Committing to Their Roots: Interview with Ted Howard

Mary Helen Petrus

Forefront interviews Ted Howard, who describes how large, so-called anchor institutions can make a difference in the high-unemployment, high-poverty neighborhoods in which they operate. But he also says they should be ready for unintended consequences as they do.

Ted Howard has dedicated the last 30 years to the not-for-profit/civil society sector. Today, he is known as an expert on community wealth building, specifically on how organizations committed to a community over the long term can help it thrive. They’re called “anchor institutions,” and Forefront wanted to know more about them.

Howard is the founding executive director of the University of Maryland’s Democracy Collaborative, which recently developed an “Anchor Dashboard” that encourages institutions to align their business practices to benefit the places in which they are based. The Cleveland Fed’s Mary Helen Petrus, assistant vice president of community development, sat down with Howard in late 2013. A condensed and edited transcript follows.

Ted Howard

Petrus: Thanks for coming in. I really appreciate it.

Howard: Thanks for having me.

Petrus: What exactly are anchor institutions?

Howard: The most widely accepted definition is they’re very large, place-based, usually nonprofit institutions, the largest sectors being universities and hospitals. They tend to have a social mission, as well as being significant economic engines locally. So with a hospital, it’s healthcare; with a university, it’s research, teaching, and service. I also include municipal governments. Cultural institutions certainly fall into this category—large museums and the like. Some would include sports teams, which is a little bit of a different animal because it’s a for-profit and we know they do, on occasion, leave. We’ve learned that in Cleveland. There is a movement afoot to say “Aren’t some for-profit corporations that have been in a community a long time anchors also?” I would push back and say that companies can exhibit anchor-like behavior contributing to the community, but at the end of the day, if you have a company that’s owned by private interests, particularly shareholders who live outside the community, at some point it’s very likely that company’s going to move. And what characterizes an anchor is that it is so rooted in place you can pretty much count on it being there in a hundred years.

Petrus: Some might define an anchor as any institution that is affected by population loss. How would you respond to that?

Howard: A concern I have is, if we water down the concept so much so that virtually anything becomes an anchor, then we start to lose the opportunity for really interesting strategies to leverage the power of these institutions. So I think first and foremost, an anchor is truly rooted and one can count that it is going to be there for the very, very long haul.

Petrus: What does it mean to be an anchor in times of disruptive change? The phrase “tension between legacy and innovation” has been used. How can anchors address that tension or leverage it?

Howard: The question of the evolution of anchors is an important and legitimate one, as the economy is changing, as universities are changing, as we move to a whole new healthcare situation. That said, while I think it’s important to be exploring all these concepts, the reality is that for the foreseeable future—10, 15 years at least—we’re really talking about anchor institutions that are the legacy of a certain kind of economy (in Rust Belt cities, it was a manufacturing economy). They operate in a certain way and that’s not going to change all that much.

So, while I think it’s important intellectually to have conversations about where we see anchors going and new models of anchors, I think the issue right now is that, given the level of disinvestment, the level of pain, the persistence of poverty, and the escalating wealth inequality in our core urban areas, anchor institutions represent not the whole answer, but at least part of the answer, given their rootedness and the enormous amount of resources going through them.

We tend to think about a hospital or university as simply a private, tax-exempt organization, but the reality is that universities and hospitals have an enormous amount of public resources flowing through them, whether they’re Medicaid reimbursements, different kinds of grants from the federal government, or monies from the state. In this sense, they are quasi-public. Should we consider that some of that public support should be linked to an encouragement or an incentive for these institutions to behave in a different way? I think we can start to see that a bit in the Affordable Care Act, where now every three years each hospital will need to file a Community Health Needs Assessment that demonstrates how the institution is directly addressing the social determinants of health in the community. That’s an interesting dynamic from a policy perspective.

Petrus: Can you explain what “anchor mission” means?

Ted Howard

Howard: When we talk about the anchor mission at the Democracy Collaborative, we mean aligning the intellectual and human resources and capital of the institution with its economic and business practices, not only to meet the needs of the institution, but also to benefit the local community. For us particularly, this means lower- and moderate-income neighborhoods which in many cities are adjacent to these institutions. This is a concept that I’d say most institutions have not yet fully embraced. They’ve come a long way in understanding that their human resources and intellectual capital can benefit the community. There is growing interest in assessing how their procurement and workforce policies can similarly be aligned with that mission. But to date, only a few universities and hospitals have to creatively refocus their endowment investments to benefit the local community.

It’s one thing for an institution—a hospital, a university—to say “We’ve seen the light and now we’re going to conduct our business differently and what we want to do is put money in the community and get people to work and start to make a better place.” That’s laudable, but I think we need to recognize at least two things.

One, there is a long history of institutions trying to do just that, and the end result has been ultimately a better-looking neighborhood, a safer neighborhood, more retail, higher property values, but at the end of the day the population (often people of color) have been blown out of the community. So the unintended consequence of trying to benefit the community through your behavior has been shown over and over again. Some institutions have purposefully conducted themselves in such a way as to blow the neighborhoods apart, but mostly it’s an unintended consequence. This is a history that needs to be overcome. Second, we need to recognize that leaders of anchor institutions are doctors and academics and so forth. They haven’t cut their teeth on community building and economic development in low-income neighborhoods. So in some sense, one can’t fault them when some of their efforts go wrong.

Petrus: How can an institution know whether or not it’s living up to its anchor mission?

Howard: I think the answer is twofold. First, we need to ask the questions, “What are the desired outcomes we’re trying to produce in communities?” and “What are the indicators that we need to track over time to see if those outcomes are being delivered on?” And that’s what the Anchor Dashboard is intended to be: not the final word on what should be measured and tracked, but a way to start that dialogue within anchors. We created it through a year-long research project based on 75 interviews both with anchors and community groups. We said, “Here’s a proposal for what it means to operate your business in a way that benefits the community. Here are the outcomes we think you should be trying to achieve and the date you should begin tracking and reporting out." But the premise is simple: As anchor institutions, what ball do we need to have our eye on to ensure that we produce meaningful community benefits?

If you want a really effective anchor institution strategy, you can’t do it (in my view) simply from the institution’s perspective. There has to be a really robust dialogue with the community, and there have to be community-based organizations and partners that are engaged with you. Understanding what the community feels it needs and what its priorities are, as well as what the institution actually needs, can be the basis for really sound development.

Petrus: How can anchors function effectively in cases like the Cleveland Clinic Foundation (CCF) or University Hospitals (UH), where they’re rooted in a place, but their facilities are spreading?

Howard: I had a very interesting discussion with Nancy Zimpher, who was the president of the University of Cincinnati and is now the chancellor of the State University of New York system. She’s deeply committed to community, local economic development, and equity inclusion, and pioneered for them in Cincinnati. Now she’s chancellor of a system that has more than 60 campuses and so she has to have a different sort of outlook. Her question is, “How do you encourage whole systems to express an anchor mission?”

With an anchor system where there are many hospitals with one owner, like CCF or UH, it’s easy to prove the case that the institution is contributing to the overall vitality of the region. It’s employing 35,000 or 40,000 people, they all live somewhere in Northeast Ohio, it’s spending billions of dollars for goods and services, and “x” percent of it is going to local businesses—that’s an easy case to make. But if you’re concerned with how these institutions can operate not just to benefit an entire region, but those most disadvantaged and in neighborhoods that are particularly distressed, then you have a real challenge. While institutions should benefit their region, we should not assume that that economic activity will ever trickle down to neighborhoods that are most in need, because the lesson over and over again is that it does not. That challenge was part of what motivated us to create the Anchor Dashboard. How do you start to reformulate your business practices, even of a nonprofit university or hospital, to produce on-the-ground results in high-unemployment, high-poverty neighborhoods? That’s the challenge, but increasingly there are good models and innovations we can point to—University Hospitals in Cleveland, Dignity Health in California, Syracuse University, Drexel University, and many, many more.

Petrus: When an anchor can engage in that dialogue in terms of process, would you say that’s a success?

Howard: In terms of process, yes. Now, you still have to produce outcomes. The relationship between large, multibillion-dollar institutions and community-based organizations that might have 10 people in them and a budget of $100,000 can be filled with tension because of the power imbalance between elite institutions and community groups. They have to learn to talk to one another, and part of that is learning to establish a space in which they can come to trust one another. Communities all over the country have a legitimate grievance, if you will, because they’ve seen past anchor behavior and feel, “They don’t care about the community; they’re just interested in us for our land.” Thankfully, there is a new day among anchors and, in many places, very enlightened leadership that is really open to this sort of partnership.

Petrus: Are there unintended consequences of anchor strategy?

Howard: Gentrification is a big one. For example, you can track the revitalization efforts undertaken by the University of Pennsylvania in the West Philadelphia Initiative, which has led to seriously escalating prices in the neighborhoods. If you ask Judith Rodin, president of the Rockefeller Foundation and the president of Penn at the time, what she would have done differently, I’ve heard her say, “We should have planned for success.” By which she meant that the university would have anticipated that all the investment and work it was doing in the community actually would have changed the dynamic and tipped the balance. And if they had done that, they would have been asking themselves, “If we do succeed, as the community improves it will become a more expensive place to live in. Housing prices will go up, rents and taxes will go up. What do we need to do now to ensure that the people who have lived there for decades during the bad times can stay in place as conditions improve?” They didn’t do that and they acknowledged that. That’s part of the unintended consequences. At the same time, you can literally see how many hundreds of people have gotten work in the community as a result of the West Philadelphia Initiative who very likely would not have had employment without the university’s commitment.

Petrus: In your experience and the cities you’ve worked in, how do residents interface with the anchors?

Howard: There’s a legacy of the way anchors behaved in the ’60s, ’70s, ’80s, and into the ’90s. There’s still a feeling in low-income communities all over the country that the institutions simply don’t care about us, or the institutions aren’t for us, or the institutions are actually out to get us. That’s just the reality, and one starts to see that shifting in communities as things improve and residents see that there’s a commitment to keep people in the community so that everyone can benefit.

That’s why, when the Cleveland Foundation started the Evergreen Cooperative strategy in 2008 as part of the Greater University Circle Initiative, the foundation intentionally called one of the areas of focus “economic inclusion,” meaning that if the economy’s going to improve in an area, it needs to include everyone in that improvement. As a result, residents are excited by the prospect of an improved neighborhood because they know they’ll get to participate in it. They don’t have to leave.

Petrus: How critical is vision and leadership (and their stability) to an anchor strategy or even just to economic revitalization?

Howard: Visionary and strong leadership around the issues we’re talking about for community revitalization and the proper business procedures of institutions and so forth is essential but not the whole picture. You can have someone at the very top who says, “I’ve seen the light, we’re now going to conduct ourselves as follows,” but then when you move down the chain of command, nothing may change. You do have to have that visionary leader, but then there needs to be the process of aligning the whole culture of the organization toward this vision; in other words, you need a true culture change in the institution. Twenty years ago, few institutions had robust sustainability plans; today hundreds and hundreds of them do. That’s a culture change. The new change that anchors need to make is to focus on the importance of locality, the place in which they are rooted and which they are unlikely to ever leave.

When Dr. Rodin started the West Philadelphia Initiative, she was very visionary and way out ahead of her time, but she made sure the entire board of trustees of the University of Pennsylvania got on board. In fact, she established a committee of the board just to oversee this West Philadelphia Initiative. Then she looked at the departments where things were being purchased and realized that if they were going to change procedures and practices, they needed to provide new incentives so that procurement officers’ year-end evaluations, opportunities for advancement, and bonuses began to be tied to hitting certain local spending targets. That’s a way to get people’s attention. When President Rodin left for the Rockefeller Foundation and Amy Gutmann followed her as president of Penn, the community engagement strategy changed a bit; but its essence is so embedded in the institution now that, even with a change in senior leadership, the initiative endures. We have very enlightened leadership in the institutions concerned about Greater University Circle (including the Cleveland Clinic, the Cleveland Foundation, Case Western Reserve University, and University Hospitals), but we know all three leaders of those institutions are going to change one day. This poses a very serious question: How do you keep that institution in the game when the leadership changes? That’s why the Cleveland Foundation helped establish ongoing structures, such as the Greater University Circle Leadership Team and the Evergreen Cooperative holding company to oversee the continued growth of the initiative. Each of those institutions has a seat on the boards of these structures, so they’re embedded into the strategy for the long term.

One of the limitations of anchor strategies to date is that so often they’re dependent on one visionary leader, and when that person goes, things can change very radically. How do you embed this new culture into the DNA of an institution so that it just becomes a natural part of what the institution is? “We’re a university. We do research, teaching, and service, and we have an anchor mission in which all our practices are aligned for the benefit of the local community.” And that becomes what it means to be an anchor institution in 21st century America.

Petrus: Thank you for your time.

Mary Helen Petrus is an assistant vice president in the Community Development Department at the Federal Reserve Bank of Cleveland. She is responsible for managing the Department’s outreach efforts and research initiatives. In this role, Ms. Petrus works with economists and analysts on a broad range of issues that affect access to credit and capital in low- and moderate-income communities with an emphasis on policy implications.


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