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Cascade: No. 81, Fall 2012

Anchors Aweigh: Why Do Anchor Institutions Matter?*

In many cities, the expectation of civic leadership from a few large corporations headquartered downtown has ebbed. Instead, cities are looking to nonprofit anchor institutions, such as universities, hospitals, and museums, to support economic development and other goals. As Eugenie Birch, co-director of the Penn Institute for Urban Research and one of the panelists at a Reinventing Older Communities session on anchor institutions, put it, “Universities are the factories of the 21st century.”

However, there are sometimes stark juxtapositions between anchor institutions and their surrounding communities as well as in their capacities and functions. Many anchor institutions are located in residential neighborhoods of mixed income. City colleges and public hospitals are funded by the government to serve low- to moderate-income residents. Private institutions often serve middle- and upper-income populations and may also provide targeted support services to lower-income groups. Both types of institutions provide education and conduct research that serve the city broadly but in different ways.

The three panelists offered these observations on civic involvement by anchor institutions:

  • An anchor institution can transform a neighborhood or downtown area through employment, affordable housing, or real estate investment.
  • Successful initiatives connect the core mission of the anchor institution to the goals of the city and make collaboration a hallmark. Educational institutions can improve a city’s future potential through their core mission of education.
  • Educational and health institutions face rising cost pressures, while cities face their own pressures to raise revenues in an era of fiscal crisis.

Figure: Anchor Institutions and Community Vitality: Strategic Framework

Making a Big Impact

Teresa Lynch, senior vice president and director of research for the Initiative for a Competitive Inner City (ICIC), said that in some cities anchor institutions employ 15 to 20 percent of all workers, “corresponding to hundreds of billions of dollars of purchasing power.” Anchor institutions are the largest real estate developer in many cities and develop the workforce through internal training programs. They start or lead economic development clusters, such as the Cleveland Clinic in medicine, MIT/Harvard in biotechnology, and Stanford University in scientific and technological innovations. Anchor institutions may play a catalytic role to transform a city, create a 24/7 downtown area, nurture community development corporations, or undertake a specific project. The figure below shows the many ways in which anchor institutions can have a positive impact in their communities.

Anchor institutions comprise a particularly large job center in the northeastern United States, as Birch explained. Research universities and medical centers together employ 294,000 people in the northeastern states. Much of the economic activity is dependent upon revenue from tuition, but government funding also plays a role. Over $18 billion in federal research grants go to the northeastern corridor (out of $52 billion nationally).1

There are well-known examples of university-community partnerships. The University of Pennsylvania and Temple University have revitalized Philadelphia neighborhoods through major real estate developments while enabling faculty and students to help meet community needs through service and research projects.

Students attend a class at the University Park Campus School, which was established by Clark University and the Worcester public schools and serves grades 7-12 in the poorest section of Worcester, MA. Over 95 percent of its graduates have attended college; nearly all are first-generation college attendees.Students attend a class at the University Park Campus School, which was established by Clark University and the Worcester public schools and serves grades 7–12 in the poorest section of Worcester, MA. Over 95 percent of its graduates have attended college; nearly all are first-generation college attendees.

David Angel, president of Clark University, explained what can be accomplished in a smaller city with limited financial resources. Clark University, which is located in the inner city of Worcester, MA, has had a singular impact as a small liberal arts university. After debating in the 1980s about ways to improve town-gown relations, Clark instead launched a partnership to help reinvigorate the community. Its flagship effort seized on public education as the means to do so.

Clark and the Worcester public schools created University Park Campus School,2 a new public neighborhood high school for residents in Clark’s ethnically diverse but economically poor neighborhood. Some 82 percent of the students qualify for free or subsidized lunch. Over the past five years, it has been the highest-performing urban high school in Massachusetts, according to state test data, and performs in the top quartile of all high schools statewide.

Clark University believed that public education provided the biggest bang for its buck and offered a bold prize: Any student who is a resident of the surrounding neighborhood and who is admitted to the university receives four years of free college tuition, room, and board. This is a $200,000 award at a private school like Clark, and nearly 50 students have taken advantage of it.

Students become acclimated to college while “on campus” at high school. Clark faculty and students teach mini-seminars. Students have access to college facilities, and in their junior and senior years, they can even take college classes. Their sense of participation in a college environment helps them see college as a goal, and 98 percent of University Park students go on to a two- or four-year college.

Getting this right can be a powerful experience. At a Clark board meeting, a news segment was aired on the school’s accomplishments. Angel recalled, “The meeting was filled with high-powered businessmen and hedge fund investors and other members of your typical board, and at the end of the segment, some had tears in their eyes.” More broadly, the experience has changed how Clark views itself and its mission as a liberal arts school and has become part of the university’s core mission and marketing.

Connecting and Collaborating to Accomplish a Core Mission

Having an impact doesn’t mean going it alone. Although the high school is Clark’s unique contribution, the university is also working in the Worcester region with a group of about 10 other colleges on issues such as housing and economic development. This formal partnership achieved significant results through collaboration, and each institution leads a different activity.3 Similar formal partnership agreements exist in places such as the Longwood medical area in Boston and University Circle in Cleveland. These agreements can serve as a kind of business-improvement district.

In addition, anchor institutions can have an important impact by jointly purchasing goods and services. A collaborative joint-purchasing effort in Detroit’s Midtown corridor encompasses the Henry Ford Health System, the Detroit Medical Center, and Wayne State University. A National Anchor Institution Task Force is designed to foster such partnerships.4

Cities must recognize that an anchor institution has a core mission that is not the same as the city’s mission; therefore, cities must create opportunities in which the institution can use its strengths. Universities that offer programs in the areas of education, planning, public health, medicine, business, or engineering can contribute in ways linked to their research and teaching efforts.

Economic development is not the core mission of an anchor institution. A research university trains budding scientists or scholars. Teaching hospitals treat their patients, train doctors, and perform medical research. Anchor institutions likewise must be engaged in their core mission if they are to increase their community involvement.

Facing a Challenging Future

In the current economic climate, educational and health-care institutions will have slower job growth, and federal research grants will likely be reduced. Meanwhile, cities need revenues to balance budgets; however, much of their commercial real estate is owned by nonprofit anchor institutions that are exempt from paying property taxes by state law (although some make payments in lieu of taxes, these amounts are often ad hoc determinations).

Cities may also be contending with foreclosures and vacant properties, both of which are an issue in Worcester. Therefore, cities must determine if anchor institutions are growing or hurting, and then they can align expectations with what is feasible.

Conclusion

The speakers offered the following suggestions for anchor institutions that want to start initiatives in their communities:

  • Make contracting rules transparent and adopt best practices. Lynch found that one institution improved local contracting from 4 percent to 15 percent by teaching local firms how to bid and by doing a better job of soliciting requests for proposals.
  • Locate some programs and facilities downtown. For example, universities can move theaters, back-office operations, and urban-related programs downtown.
  • Talk to local community organizations about area needs and set up a meeting with these organizations.
  • Examine your institution’s current efforts, talk to other institutions, and look for ways to work together to avoid redundancy. Anchor institutions don’t have to be large or wealthy to have a positive impact.

Pabral Chakrabarti can be contacted at 617-973-3959 or prabal.chakrabarti@bos.frb.org. E-Mail