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The Need for Institutions to Measure the Value They Create in Their Communities

Place-based organizations need to know just how much impact they're having on both their communities and their business. It's a matter of enlightened self-interest.

Anchor institutions are large, place-based organizations such as universities and hospitals 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 varies greatly. 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 their communities' economic and social conditions.

Measuring that shared value -- the community impact and the benefits flowing to the organization from its community-development initiatives -- matters. 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, the Initiative for a Competitive Inner City (ICIC), of which I am senior vice president, interviewed more than 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 for universities and hospitals, increased ticket sales for sports franchises and increased consumer demand for corporate anchors.

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. 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.

Defining the right metrics is critical but often difficult. It never is easy to isolate the impact of an initiative in a community or 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 organizations 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.

Additional insights from ICIC's research, which was supported by the Surdna Foundation, will be published in a report entitled "Measuring What Matters: Internal Indicators for Anchor Strategies." The research also will be featured during a free ICIC webinar on June 5 at 1 p.m. ET: "Measuring the Shared Value of Anchor Community Engagement." 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, and Tony Sorrentino from the University of Pennsylvania will discuss the challenges associated with measuring community-engagement initiatives.

A senior fellow at the Initiative for a Competitive Inner City
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