What's true for families is true for communities. Jobs may be drawn into a community but leave without warning. "There's nothing worse than a company that you've worked with for ten years just leaving because the incentives wore off," said Tracey Nichols of Cleveland. "But having the community own the enterprise, it will always be there."
2. Ownership
Ownership of assets is the foundation of every economy, for it determines who has control and who receives the lion's share of benefits. Community wealth building deploys a whole spectrum of inclusive ownership models. At the non-inclusive end of the spectrum we see absentee-owned firms. Corporations with shares trading on public stock markets are inherently absentee-owned.
Inclusiveness has more of a chance with locally owned firms. When money is spent at locally owned firms, studies show that revenue recirculates locally at least three times as much. Local ownership is vital. But local ownership by a few wealthy families only gets us part of the way toward broad prosperity. More inclusive are firms owned by women and people of color, who have traditionally been excluded from asset ownership. Still another consideration is a longer time horizon. When local owners retire or sell, how do those firms stay local?
Social enterprises are likely rooted in community over the long term, for they have a primary mission of providing social benefit, and many are owned by nonprofits and unlikely to be sold. Also inclusive are firms with employee stock ownership plans (ESOPs), which allow founders to exit their ownership by selling to employees--who are likely to remain loyal to place over the long term, since employee-owned companies are typically locally owned. Still more inclusive are cooperatives, where all members have one share and one vote. Particularly valuable for job creation are worker-owned cooperatives, where workers are the ones who control the company and elect the board.
When employees not only have a job but an ownership stake, they enjoy greater control of their economic fate.
3. Multipliers
While ownership shapes the skeleton of enterprise, demand is its lifeblood. Community wealth building asks: Where is the large-scale demand that can drive the growth of local, inclusive enterprise? What kind of demand cares about place?
A critical force generating momentum for local enterprises is the purchasing power of anchor institutions, like nonprofit and public hospitals and universities, which are rooted locally and have missions of service. Other types of anchor institutions include museums, community foundations, and local government. When anchors deploy their economic power to strengthen local enterprises, especially inclusive enterprises, they are engaging in what The Democracy Collaborative has termed an "anchor mission." An anchor mission consciously links the well-being of an institution and its community.
Support for an anchor mission has grown over the last decade among nonprofit hospitals and universities, which together represent well over $1 trillion in economic activity, about 7 percent of GDP.
The procurement, hiring, and investment practices of anchor institutions represent a potentially enormous source of economic development support, which cities like Cleveland, Chicago, Baltimore, and New Orleans are beginning to tap. For instance, when anchor procurement supports locally owned businesses, cities enjoy a powerful multiplier effect, keeping money circulating locally. Over the past decade, more than two dozen studies have shown that local businesses generate two to four times the multiplier benefit, compared to non-locally owned firms. As author Michael Shuman observes, that means that every dollar shifted to a locally owned business generates more income, more jobs, higher local tax revenues, and greater charitable contributions.
4. Collaboration
In traditional economic development, collaboration involves the two traditional players of city government and the private sector. Community wealth building is more broadly collaborative--involving nonprofits, philanthropy, anchor institutions, community residents, local businesses, and workers.
"What's happening in New York City is fascinating, and I think it's the way things might happen in the future," Melissa Hoover, executive director of the Democracy at Work Institute, said. "What it looks like from the outside is that the City authorized $1.2 million for cooperative development [for 2015, increased to $2.1 million for 2016]. What really happened is that grassroots organizations had been working toward this for a long time." The City's allocation was encouraged by these nonprofits, and went to fund their work. The process, in short, was highly collaborative.
Among cities taking seriously the power of collaboration is Philadelphia. When the mayor in 2013 created a new anti-poverty office, the Office of Community Empowerment and Opportunity (CEO), the initiative embraced the philosophy of "collective impact," said CEO Executive Director Eva Gladstein. In creating and implementing its action plan, CEO involved close to 200 stakeholders in meetings, focus groups, and interviews.
5. Inclusion
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