The Democracy Collaborative has coined the term “community wealth building” to describe the approach to systems-level change to create a more inclusive economy.
The Democracy Collaborative works to carry out a vision of a new economic system where shared ownership and control creates more equitable and inclusive outcomes, fosters ecological sustainability, and promotes flourishing democratic and community life.
They work in United States through two main initiatives: Community Wealth Building Initiative, an initiative sustains a wide range of Advisory, Research and Field Building activities designed to transform the practice of community/economic development in the United States; and the Next System Project, intellectual work designed to connect Community Wealth Building to the larger context of systemic economic transformation.
Sarah McKinley is Manager of Community Development Programs for The Democracy Collaborative.
She manages the Learning/Action Lab for Community Wealth Building, a multi-year initiative supported by the Northwest Area Foundation, assisting ﬁve organizations in Indian Country to create social enterprises and employee-owned companies. She co-authored Cities Building Community Wealth, The Anchor Dashboard: Aligning Institutional Practice to Meet Low-Income Community Needs, and Raising Student Voices: Student Action for University Community Investment. She has a background in community development and has worked with a number of community groups, including the Greater Southwest Development Corporation, a Chicago-based community development corporation, and the National Alliance of Community Economic Development Associations.
Sarah, what is the Community Wealth Building Project?
Community wealth building is an asset-based and inclusive approach to economic development that roots wealth and jobs in place through broadly held ownership of assets and enterprise. Community wealth building is inherently collaborative, developing ecosystems of support that build the capacity of these community-rooted assets and connects them to institutional demand which offers both financial security and scalability.
At the Democracy Collaborative we work to promote, lift-up, and connect community wealth building activities across the United States and now we hope to connect to communities in Europe as well.
How might local economies be different?
Rooting economic activity locally is necessary for any community to thrive. Globalization works well for capital, which can move across borders with a computer keystroke. But the real economy of jobs and families and the land always lives someplace real. The real economy is place-based. And a real place is more than a free market of footloose players, where ﬁrms are like objects that can be moved anywhere.
Community wealth building is inherently place-based. In contrast to luring companies from elsewhere, building community wealth is about developing under-utilized local assets of many kinds—social networks, the built environment, cultural riches, local ecology, anchor institutions—and doing so in a way that the wealth stays local and is broadly shared.
Cities and towns are places that people care passionately about, where working collaboratively for the common good instinctively makes sense. Local communities are where building a new economy naturally begins.
What are the role of anchor institutions? Are they the only actors key to the success of the transition to a more inclusive economy?
Anchor institutions are institutions such as colleges, universities, hospitals, and local government. They are one of these local assets I mention above: they are rooted in place and their success goes hand-in-hand with the success of surrounding communities. These institutions often have a mission to serve and are often the largest employers and purchaser of goods and services in many communities. And unlike most large, multinational corporations, anchor institutions are not likely to pick up and leave these communities. These institutions offer “sticky” or local rooted capital that has the potential to create multiplier effects and benefits in place.
In the United States, hospitals and universities alone employ over 9 million people, over 5 percent of the labor force, and procure over $500 billion in goods and services annually. Imagine the impact this activity could have if even a percentage of it was intentionally directed and connected to struggling communities.
Certainly these institutions are not the only actors necessary to transition to a more inclusive economy – in fact, this transition needs to involve many actors at many levels from community leaders and organizations to policy actors and government at all levels. However, these institutions offer the possibility to scale local economic activity and provide stable sources of capital and demand for local enterprise activity of many kinds. They have an important role to play in showing that an alternative local economic system can work at scale, benefiting people in all parts of the community.
What are the main drivers of Community Wealth Building?
There are 7 key drivers of community wealth building:
- Place: As noted above, community wealth building leverages many kinds of assets rooted in community, for maximum beneﬁt of local residents.
- Ownership: Promotes local, broad-based ownership as the foundation of a thriving, resilient local economy.
- Multipliers: Encourages institutional buy-local strategies to keep money circulating locally.
- Collaboration: Brings many players to the table, including nonproﬁts, philanthropy, anchor institutions, and cities.
- Inclusion: Aims to create inclusive, living wage jobs that help families from all walks of life enjoy economic security.
- Workforce: Links training to employment and focuses on jobs for those with barriers to employment.
- System: Develops new institutions and support ecosystems, to create a new normal of political-economic activity.
However, the beauty of a community wealth building approach is that it should be reflective of the local economy. Therefore, in addition to these 7 drivers, it is important for those engaged in community wealth building activities to identify what is an important driver for their community. We work in communities where they have added drivers of “cultural relevance” and “mutuality.”
It is possible to going to scale on this approach?
It is not only possible, but necessary. The heretofore disconnected approaches of community wealth building are beginning to move out of a phase of uncoordinated innovation into a new phase of infrastructure building. Communities of practice are forming (as we saw at the NESI Forum), and resources and tools need to become more widely available. City leaders can join with others to build new local collaboratives. And anchor institutions, need to adopt a community wealth building approach as business as usual that benefits, rather than harms, the communities within which they reside.
We have a released a report on “Cities Building Community Wealth” that offers examples of this work in cities across the United States – but it also offers more recommendation for taking this approach to scale in the final chapter. The report can be downloaded for free here: http://democracycollaborative.org/cities.
Can you give us some examples of cities or communities working on this approach?
There are a number of wonderful examples where community wealth building is underway. In Cleveland, OH in the United States, the City of Cleveland and the city’s major hospitals and universities, working in collaboration with local foundations and community organizations, are helping to implement a new model of large-scale worker-owned and community-benefiting businesses through the creation of the Evergreen Cooperatives. These employee-owned cooperatives provide goods and services to the institutions and employ local residents with barriers to employment who can then share in the profits of the business and benefit from other supports such as a housing and savings program. There are currently nearly 140 employees and there is potential to spin off more cooperative enterprises as they grow.
But these examples are not limited to the United States. In Preston in the United Kingdom an effort, still in the early stages, is underway to prevent money from leaking out of their community, by engaging local institutions, including the city council and two local colleges. A cooperative network has been formed and they are have established a local credit union to provide loans to local businesses. The city council is deeply considering all the ways in which it can leverage its economic power, including becoming a municipal energy provider and how it can invest local pension for community benefit.
These local efforts show us what is possible to build a more sustainable and inclusive economy rooted in place.