January 23, 2014

Harnessing the Economic Power of Anchor Institutions

A recent article in Governing emphasizes the unique, important role of universities, hospitals, and other “anchor institutions” in economic development and suggests strategies for maximizing that role. Unlike for-profit businesses that may relocate or downsize, these institutions are rooted in their locations and have a stake in helping their community thrive. The most common anchor institutions—universities and hospitals— are also big contributors to the economy, employing 8% of the national workforce, creating more than 6% of GDP, and controlling over $500 billion in endowment investments.

Anchor institutions are usually tax-exempt nonprofits, and some communities, including New Haven, have adopted PILOT (payments in lieu of taxes) programs to gain additional revenue that could lighten the property tax load. But Ted Howard, community development expert and Governing contributor, suggests a different strategy: institutional “buy-local” initiatives, one that is already being used across the nation as anchor institutions begin to purchase more goods and services from local suppliers and contractors, including minority- and women-owned businesses.

Ted Howard noted that anchor-led development projects come with challenges, such gentrification, and that proper evaluation of any project is essential to its success. The Anchor Dashboard, a product of the Democracy Collaborative, provides tools and indicators to assist communities and institutions in measuring the impact of their efforts, especially their impact on low-income neighborhoods. With the Anchor Dashboard, local governments and anchor institutions can find and evaluate new opportunities to collaborate to improve their communities.