The growth of U.S. cities is largely rooted in the nation’s industrial past. As industry boomed, local governments constructed roads, sewers, and water systems, making it easier to live and work in densely populated areas. An increasing number of factories opened, public transportation expanded, and workers formed neighborhoods nearby. In short, cities grew alongside their businesses, and these firms employed workers, paid taxes, and purchased goods and services from other businesses. Not only did businesses make economic contributions to these cities, their owners and management teams provided civic leadership that, in some cases, served as a powerful enabler for taking on visionary projects.
The role of businesses in cities has become markedly different over the past few decades. Suburbanization, technological innovations, and globalization have each shifted the idea that businesses are rooted in communities. Communities across the country continue to experience the devastating effects of factory closings, and many of the jobs lost during the 2007 Great Recession will not return as businesses are forced to adapt to a new economic climate. Furthermore, only about one-quarter of low- and middle-skill jobs are accessible within a 90 minute-commute in metropolitan areas.
However, some institutions—including colleges, universities, and hospitals—maintain and foster strong connections to the places where they are located and serve many of the same functions as early industry leaders. They participate in local and national markets, employ hundreds—if not thousands—of workers, and purchase from other businesses. These institutions are often referred to collectively as “Eds and Meds,” or anchor institutions, as they are rooted in the communities where they are located.
As entities that control vast economic, human, and intellectual resources, anchor institutions have the potential to be important partners in community and economic development work. Universities represent roughly 3 percent of U.S. gross domestic product and employ more than 3 million people annually. The hospital industry is even larger: 5 million Americans work for hospitals and, in aggregate, hospital-sector procurement is in excess of $600 million annually. According to the Initiative for a Competitive Inner City, or ICIC, in 66 of the 100 largest inner cities, an anchor institution is the largest employer. Some 925 colleges and universities—roughly one in eight—are based in an inner city, and about 350 hospitals—roughly 1 in 15 of the nation’s largest hospitals—call an inner city home. U.S. hospitals and universities spend a combined $1 trillion per year and employ 8 percent of the labor force.
Local leaders increasingly understand the critical importance of anchor institutions within their own cities’ economic development strategies. For example, Baltimore Mayor Stephanie Rawlings-Blake (D) recently announced partnership agreements with Baltimore’s major higher-education and medical institutions to advance economic development, public safety, local hiring, local purchasing, and quality-of-life goals.
As momentum gathers among mayors to leverage their cities’ anchor institutions, the federal government can help further this process. The federal government has a history of supporting the work of such institutions and has a vested interest in exploring strategies that harness the power of anchors to increase community revitalization and economic growth. While anchor institutions have many resources, they are still institutions focused on their own goals and thus may not readily align their priorities with those of a greater community strategy. Furthermore, anchor institutions are no silver bullet for addressing the socioeconomic challenges that low-income communities face.
Still, anchor institutions can play an important role in this work, and the federal government should help encourage it. This report proposes a number of recommendations for how the federal government can do this, including:
- Giving greater weight to place-based grant applicants that have strong partnerships with anchors. Federal leaders should ensure that initiatives better outline the possible roles anchors can take and better assess the strength of these partnerships to spur greater anchor involvement.
- Rebuilding the U.S. Department of Housing and Urban Development’s, or HUD’s, Office of University Partnerships, or OUP. This office should assist anchors located in communities that have been awarded federal grants for place-based work by providing research and technical assistance around their roles.
- Ensuring HUD helps develop tools to measure anchor performance. HUD should work to improve anchor performance by encouraging the creation of dashboard indicators that demonstrate community impact and can be reported to Congress and other stakeholders.
- Encouraging HUD to work with anchors to promote affordable housing development. OUP should engage anchors around HUD’s housing development goals and offer matching funds for employee-assisted housing and AmeriCorps and AmeriCorps VISTA housing.
- Encouraging colleges to better utilize the Federal Work-Study, or FWS, program for service learning. The U.S. Department of Education should outline ways in which colleges and universities can better leverage the community service requirement to enhance educational and leadership experiences while benefiting the broader community.
- Ensuring a greater impact from the community benefit requirement under the Affordable Care Act, or ACA. Federal leaders should expand the definition of community benefit and direct hospitals to work with local leaders to collaborate around the community health needs assessment, or CHNA, to ensure resources are spent on shared priorities.
- Fostering small-business partnerships and mentoring. The federal government should encourage institutions receiving funding for research to implement programs that mentor local, disadvantaged businesses through additional funding opportunities. In addition, the Small Business Administration, or SBA, should support small-business intermediaries in identifying local and disadvantaged businesses that have the potential to work with anchor clients.
- Helping align community and technical college courses with apprenticeship programs. A previous Center for American Progress report recommends that the Department of Education and the U.S. Department of Labor work with policymakers, accrediting bodies, and colleges and universities to greatly expand the number of effective articulation agreements in place.
This report provides an overview of how the federal government has worked with anchor institutions over the years, the potential roles anchors can play in communities, and how to measure the community benefits of this work. It concludes with detailed recommendations for federal officials to further enhance the role of anchor institutions in communities and to promote communities’ economic development.
Tracey Ross is a Senior Policy Analyst with the Poverty to Prosperity Program at the Center for American Progress.