More Cities Get Serious About Community Wealth-Building

For a while now, there’s been a growing interest in what’s called “community wealth-building”. That means strengthening locally-rooted  and locally- held businesses and investing vehicles, with worker cooperatives, Community Development Financial Institutions (CDFIs) and impact investors as some of the leading practitioners.

But recently, more city and local governments have been getting in on the act–and that activity is at a point where it’s really starting to take off and, as we say in the business world, scale.

Those are the findings of a new report, Cities Building Community Wealth, just published by The Democracy Collaborative. “City leaders are desperate to try something different,” says Marjorie Kelly, a co-author of the report. “And, now, you’re starting to see more substantial results from their efforts.” The study also looked at relevant activities in 20 cities around the U.S.

As examples, Kelly points to Madison, WI, which recently proposed allocating $5 million over five years for worker cooperative development. Over the past two years, New York City has directed more than $3 million to support such development.

The background to New York’s decision, according to the report: In 2006, the Center for Family Life, a program of SCO Family Services in New York City, launched a housecleaning worker cooperative called Si Se Puede! and then created other cooperatives in handiwork, childcare and painting. Next it joined a coalition which worked with the city council on a campaign aimed at strengthening worker cooperatives. The result, according to the report, was a $1.2 million allocation for 2014-2015 and $2.1 million for 2015-2016.

Some cities also are figuring out  ways to encourage retiring baby boomer-small business owners to sell their companies to their employees. According to Kelly, keeping companies local means that, “Revenues circulate three times more than they would otherwise. There’s more local tax revenue, more local business activity  and more local employment.”

The report also cites seven “drivers” essential to city involvement in community wealth-building:

    • Place. Traditional economic development is agnostic about where investment comes from. Place-based tactics target local players that are tied to the city and interested in ownership over the long-term. “It means not having companies with ownership scattered all over the world, but that is rooted in the city,” says Kelly.
  • Locally-rooted ownership. That entails promoting “Local, broad-based ownership of a thriving, resilient local economy’,” according to the report–  anything from  local family-owned businesses to community land trusts. “Not Wall Street ownership,” says Kelly.
  • Multipliers. Encouraging  institutions–hospitals, say, or universities–to buy local and do so regularly and in large quantities.
  • Collaboration. Instead of the usual situation, where different players operate in silos, cities involve everyone from nonprofits to businesses in collaborative efforts. For example, as part of an initiative to reduce waste, the city of Minneapolis recently teamed up with a local nonprofit to hire formerly incarcerated inmates to work on that effort.
  • Inclusion. That is, making sure different groups benefit from economic development. Kelly points to Portland, OR, where, in 2014, officials discovered that efforts to support local entrepreneurs were only attracting white men. So they created a new initiative deliberately aimed at other people. And, according to Kelly, they succeeded.
  • Workforce. Providing not just training, but also linking those efforts to employment. “You need more than training,” says Kelly. “You need to tie that to real jobs.”
  • System. Developing city-wide institutions, so community wealth-building becomes a regular, accepted part of the  system, what Kelly calls “a new normal”.

Anne Field (contributor to Forbes) I cover for-profit social enterprises and the people who fund them.

A few months ago, I wrote about another Democracy Collaborative report called Educate and Empower: Tools for Building Community Wealthwhich also explores the topic of community wealth-building.