Investing in Inner Cities as a Business Model, Profits First Priority = "Shared Value"

In this weekend's New York Times piece "First, Make Money. Also, Do Good," Steve Lohr highlights the concept of shared value--that a company can do well by doing good as part of its core business. Championed by ICIC Founder Michael Porter and consultant Mark Kramer, the concept is illustrated here by exciting examples from General Electric, IBM, and Intuit.

Professor Porter and ICIC both agree that shared value opportunities also extend to large academic and medical institutions, otherwise known as "anchor institutions".

Anchor institutions are the largest employers in 66 of the 100 largest inner cities, spending over $200 billion on workforce, goods, and services. Many of them recognize opportunities to improve their local neighborhoods while still acting in their self-interest.

One noteworthy example of an anchor producing shared value is The Cleveland Clinic.  The Clinic has been very focused on increasing its impact on the local economy in ways that are beneficial to its core mission and strategy. The Clinic has collaborated with local unions on a workforce development program to support the training of local and diverse construction workers. The organization is also working to increase its local spending and offers incentives for employees to live locally through the Greater Circle Living program. These programs create jobs, strengthen businesses and increase real estate values in the local community. In turn, the Clinic benefits from a stronger pool of local vendors and an increased ability to attract employees and patients as the local economy improves.

The success of this anchor has not gone unnoticed. ICIC is currently working in New York City with the Mayor's Office and Department of Small Business Services to take stock of anchor institution activity at public and private academic institutions across the city. Ultimately, the goal is for the city to better leverage its anchors to produce additional shared value for the community.

To learn more about anchor institutions and their role in urban economic development, see ICIC's June 2011 Inner City Insights issue or Professor Porter's October 2010 Inner City Economic Forum presentation on the topic.

Share with us your stories of anchors investing in your inner cities!

BY Steven Pedigo on August 16th, 2011

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