Interactive Design Charrette,” Daniel Farrell

Can nonprofits advance community values through their business practices?

The promise of the anchor institution approach has always been that nonprofits, especially hospitals and universities (often called “eds and meds”), using existing resources can have greater impact by aligning their businesses practices with their mission. A new report, titled The Overlooked Anchors: Advancing a New Standard of Practice for Arts and Culture Organizations to Create Equitable Opportunity in America’s Cities, published by the Boston-based nonprofit Initiative for a Competitive Inner City (ICIC), and funded by the Kresge Foundation, examines the potential for arts and cultural groups such as theaters and museums to apply this approach.

It is worth considering the scale of the opportunity. In 2018, the Urban Institute reported that nonprofits in 2015 had revenues of nearly $2 trillion. If applied strategically, this money could have an enormous impact. The arts are about two percent of this total, but, even so, in 2015 they still had $40.6 billion in revenues and $127.9 billion in assets (3.5 percent of nonprofit assets).

What does it mean to align business practices with mission? Well, it might mean a nonprofit buys goods and services from businesses owned by local residents of color, rather than national chains, helping build wealth and sustain employment in disinvested neighborhoods. The same approach can be applied to many other business functions too—hiring, investment, and real estate development among them. These shifts can have dramatic effects. Kim Zeuli and her coauthors cite an earlier ICIC study of Newark, which found that if Newark anchor institutions “increased their contracts with local, small businesses by just 10 percent, it would result in an additional $33 million flowing to these businesses annually.”

ICIC has been writing about anchor institutions since 2002. In addition to purchasing, investment (which it includes as a form of community development), hiring, and real estate, the ICIC also suggests three other mechanisms: building workforce skills, incubating businesses, and altering core services to better meet local community needs (for example, a university recruiting more students from local neighborhoods).

Unfortunately, while the phrase “anchor institution” is now used plenty, the shift in practice has been less than promised. As Charles Rutheiser, a senior associate at the Annie E. Casey Foundation and a funder of anchor institution work, noted earlier in the decade, “It is by no means inevitable that the growth of anchors will be accomplished in ways that maximize the benefits to the communities and cities in which they are located.” Rutheiser added that many nonprofit anchor institutions focus on narrow self-interest, rather than adopting a broader “enlightened” self-interest vision that might see boosting community welfare as part of their missions.

And yet, we should not lose sight of the fact that the failure of—many, not all—nonprofit institutions to align business practices with mission is, in fact, a failure of our sector. Put simply, if we believe that nonprofit institutions can be a tool that can—to paraphrase Dr. Martin Luther King Jr., for a moment—bend the arc of the economic universe toward justice…well, by and large, nonprofits are falling short on the job.

So, as a five-person team led by Zeuli—along with Zachary Nieder, Kathleen O’Shea, Stephanie Savir, and Jay Gray—applies the anchor lens to arts institutions, what do we learn?

One of the more fascinating findings comes in the form of a confession, wherein the authors identify “a fundamental weakness of ICIC’s anchor framework.” This weakness—and let’s give credit for frankness here; how many times can you recall a nonprofit admit a flaw in a model it has promoted for 17 years?—is a lack of community engagement.

As Zeuli et al. put it, “The anchor strategies are business strategies and, therefore, typically do not emphasize resident empowerment or include processes for getting more community members involved in the revitalization process.”

But, Zeuli and her colleagues add, resident engagement is—or can be—a strength of arts and cultural institutions. In short, the potential is not just for arts institutions to learn how to align their business practices with their missions, but for the tools that arts institutions have used in their community work to be imitated by other nonprofits (especially hospitals and universities).

In the report, Zeuli and her team focus on 13 arts institutions. These are grouped in three categories. Four are large arts institutions with at least 50 staff and budgets over $10 million that have adopted anchor-based approaches, another five are large institutions that have taken steps in that direction, and four are smaller institutions that nonetheless play important anchor-like roles.

One of the institutions profiled is the Maryland Institute College of Art, better known as MICA. Open since 1826, making it “the oldest continuous degree-granting art college in the country,” MICA has long been regarded as a community-minded anchor institution in Baltimore. As its name suggests, since it is a specialty arts college, it straddles the line between arts and education. Among the actions MICA has taken are the following:

  • A cofounder of the Central Baltimore Partnership in 2006, a community coalition that now encompasses over 100 organizations citywide.
  • A partnership with a specialty arts school that teaches Baltimore public school students in grades 6 through 12.
  • A focus on repurposing vacant buildings rather than building new ones, with most of its 34 buildings being repurposed in this way.
  • An investment of $60.7 million between 2008 and 2014 in community development.
  • The formation of an arts-focused business incubator that graduated its first class in 2018.
  • In 2017, on construction projects, more than 25 percent contracts went to businesses owned by people of color and 15 percent for local businesses. Two departments—Facilities Management and Campus Services—have directed seven percent of procurement spend to local, women-owned businesses and 25 percent to local businesses owned by people of color.

The authors note, based on community interviews, that MICA is “perceived to be a strong advocate for its surrounding community and an organization that engages with community members and incorporates their input into ongoing strategy development.” Still, they recognize that MICA “struggles to identify strategies that support neighborhood revitalization without contributing to gentrification and displacement.”

The other large arts institutions profiled have done less, but they have taken some steps in the direction of aligning business practices with mission. The authors profile the Adrienne Arsht Center for the Performing Arts of Miami-Dade County, which has sought to create pipelines to careers in the largely Black and Latinx neighborhood of Overtown. In Indiana, the Children’s Museum of Indianapolis has supported local affordable housing and has partnered with residents on community planning. In Ohio, the Cleveland Museum of Art has created a community arts center in the largely Latinx neighborhood of Clark-Fulton.

The report also looks at four smaller institutions: Project Row Houses in Houston, an arts and community development nonprofit in Houston’s Third Ward, a historically Black neighborhood; the Guadalupe Cultural Arts Center in San Antonio, Texas, a Latin American and indigenous art nonprofit with a staff of nine; Movimiento de Arte y Cultura Latino Americana (MACLA) in San Jose, California, which runs a Latinx cultural center; and Ashé Cultural Arts Center, which promotes African arts and culture in New Orleans.

A common theme from these smaller groups is their ability to serve as conduits for community voice. In Houston, for example, Project Row Houses “encourages larger organizations (including non-arts and culture organizations) to engage with the Third Ward community in authentic ways and draws their attention to community issues and proven strategies. In San Jose, “MACLA leaders have been asked by a large arts and culture organization in the city to help as advisors on its own anchor engagement.” In New Orleans, Ashé aims to improve the “livelihoods of ‘culture bearers’ in New Orleans—the performance artists who drive the city’s tourism-based economy but do not receive sustainable income from its work.” Carol Bebelle, Ashé’s executive director, tells the authors, “We know what works and what does not, and how to move beyond simply audience engagement.”

Zeuli and her colleagues close with some recommendations for how arts institutions can adopt more comprehensive anchor strategies that better align business practices with mission. But the more significant finding is that city economic development departments tend to ignore arts institutions, at least when it comes to developing place-based economic strategies. For example, Zeuli and her team report:

In New Orleans, the first iteration of the city’s anchor collaborative grew to include 38 member institutions focused on four industry clusters—health care, technology, industrial development (manufacturing and construction) and hospitality. The collaborative did not include any large arts and culture organizations.

To repeat, in New Orleans, not a single arts and cultural organization was in the city’s anchor collaborative.

In Cleveland, home to Playhouse Square, the country’s largest theater district outside of New York City, again, the arts were initially left out.

Of course, while arts and cultural institutions may improve community engagement and help nonprofits better align business practices to their missions, this is not always the case. After all, nonprofit arts institutions can be just as myopic as nonprofit universities and hospitals.

As one interviewed community development practitioner cautioned, “I worry that some arts organizations will not even see gentrification as an issue because for all intents and purposes, gentrification brings more of their clientele closer to their institution.” The authors add, “There is also an uneven history of the arts, development, and gentrification, similar to the history of many universities.”

Indeed, one challenge facing nonprofits—in arts, universities, and hospitals alike—is that while nonprofits are supposed to serve the entire community, donors and boards of trustees typically are more elite. It is therefore not surprising that, absent an explicit equity focus, nonprofit institutions in their actions will often reflect the groups that fund and govern them. Too often, the result can be to deepen resident displacement and gentrification, rather than ameliorate it.

Nonetheless, with an explicit equity focus, this result can be avoided. In one graph from their report, the authors note that arts-based “creative placemaking” defines community and economic prosperity as involving economic, social, physical, and cultural outcomes, while an anchor framework is exclusively economic focused. While this formulation is surely an overly narrow notion of what an anchor-based approach entails, it is a useful reminder, nonetheless, that an economy does not exist independent of the social, physical, and cultural worlds in which it is embedded.

In short, while Zeuli and her team focus on how arts institutions could benefit from a greater understanding of anchor-based approaches, they also demonstrate the many ways that city economic development departments and nonprofit hospitals and universities could benefit from paying more attention to the many arts and cultural institutions in their midst.