Report Cites Importance of Tapping Large Nonprofits as Economic Development Engines

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March 16, 2012; Source: Living Cities

Large nonprofits such as universities and hospitals sometimes have an uneasy relationship with their surrounding communities, enjoying tax-exempt status while competing for land, labor, donations and public investment. But according to a new study by the Baltimore-based Living Cities Design Lab, such “anchor institutions” are a key underutilized asset for regional economic vitality and equity. According to the authors, these anchor institutions can contribute to the regional economy in many ways, including:

  • Direct employment (hospitals or universities are the largest employers in approximately two-thirds of the nation’s largest cities)
  • Connecting a network of customers and suppliers on a scale that can influence spending patterns
  • Supporting and fueling industry clusters to tap emerging economic opportunities
  • Shaping the real estate market through investments in land and development activities
  • Exercising civic leadership

The sizable economic activity already generated by anchor institutions is somewhat hidden because it’s geographically dispersed beyond the immediate locale. Furthermore, their lack of integration with other regional development strategies dampens their potential for positive impact. The report characterizes five major types of anchor institution relationships on a continuum from least to most effectively engaged with their region:

  • Isolated Institution: Focused on its own core functions, this type of anchor institution doesn’t intentionally view itself as a player in transforming community and region.
  • Idiosyncratic Experimenter: With narrowly defined community-oriented goals (e.g., service learning), this type of anchor institution is driven by individual or departmental initiative as opposed to overall institutional priority.
  • Neighborhood Actor: This type of institution sees itself as part of its community and uses its resources to promote the revitalization of the immediate neighborhood. It is somewhat engaged with local stakeholders, but not regionally.
  • Economic Catalyst: This type purposefully leverages its assets to promote local economic activity and maintains some partnerships with other key institutions.
  • Regionally Aligned Actor: This anchor institution group actively collaborates regionally to increase economic opportunity created by its activities and to connect people within the region to take advantage of those opportunities. According to the authors, this type currently only exists hypothetically, as a worthy goal.

The Living Cities report focuses on large cities, but in rural areas, education and health care also tend to be among the largest employers. The recommendations for intentionally building regional synergy—such as spinning off activities and retaining them within the region, small business incubation, sourcing goods and services locally/regionally, and connecting workers (especially low income workers) to job opportunities—also apply to less urban areas. Are you tapping your anchor institutions as an economic engine for your region? –Kathi Jaworski