Living Cities CEO Ben Hecht is reinventing how cities leverage investment for big projects.

Sometimes, cities looking to implement an economic-development project need a little outside help. When the Twin Cities began an effort to develop a light-rail system that would connect downtown Minneapolis with downtown St. Paul, local leaders needed resources and expertise to produce the most effective plan for their communities. That's where Living Cities comes in. A collaboration between 22 of the world's largest foundations and financial institutions, Living Cities has been connecting city leaders with private sector capital for over two decades.

I sat down with Living Cities President and CEO Ben Hecht to find out how the organization targets its funds, and why addressing specific problems requires leaders to think system-wide: to think about how assets like jobs, transportation, and education fit together, not consider them in isolation.

What does Living Cities focus on, and why is there a need for an organization like this?

We use this blend of financial institutions and foundations to help U.S. cities become gateways to economic opportunity for low-income people. We look to help places that are really trying to fix the core systems that aren't working. We want to support leaders from the public, private, philanthropic, and nonprofit sectors to come together to solve big problems.

We also believe that you're never going to get to scale unless you can really creatively use private-sector capital in new ways. And we really believe that the public sector needs to be a partner in this. Almost by default, if you don't engage the public sector, you're never going to get to a scale that is going to make a difference.

What are some initiatives that hit that sweet spot, where private capital can help cities address entrenched problems?

Our signature initiative is an effort that we call the Integration Initiative. We put together this initiative, and we invited cities to apply. We wanted a city where they had political, private sector, philanthropic, and nonprofit leaders already together, where they were already working toward a big, comprehensive solution that was going to benefit low-income people. We picked five places.

One of them is Cleveland, Ohio. The major economic drivers in northeast Ohio are universities and hospitals. Those institutions over the last few years have started asking: How do we use our economic force to improve the economic well-being of the region? Because as the region goes, so go we. They wanted to build out their biotech work, and we've helped them move their supply chain from being global to being more local.

Another is Minneapolis-St Paul. They started to build and plan for a light-rail line that connects downtown Minneapolis to downtown St. Paul, and goes through all the poor neighborhoods. The effort there is to maximize the benefit to those communities. You want to make sure that stops actually stop in poor neighborhoods, that new community-college campuses are built on the line. The same with health care facilities, grocery stores, green space.

How do you know when an initiative is succeeding? Even very well-intentioned programs can have unintended consequences.

It's really hard. But what we've been doing with these city groups is encouraging them to pick the metrics that they want to be measured by, get data that tells them where they are now, and use the data every year to hold themselves accountable.

You have to stop funding the things that aren't working, once you see they're not working, and move that funding to new strategies. To me, the most important part of doing this work is not that you come up with new ideas, but that you redirect the billions of dollars spent today on outdated programs. How do you disrupt legacy approaches to that problem in a way that puts you on a trajectory to make meaningful progress?

Is there a way to balance aggressively shifting funding with sensitivity to the fact that, often, we're talking about funding for services that deeply affect people's lives? Is there middle ground here?

I think the question is, what's the transition between seeing the progress being made, and giving the current providers room to fix the way they're providing the service. I think that paying for performance is right. That's why we've been doing a lot of work around data-driven results. That way it's less about the political hot-buttons, and more about how do you get the result.

How do you get people from different sectors all on the same page?

Number one, you have to have people at the table who have the big picture in mind—the CEO, the leader of the university. You have to have a critical mass at the leadership level willing to sit around a table—to physically get together. No. 2, you have to agree on a really ambitious goal, because that is what's going to get people excited. No. 3, you have to be able to articulate where the system is broken, set a goal, and measure how you're doing. And related to that, you have to have a mechanism to hold you accountable—a very public and transparent mechanism.

And finally, someone has to wake up in the city every day and say: "My job is to move that collaborative forward." There has to be a backbone entity or organization or person whose job is to make sure all these people stay glued together. Because they all have day jobs! So a lot of our grant money goes to fund—somebody calls them cat-herders. We fund cat-herders in those places.

Living Cities has been around since 1991. What are some key insights that have changed the way the organization works?

Many of our member organizations fund programs or individual organizations. We realized that someone has to fund the system being changed. I was just at a conference last week in Brazil, and it's amazing how this idea of moving from program to system has a lot of currency all over the world.

The other is that systems will never be changed unless we create these new collaborations. And the third is that we have to help the public sector to be a functioning partner in this.

In our form of government, the biggest change happens at the local level. That's why we do cities. The speed of change happens in the city first, state second, federal government third.

Top image: Ben Hecht, president and CEO of Living Cities. (Sophie Quinton)

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