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Private Leadership for Public Good

“This is Just What You Do in Chicago”

James Glerum, a board member of the Civic Consulting Alliance, said this early in the session called “Corporate Community Engagement in Chicago: Commitment and Results”, which talked about private sector contribution, and cross-sector collaboration in addressing pressing social issues.

The Alliance brings together pro-bono teams of consultants and experts from different sectors. The session focused on a case study of their partnership with the City Colleges of Chicago, transforming the colleges and reinventing them for the 21st century.

I have previously read about the Alliance, and have been very much looking forward to their participation in this session. Both a board member (Glerum) and a staff member (Brian Fabes, a project manager) spoke, in addition to representatives of Accenture and KPMG, who participate in the Alliance’s efforts.

The Alliance representatives spoke about how they tapped in to Chicago’s long-standing culture of giving back, corporate leadership, and the imperative of collaborating with the organizations you’re helping, not just imposing solutions from the top down. Michael Scimo of Accenture built on this, talking about the value to business beyond social good, of building human capital, the business environment, and helping their employees grow as well.

This session also touches on the evolving role of public sector leadership. Cheryl Hyman, the President of City Colleges of Chicago, is as innovative and entrepreneurial as any successful private sector CEO. Her approach, working with the Alliance, is a departure from how education reform has happened in the past.

Another comment that resonated with me, from Terry Mazany of the Chicago Community Trust, is that these problems are ‘bigger than any single organization can take on’. It speaks to the importance of involving everyone – the organizations directly involved, along with the private sector, government, and other leaders, in addressing social issues.

The question then becomes, how do you best foster, or harness, this culture and use it for the greater good? The Chicago model would seem to be:

1. Figure Out Your Corporate Culture
Do you have a culture of giving back? Who are your business leaders, and what do they like to engage in? What are companies looking for? Do they want to give money, time, or do they want to add value beyond that?

2. Build True Partnerships
The CCA and public organizations truly work hand-in-hand. It’s not about top-down solutions, or fixes imposed from outside. Consultants and public leaders engage in long-term collaborative processes to improve the public good.

3. Change Takes Time
The CCA projects are long-term, over a period of years. It’s easy to get distracted as there are always new issues commanding attention, but they recognize that you have to stay focused, and implement change in a long, continuous process.

Every city is different, but the lessons from Chicago will go a long way everywhere.

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Building Capital in the Inner City

The first panel session was titled ‘Community-Based Capital for Small Business Financing’. In the introduction, moderator Matt Reilein of JP Morgan Chase noted that an ICIC study found that 70% of inner-city businesses are undercapitalized, which provided excellent context for the discussion that followed.

Two ideas brought up by the panelists jumped out at me – Mary Houghton of ShoreBank’s talk about ‘social investment’, and Jonathan Brereton of ACCION Chicago’s discussion of the role, and challenges faced by, non-profit organizations.

ShoreBank, now part of the Urban Partnership Bank, emerged from Chicago’s long tradition of neighborhood-based political organizing. Founded in 1973, it believed that local deposits ought to be used for local loans. Interestingly, it found that the size of loans requested by small and new businesses was the biggest barrier to accessing capital for inner-city businesses (race and perceptions of poverty were second). The issue of size of loans was brought up later by another panelist, mentioning that conventional banks have generally not been interested in anything less than $25,000.

Houghton mentioned that ShoreBank eventually found a market amongst what she called ‘socially-oriented investors’, people interested in not just a financial bottom line, but a social (and environmental) return as well. Picking up on the theme of social good, Brereton talked about the problems non-profits faced. First, that many people don’t view them as businesses (for example, many loan programs exclude non-profits). Second, there is a stigma in many minds because they are government-funded (he made a great analogy debunking this by pointing out that Boeing’s biggest customer is the government). Finally, the lack of assets non-profits have makes it hard to access credit.

The related idea I take from these two is that an interest in social good can translate into an investment in the inner city, and low-income neighborhoods. My mind goes to the question of ‘how do we harness social good to build capital in the inner city’? Certainly, as citizens we all have a role to play. We can support financial institutions that practice good corporate social responsibility. We can invest in and support non-profits that work in community development, and in marginalized areas. Leaders and funders in non-profit organizations can take on capital and equity-building initiatives and social enterprises (and government programs can adjust to encourage this).

The role of credit unions and other Community Development Financial Institutions (CDFIs) is essential – co-operatives too. There’s precedent in my home province of Alberta (in Western Canada), which has a strong history and presence of credit unions. Credit unions and co-operatives really took root during the Great Depression, when the big banks wouldn’t fund farmers and other small organizations. Many large, locally-owned financial institutions trace their roots to the early decades of the 20th century, and their legacy continues today. The United Farmers of Alberta, along with Servus and FirstCalgary Credit Unions, show up amongst the province’s highest grossing private companies.

Community Development Banks, and CDFIs (including credit unions) can employ this approach to build capital in the inner city. Between an existing customer and business base in the neighborhoods, and a growing number of investors (myself included) who want to support companies that do social good, most markets should be able to support one, if not more, of these institutions.

There will, obviously, need to be a lot more done. But I see the under-capitalizing of inner-city businesses and neighborhoods to be something that we can start fixing right now, building on successful models, and people’s interest in doing social good (even while making money).

Cross-posted from the ICIC Blog.

Thoughts Prior to Urban 2.0.

I have the pleasure of spending the next day and a half at Urban 2.0: The Next Generation of Jobs. As someone with a long interest in cities and urban spaces, and as someone who follows the Initiative for a Competitive Inner City’s work, I’m very excited to be attending and writing about this event.

With the (north) American economy stagnant, and business and industry in transition, it’s an interesting time to be discussing the future of cities, and their role in the economy. Most would say that cities have made a comeback in the last 20 years, after experiencing a decline in the previous four decades. Thinkers like Richard Florida have argued cities (and mega-regions) attract and hold on to the best talent. Christopher Leinberger has predicted the suburbs will be tomorrow’s slums. Yet, there is still evidence that suburban growth (economic, not just population) outpaces that of cities. And even in the core of most cities, you’ll find empty storefronts with remnants of businesses that have fallen apart (I think I’ve seen a closed or closing Borders in every American city I’ve been to the past two years). New developments are half-built or stalled before ground is broken.

Cleveland Public Library
Downtown Cleveland, Ohio.

With that as a context, here are five questions on my mind, and the themes that will frame my posts over the next two days.

• What are the industries of the future that will drive urban (and economic growth)? Is there a place for industry and manufacturing? Is there a place for agrarian pursuits, traditionally found outside the city core?
• How do we build economic capital in lower-income neighbourhoods, and empower traditionally marginalized groups to reach greater economic success?
• How does a(n inner) city interact and relate to a larger regional economy?
• What’s the role of business, government, NGOs, and every day citizens in making this happen?
• What will the city of the future look like?

Some of the brightest, most talented urban thinkers are in the room today and tomorrow. I can’t wait to hear what they have to say.