Michigan Senator Debbie Stabenow celebrates the launch of the Henry Ford Health System's new mobile medical unit, alongside students from Detroit Public Schools. Senator Stabenow / Flickr

Anchor institutions spur economic growth and innovation, but are still lacking cooperation with cities themselves.

The nature of urban economies has changed immeasurably over the past several decades. For most of the 20th century, large companies like General Motors and Ford, IBM and General Electric, U.S. Steel and Procter & Gamble were the veritable suns that powered both the U.S. economy and the scores of economies that comprised it. Cities, in turn, measured their strength by how many of these headquarters and manufacturing plants they held.

But globalization hit hard at many once-thriving companies, and deindustrialization decimated many of the great cities that housed them. The driving force in our economy has shifted from those behemoths to clusters of companies, talent, and support industries. Those clusters do not just emerge out of thin air; more often than not they revolve around large anchor institutions—mainly research universities, colleges, medical centers, and other creative or knowledge-based institutions—that help shape and structure urban economies.

A new report from the National Resources Network, in partnership with NYU’s Wagner School and the Urban Institute, takes up the challenge of creating more powerful synergies between cities and their anchor institutions. The report, authored by my NYU colleague Neil Kleiman, calls for a new grand bargain that can better unite cities and their anchor institutions for mutual gain. The study contributes to our growing understanding of the role of anchor institutions in urban economic development, including previous research from groups like the Initiative for a Competitive Inner City and the Democracy Collaborative.

While it’s clear that education and medical institutions—“eds and meds”— do not and cannot drive urban innovation and development on their own (that is the function of entrepreneurs, startups, private enterprise, high-tech companies, and talent), anchor institutions clearly do help support urban economies in other ways.

Anchor institutions—especially leading research universities—are critical hub institutions and catalysts for knowledge-based and talent-driven urban economies. They perform this function in several ways. For one, they are talent magnets, attracting the faculty, researchers, students, and increasingly, foreign-born talent who are key to building an innovation economy. These institutions are also the leading source of employment in many cities, especially harder-hit ones in the Rustbelt and other lagging regions of the country. Around one in eight colleges and universities are based in inner cities, as are about one in 15 of the nation’s largest hospitals. Overall, anchor institutions are the largest employer in about 66 percent of U.S. cities.

The National Resources Network report is based on detailed studies of the role of anchor institutions in a dozen cities across the country, including interviews with several dozen community leaders, anchor institution executives, researchers, and urbanists.

As the report notes, anchor institutions were either the leading employer or among the leading employers in 11 of the 12 cities examined. They will continue to be so in the future, with the eds and meds sector projected to add as many as half a million jobs in cities by the year 2020. Moreover, anchor institutions are often the largest holders of real estate and the largest developers in town, and a key actor (for better or worse) in urban transformations in many cities. While in the past, too many of them were bound up with urban renewal schemes and walled themselves off from their communities, newer partnerships between universities and cities are creating new more integrative, mixed-use approaches for urban revitalization.

The map below shows the concentration of anchor institutions across the 12 cities studied in the report. On the map, the light green represents cities with the smallest number anchor institutions (1 to 5), while the dark green represents those cities with the largest concentrations (86 to 130).

Cities with the most anchor institutions were located in the East Coast and California, along with a few large concentrations in Detroit and Dallas.

The report found that most of these cities lacked consistent partnerships with anchor institutions. The tightest relationships were in smaller, more economically challenged cities like Kansas City; Waco, Texas; or Wilkes-Barre, Pennsylvania. Anchor institutions were more important to smaller economies than to larger communities. Smaller communities also have more tightly knit and overlapping business and political networks.

That said, the report found a persistent pattern of disconnect between cities and their key anchor institutions. Sometimes the issue was as simple as not knowing who to reach out to at hospitals and universities to open up a dialogue, while at other times cities felt they didn’t have any leverage when it came to negotiations. There was also evidence of a cultural divide between the government and local institutions, with each not knowing how to speak the other’s language. On a more positive note, 11 out of 12 cities reported stronger relationships with anchor institutions over the past decade.

The report outlines a new liaison for cities and anchor institutions. “Fundamentally, we need a grand bargain that resets the dynamic between cities and their anchor institutions,” the authors write. “Instead of a transactional relationship, the dynamic we propose is based on shared goals and a mutually determined vision”—or what Harvard’s Michael Porter refers to as “shared value.”

This centers around better and more structured networks between the two groups. For one, cities and anchor institutions can forge joint forums where local leaders can stay connected. Joint leadership training programs can be used to develop a better mutual understanding of the other’s roles and responsibilities and of the benefits of working together. In addition, local colleges and universities can develop executive training programs for local officials and businesses to further deepen ties. And of course, universities have vast expertise that can be useful to local government non-profits and myriad policy areas.

There are numerous examples of what can—and is—being done. In Cleveland, the Cleveland Clinic, along with other anchor institutions, worked with city hall leaders on a redevelopment plan for low-income neighborhoods that included a local home-buying program and a large-scale workforce program. In Detroit, the Henry Ford Health System helped boost investment in and provide resources for local businesses. And the University of Pennsylvania spent over a half a billion dollars on upgrading not just its own campus, but surrounding Philadelphia neighborhoods.

There is no getting around it: Cities and anchor institutions share the same destiny. A stronger, more vibrant city enables universities and knowledge institutions to attract and retain talent. Stronger anchor institutions act as talent magnets for the cities in which they are located. It’s hard to believe we have suffered through such a town-gown divide for so long. Our urban future depends on getting this new grand bargain between cities and their anchor institutions right, which some cities have already.

This kind of joint investment is even more important today as inequality rises in cities and urban centers. In fact, some might argue that anchor institutions exacerbate that inequality by attracting more advantaged people back to the core and by acting as pillars of gentrification and redevelopment. For these reasons, cities and anchor institutions need to work together to engender more broad-based and shared prosperity.

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