10.11.2012 | In this unending campaign season, when everyone seems to have taken their marbles and gone home, it’s tempting to throw up your hands and think nothing can be solved, especially when it comes to intractable problems like poverty or inequality. But then you tune in to people who are working on the ground and you see a glimmer of hope.
I recently watched a video of Angela Glover Blackwell, CEO of PolicyLink, speaking to a group at the recent ICIC Inner-City Economic Summit and my hopes were restored. Inequality is not an easy topic to tackle, and at times it feels like the “same ole, same ole” approaches just aren’t making a dent. But the fresh approach she talked about might just breathe new life into these critical issues.
As the team at PolicyLink and the Center for American Progress asked, Can a focus on equity—the economic and social inclusion of those left behind—be much more than a humanitarian or moral act but actually a superior economic growth model?
There is power in underserved communities, Glover Blackwell told the ICIC audience, and that power must be tapped.
“There was a time,” she said, “when economists thought inequality encouraged growth.” But as we know now, the evidence finds otherwise. Leaving a large portion of Americans behind is actually bad for growth. BRR member Manuel Pastor has written about this in his book, “Regions That Work.”
Sadly, we also know that while inequality is harmful, it is also still too widespread.
So how do we make equity the standard of the nation? The answer, Glover Blackwell says, lies in how we invest our public and private dollars. We must, she argues, turn every investment into an equity strategy. And that begins at the community level.
Anchor institutions are a great example, she said. Hospitals, universities, and other anchors are intimately tied to the community that they anchor. They have sizable assets and they spend money in the community. The University of Pennsylvania, she noted, is a beacon for how to invest smartly, with impact. Since the 1990s, UPenn has used its purchasing power and its education to improve community. They purchase $114 million of goods and services in one year alone. They’ve paid attention to housing issues and promoted safe communities for their employees. They’ve used their contracting clout to ensure that a certain proportion of contracts go to smaller contractors. And they’ve used their education insights to help improve schools in West Philadelphia.
Cleveland offers another example of an anchor institution putting equity on the agenda.
Glover Blackwell also stressed the importance of making smart use of federal infrastructure dollars to achieve our equity goals. Billions are spent on infrastructure, yet too often the funds and projects don’t help people in the vulnerable communities. Smart investments would work to connect low-income families to regional job opportunities through smart transit or innovative commuting projects. Other efforts can help to ensure that minority or women-owned businesses can tap the contracting dollars. Since 1979, Maryland has worked toward this goal, and today, according to Glover Blackwell, 23% of state contracts are to minority or women-owned businesses. In San Francisco, she said, the Public Utilities Commission has a goal of ensuring that 20% of work hours on public projects go to local hires and 10% to underserved communities. Those shares are on track to increase to 50% and 25%, respectively, by 2017.
To ensure that the benefits of regional economic development and growth are felt in all neighborhoods and communities, groups like the Pittsburgh Central Keystone Innovation Zone are promoting “innovation clusters” of advanced manufacturing or technology firms with an eye toward communities that need growth the most. “Don’t have it develop elsewhere and then hope it comes to the inner city,” she said. Because it won’t happen.
The Federal Reserve Bank of San Francisco is also supporting innovative work on “impact investing,” which also strives to address inequities. As a 2009 issue of their journal Community Development Investment Review explained, impact investing “Impact investing helps solve social or environmental problems while generating financial returns.” Its a smart blend of public and private dollars with an eye toward both profit and equity.
In New Jersey, for example, a family was able to move into an affordable home that was newly renovated (and previously foreclosed) because a nonprofit housing organization was able to secure a low-cost loan to buy several distressed mortgages through JP Morgan Chase. They renovated them and turned around and sold them for a profit, yet kept them affordable so vulnerable families could benefit from the transaction. The capital for the purchase of the loans came from Prudential’s Social Investment Fund.
In Los Angeles, a kindergartener can eat a healthy lunch and snack every day at school thanks to Revolution Foods, which focuses on cooking lunches with fresh ingredients for kids whose families are struggling. Revolution Foods has been financed by a combination of wealthy individuals, conventional venture capitalists, and a double bottom line venture fund backed by banks and foundations.
Indeed, attracting private dollars is imperative, says Glover Blackwell. As journal contributor Anthony Bugg-Levine of the Rockefeller Foundation, which began its “Harnessing the Power of Impact Investing” initiative in 2008, described:
“Like the institutions who invested in the New Jersey housing group, impact investors seek for-profit investments that can also provide solutions to social and environmental challenges. In the United States, this field brings together an assortment of players with a range of motivations, from banks investing for Community Reinvestment Act (CRA) purposes, to financial institutions fulfilling their corporate responsibilities and responding to client interest, to foundations engaged in mission-investing, to individuals and family offices expressing their values through their investments.
These impact investors offer a bridge between traditional philanthropy, which incubates innovation and mobilizes attention to exciting solutions, and the private-sector capital markets that ultimately hold the wealth required to advance these solutions to a level proportionate to need.”
“This is not beyond our reach,” Glover Blackwell told the ICIC group. “Every time we build, we have to ask, how do we squeeze equity out of it.” The equity agenda cannot be marginal. “America can see its future, and it’s a 12-year-old black boy and a 7-year-old Latino, or a 10 year old Hmong girl. Equity is both a moral imperative and an economic imperative. We must understand the value that is in those communities and shine a bright light on that work. Equity must drive everything we do.”