Can Anchor Organizations Measure Enlightened Self-Interest?

Register here the free webinar, Measuring the Shared Value of Anchor Community Engagement, on June 5th.

Crossposted from Governing: Voice of the Governing Institute

Anchor institutions are large, place-based organizations with strong roots in their local communities. They often are major employers and major purchasers of local goods and services. But the behavior of such organizations as intentional drivers of social and economic growth in their communities greatly varies. While universities and hospitals are held up as examples of anchor organizations, most of them, including those located in distressed urban areas, still do not have robust community investment strategies.

These differences in anchor behaviors reflect the different value propositions organizations assign to their roles in their local communities. For some anchors in distressed urban cores, the need for local engagement is urgent and tangible. Crime and blight are difficult to ignore on a daily basis. For other anchors, the positive economic and social impact they could have locally may not be as clear or feel as urgent. A full stadium on game day, for example, may mask a struggling local economy.

Anchors that act as intentional drivers of social and economic growth create shared value. The concept of shared value recognizes that organizations and their communities are inextricably bound together and organizations do well by doing good. Anchor organizations that adopt a shared value perspective will put into place operations and policies that simultaneously increase the organization’s competitiveness and improve economic and social conditions. 

Measuring the shared value—the community impact and the benefits flowing to the organization from its community development initiatives—matters. Quantifying the returns from community investment is necessary to show the connection between community investment and the competitiveness of an organization. When community engagement strategies, such as local purchasing or local hiring, are marginalized and not viewed as integral to an organization’s core business, they are not sustainable. They are susceptible to budget cuts and changing leadership agendas. Quantifying the returns from community initiatives will help ensure that those initiatives are in place for the long-term.

During the past year, ICIC interviewed over 70 anchor leaders and experts to better understand the benefits organizations realize from community initiatives and the metrics they use to track those returns. We identified four primary streams of benefits:

• Successful real estate development projects shaped by community input are essential for organizational growth and competitiveness.
• Employee attraction and retention help anchors remain competitive by capturing and retaining “top talent”.
• Increased demand for goods and services translates into increased student and non-emergency patient numbers, increased ticket sales and increased consumer demand.  
• Improved and expanded supplier networks can increase an anchor’s operational efficiency and innovation.                                                 

ICIC’s research revealed a surprising finding: None of the organizations we studied measure the benefits to their organization from their community initiatives. If they measure anything, they focus on outcomes and community impact.

Additional insights from this research, which was supported by the Surdna Foundation, will be published in a forthcoming report entitled Measuring What Matters: Internal Indicators for Anchor Strategies. The research also will be featured during ICIC’s Measuring the Shared Value of Anchor Community Engagement webinar on June 5th.

In order to promote shared value and to encourage additional organizations to act as intentional drivers of social and economic growth in their communities, anchor institutions should consider and measure both sides of the community engagement equation. During the webinar, Ted Howard from the Democracy Collaborative will share his insights on measuring community impact, in particular the welfare of low-income families.

Tony Sorrentino from the University of Pennsylvania also will participate in the webinar to discuss the challenges associated with measuring community engagement initiatives. Defining the right metrics is critical but often difficult. It never is easy to isolate the impact of an initiative in a community nor the returns stemming from a community investment. For some organizations, this may be compounded by a lack of specificity around the purpose of their initiatives beyond generally improving the conditions of a community.

Anchor organizations also may be sensitive to potential backlash from quantifying the performance of their community initiatives. They may not be having the impact they had hoped in the community and by measuring returns to their organization they may fear accusations of hypocrisy from the community. A few bold organizations will need to lead the way and show that the benefits from a robust and transparent effort to measure anchor strategies outweigh the risks.