikely to ever become unmoored from the neighbourhoods and communities in which they were established. That’s why they’re called “anchor institutions.” We have economic clout – and the responsibility to reduce poverty and the potential to build community wealth that comes with it.
Maybe like you, we think it’s time to give more oxygen to solutions than problems. So, we’ve been looking around the world for others who are experimenting with strategies and mechanisms to create more decent work and share prosperity.
In places like Cleveland and Glasgow, we’ve found people who are busy negotiating Community Benefits Agreements with developers and officials responsible for public infrastructure projects. These enterprising leaders are working on better procurement strategies, workforce development hubs, and collaborations with organizations that engage, train and support workers in low-income communities. They’re mounting “buy local” campaigns and promoting worker-owned businesses and co-ops.
“We’re seeing signs of real progress in these cities, and they’ve helped us see the potential for progress in ours.”
“We’re seeing signs of real progress in these cities, and they’ve helped us see the potential for progress in ours.”
We’re seeing signs of real progress in these cities, and they’ve helped us see the potential for progress in ours. That’s why the Atkinson Foundation commissioned a series on community wealth building strategies from the Mowat Centre, starting with a paper on anchor institutions and a second one on community benefits agreements. Think of this information as briefing notes for an important mission – one that sets your sights higher than your institutional mission and on the day when a province is known as prosperous because its economy is inclusive.
This is not a new mission even though the way we’re thinking about it is new. Consider health care, employment insurance and pensions along with greater gender, racial and marriage equality. In each case, people successfully challenged the belief that inequality is a natural condition with a clear political choice arising from a progressive vision for the country. They had a shared ambition that was, in the end, stronger than cynicism, private interests and institutional inertia.
The Atkinson Foundation’s ambition is anchored in tough challenges and choices like those faced in the last century. Joseph Atkinson was a frequent media commentator during the public infrastructure boom that gave future generations the Bloor Street Viaduct and a modern water sanitation system among other civic improvements. In his op-eds for the Toronto Star, Mr. Atkinson advocated for Ontario’s young cities and towns as the best “spot” for investment. He encouraged investors to place their bets locally for the biggest returns.
Perhaps the first choice we’re asked to make is whether or not we’ll stand with those whose investments demonstrated that their generation cared about the next. We hope you’ll choose to join us in the continuing pursuit of an equitable, inclusive and prosperous Ontario.
COLETTE MURPHY
Atkinson Foundation
August 2015
1
Introduction
Anchor Institution
and Anchor Missions:
A Definition
Anchor institutions are large public or nonprofit organizations – such as hospitals, universities or municipal governments – that are rooted in community. An anchor mission is the process of deliberately deploying the institution’s long-term, place-based economic power to strengthen a local community, especially neighbourhoods where people facing historic and other barriers to economic opportunity live.
and Anchor Missions:
A Definition
By every standard measure, Ontario is a prosperous province. As recently as 2012, Ontarians experienced the highest increase in average household wealth in Canada – eight per cent over the previous year. Households in the Toronto Region fared even better, growing their wealth more than nine per cent to achieve an average household net worth of $617,000.1 A majority of Ontario’s 13.6 million residents enjoy an enviable standard of living.
This is not the reality, however, for a sizeable minority of Ontarians who are disproportionately young, new to Canada, and from racialized communities.2 Access to opportunity and wealth is far from equitable. Youth unemployment in Toronto is nearly three times the average regional rate. Jobs are increasingly precarious, while the housing market has been designated as "severely unaffordable."3 If nothing changes, the share of low and very low-income neighbourhoods in the city is expected to climb to 60 per cent by 2025.4
Ontario and Toronto are not exceptions. In most parts of the world, income inequality is growing, while access to opportunity is shrinking.5 Ongoing and significant changes in the structure of the Ontario, Canadian and global economies mean that more people are falling behind even as global wealth increases.
Community wealth building is an encouraging response to this situation. This approach builds local assets and leverages them to create a greater supply of decent work and other economic opportunities.6
Anchor Institution
and Anchor Missions:
A Definition
Anchor institutions are large public or nonprofit organizations – such as hospitals, universities or municipal governments – that are rooted in community. An anchor mission is the process of deliberately deploying the institution’s long-term, place-based economic power to strengthen a local community, especially neighbourhoods where people facing historic and other barriers to economic opportunity live.
and Anchor Missions:
A Definition
Anchor institutions – large public or nonprofit institutions rooted in a specific place, such as hospitals, universities or municipal governments – have significant roles to play in community wealth building. They are among a region's biggest employers and purchasers of goods and services. Anchors also tend to have significant fixed assets, endowments and real estate holdings that can be used to drive economic development – economic power that translates into a specific “anchor mission.”
“At a time of increased public debt and renewed promises to tackle poverty in Ontario, anchor strategies offer an opportunity to leverage existing public funds and assets to address these ambitious objectives.”
“At a time of increased public debt and renewed promises to tackle poverty in Ontario, anchor strategies offer an opportunity to leverage existing public funds and assets to address these ambitious objectives.”
An anchor mission is the deliberate and strategic use of resources to benefit communities, especially low- and moderate-income neighbourhoods or historically disadvantaged groups. It is the conscious anchoring of capital, jobs and other opportunities locally. When pursued in tandem with their core missions (e.g. education, health care), anchor institutions have the potential to make their communities stronger by every measure.
This report is timely for a number of reasons. At a time of increased public debt and renewed promises to tackle poverty in Ontario, anchor strategies offer an opportunity to leverage existing public funds and assets to address these ambitious objectives.
This research also supports anchor institutions in the Toronto Region and across Ontario that are considering the community wealth building approach, as well as of those already grappling with challenges arising from their new institutional efforts. Given the number of successful anchor strategies that have emerged in the U.S. over the last decade, the time is right to examine best practices and apply lessons learned to Ontario.
This paper begins by offering a more detailed explanation of anchor institutions and strategies ('anchor mission' and 'anchor strategies' are used interchangeably throughout the report), followed by examples of well-established anchor missions in the U.S. It then looks at the current landscape and economic potential of anchor strategies in Ontario and analyzes five key issue areas and enabling strategies to overcome challenges. The conclusion describes next steps in anchor strategy development in the Toronto Region and Ontario.
“In Ontario, universities and hospitals alone spend $9.9 billion procuring goods and services annually. Given this scale of spending, it is evident procurement is among the most important levers anchors have to advance community wealth.”
“In Ontario, universities and hospitals alone spend $9.9 billion procuring goods and services annually. Given this scale of spending, it is evident procurement is among the most important levers anchors have to advance community wealth.”
While anchors can deploy different community wealth building tactics, much of this paper is focused on the issues and opportunities associated with how and where institutions spend their money. In Ontario, universities and hospitals alone spend $9.9 billion procuring goods and services annually. Given this scale of spending, it is evident procurement is among the most important levers anchors have to advance community wealth.
Additionally, though communities, social purpose organizations, advocacy groups, foundations, research institutes, private businesses and others all have important roles to play in anchor strategy development, much of the initiative and groundwork must necessarily come from the anchors themselves. For this reason, the report focuses on challenges and opportunities facing anchor institutions.
A Note on MethodologyThis research is informed by interviews conducted with 17 senior executives at 13 different organizations, including anchor institutions, foundations, research centres and community organizations in the U.S., Canada and the U.K.
2
Anchoring Institutions and Rooting Opportunities
Most large public or nonprofit organizations with significant spending and employment power can be considered anchor institutions. Because such institutions are unlikely to leave their communities in search of opportunity elsewhere, their economic, human and intellectual resources remain rooted or 'anchored' in place.
Hospitals, higher-education institutions and municipal government are some of the most common examples of anchor institutions, but museums, libraries, schools and foundations act as anchors as well.
“Anchor mission building” is the process of deliberately deploying long-term, place-based economic power to strengthen a local community, especially one that is low income or experiencing barriers to economic opportunities. An anchor mission consciously links institutional objectives to the health and wellbeing of surrounding communities.
A number of strategies that leverage institutional assets can be undertaken as part of anchor mission building. Common anchor strategies include:7
- Directing a greater percentage of purchasing power toward local vendors.
- Hiring a greater percentage of the workforce locally.
- Providing workforce training for people needing assistance in the community.
- Incubating the development of new businesses, including social enterprises as well as nonprofits.
- Leveraging real estate development to promote local retail, employer-assisted housing, and community land trusts.
- Using pension and endowment funds to invest in local job creation strategies and to provide community venture capital for nonprofits, entrepreneurs, and employee-owned firms.
Municipal governments can further leverage planning and tax-levying powers as part of their anchor missions. Naturally, as more anchors adopt these strategies, coordinating efforts among anchors and other organizations participating in local economic development offers the potential for greater returns and community benefit.
The idea that anchors should play an active role in community development is not new. However, support for anchor mission building has grown over the last decade in response to challenges brought about by global economic restructuring and the reverberating effects of the 2008 recession.
These challenges – particularly the increased mobility of capital and labour – have left many North American urban centres in a state of decline. Stories of factory closings and entire towns left reeling from sudden massive job losses have been all too common in the recent past.
In contrast, anchor institutions are a source of ‘sticky capital’. Unlike corporations, anchors inherently provide increased job security and greater stability for local businesses contracting with them by virtue of being rooted in the community. Accordingly, one of the key issues anchor missions address today is stabilizing communities in the face of growing economic uncertainty and the flight of capital.
3
Anchor Missions in Action
The past decade has seen an explosion of learning, experimentation and innovation in anchor mission building across the U.S. New strategies are continually being devised and tested, while a number of mature models have tracked outcomes, best practices and lessons for years.
The most successful of these experiments have led anchors to a new way of expressing themselves institutionally, focusing the breadth of their intellectual and business practices to benefit local areas. Three cases illustrate the scope of initiatives underway:
4
Potential of Anchor Strategies in Ontario
Commonly, anchor institutions view themselves as serving a core mission such as furthering education or promoting public health. This mission gives them their identity as well as their purpose. It drives organizational behaviour and decision-making at all levels and is held in tension with budgetary realities.
Often, however, anchors also provide the most significant employment and career opportunities or act as the single biggest purchaser of goods and services in a city or region. As the cases throughout this paper suggest, 'local economic engine' is an identity that many anchors have embraced, especially those in the US. Leading anchors are expanding their priorities to include community wealth building strategies as part of local, sustainable and inclusive economic development.
“In 2011, universities in Ontario spent $4.2 billion annually contracting goods and services, including construction, while hospitals spent $5.7 billion on goods and services alone.”
“In 2011, universities in Ontario spent $4.2 billion annually contracting goods and services, including construction, while hospitals spent $5.7 billion on goods and services alone.”
The potential of such a shift in purpose is clear. In 2011, universities in Ontario spent $4.2 billion annually contracting goods and services, including construction, while hospitals spent $5.7 billion on goods and services alone.12 Toronto’s municipal government, meanwhile, spends on average $1.5 billion annually on procurement.13 Diverting just two per cent of these expenditures to local small business and community development efforts could inject almost $230 million into local communities.14
As an employer, the broader public sector is responsible for 300,000 jobs in health and social services and nearly as many in elementary and secondary schools. Another 133,000 people work at colleges and universities, while the Ontario Public Service and municipal governments together employ 180,000 individuals.15 Combined, these anchors account for roughly 13 per cent of the provincial workforce.16
Importantly, jobs at these institutions tend to offer decent work – greater security and better wages and benefits at a time when employment in Ontario is becoming more precarious. While job precarity has been shown to affect all income levels, people earning lower incomes and working precarious jobs are inherently worse off.17
Greater efforts to bridge those in low-income and historically disadvantaged communities to jobs at anchor institutions could move many people into more secure work and help stabilize households. Such efforts have been successfully undertaken at a number of institutions including University Hospitals in Cleveland, which connects local low-income residents to entry-level positions at the hospital through the Step Up to UH program. Besides linking potential candidates to job openings, the program also delivers soft skills training and other customized supports. So far, Step Up has achieved a 98 per cent job retention rate and has helped the hospital reduce hiring process time.18
As these numbers and examples illustrate, anchor institutions represent a great source of (mostly) untapped capital and human resources for community wealth building. Deliberately directing just a fraction of this vast economic potential to such efforts could dramatically improve the circumstances of many struggling Ontario households.
5
Anchor Strategies in the Toronto Region
The current landscape of anchor strategies in the Toronto Region is marked by experimentation and growing excitement about the potential of this work to have a positive social and economic impact on communities. While this paper takes into account the experiences of only a few institutions with active anchor strategies, our interviews revealed that similar ideas are taking shape at other anchor, advocacy and community organizations.
The cases that follow highlight the diversity in current anchor strategies and their trajectories:
- At Ryerson University, a desire to improve food quality led to a new locally-driven supply chain.
- At the City of Toronto, a series of smaller successes in diversity hiring and procurement set the stage for an innovative social procurement framework and Public Sector Social Procurement Community of Practice.
- At the University of Toronto Scarborough (UTSC) a large redevelopment project presented an opportunity to meaningfully engage the community.
While these examples present promising developments, a myriad of legal, cultural and financial challenges stand in the way of scaling initiatives and securing gains. Furthermore, as early adopters of anchor strategies, these and other institutions are working in a mostly ad hoc and isolated manner, resulting in missed opportunities. Given these challenges and the growing level of interest in anchor strategies, the time is now right to bring more focus to anchor mission building in Toronto and Ontario.
6
Challenges and Insights
Anchors face many real and perceived challenges in anchor mission building. This section focuses on five major issue areas – culture change, the legal context, community and business capacity and access, the role of evidence and greater system tensions – and offers insights to support strategic decision-making and overcome obstacles.
7
Continuing the Conversation
There is a growing awareness of anchor institutions and their role in equitable and inclusive economic development in Ontario. An important conversation is underway. What follows are some of the questions and key points on the table at this time.
How do we create sustainable anchor strategies?- Successful anchor strategies are framed in terms of creating win-win situations for both communities and the anchors. A sound business case drives anchor mission building.
- Government at all levels can help anchors by treating procurement as a local economic development tool. They can help anchors in the broader public sector balance mandatory cost-minimizing criteria with social procurement objectives.
- In the U.S. the federal government is beginning to take an active role in supporting anchor strategies through funding and other capacity building supports. Since the 1970s, the U.S. federal government has also required companies with contracts worth $500,000 (USD) or more to have an approved Minority Business Enterprise subcontracting plan.
- We know that more anchors working together take projects to scale faster and maximizes community benefits. Given the collective platform for anchor efforts in Toronto, there is an opportunity to build collaborative strategies early on and reap the benefits of a coordinated anchor initiative.
- Greater collaboration also lowers perceived risks of going it alone and fosters experimentation and innovation.
- By working together, anchors can engage in an asset or knowledge mapping exercise to determine possible gaps and opportunities as they arise. The City of Toronto and Atkinson Foundation’s Public Sector Social Procurement Community of Practice is a promising start.
- Greater learning and knowledge sharing among anchors, governments, communities and other stakeholders can be facilitated to better align efforts and resources.
- In other jurisdictions, a neutral third party usually acts as a facilitator for such discussions. Such a facilitator is seen as instrumental to establishing trust and goodwill among stakeholders.
- Many developers and large suppliers have shown a willingness to incorporate social development objectives in their contracts with anchors. They also stand to gain a competitive advantage from these activities.
- Although legal obligations are not necessarily desirable or practical, it is important to determine what happens when anchor strategies fail.
To date, this conversation has been energizing because it’s taking place in a broadly based “community of practice”. While it includes academics and policy makers, this community is forming around people who have the authority to make decisions and direct accountability to those who benefit – through their boards of directors or through the electoral process. It has a geographic orientation that spans large urban centres and smaller towns as well as a diverse mix of institutions.
The community’s conversation is squarely located at what Dr. Manuel Pastor would call the “pivot points” where challenges meet opportunities.53 He describes them as the turn from:
- onerous planning to ownership of coordinated action;
- building processes strictly for community participation to building “people power” for policy reform; and,
- experimenting with initiatives to constructing the infrastructure that sustains what works.
“This new strategy for creating decent work and sharing prosperity confronts the limitations of traditional economic development and poverty reduction approaches.”
“This new strategy for creating decent work and sharing prosperity confronts the limitations of traditional economic development and poverty reduction approaches.”
As long as the Ontario economy – and the world in which it is anchored – continues to experience deep structural change, this conversation is both necessary and encouraging. This new strategy for creating decent work and sharing prosperity confronts the limitations of traditional economic development and poverty reduction approaches. In the process, it can strengthen the ties that bind communities and make them more resilient. It can also draw out the very best in anchor institutions, as evidenced by the case studies in this paper, and build their capacity to innovate and collaborate. The potential to affect meaningful and lasting change has brought farsighted and enterprising leaders to the table and is likely to keep them there for some time to come.
The MOWAT CENTRE is an independent public policy think tank located at the School of Public Policy & Governance at the University of Toronto. The Mowat Centre is Ontario’s non-partisan, evidence-based voice on public policy.
It undertakes collaborative applied policy research, proposes innovative research-driven recommendations, and engages in public dialogue on Canada’s most important national issues.
The ATKINSON FOUNDATION promotes social and economic justice by investing in people who are making Ontario more equitable, inclusive and prosperous.
© 2015, Anchor Institutions by the Mowat Centre for the Atkinson Foundation is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, click here.