ImpactAlpha, Oct. 29 – With inequality at an all-time high, cities are rethinking their decades-old approach to community revitalization.
A “quiet revolution” is transforming their work, particularly in underinvested urban areas, according to a new report. Out: top-down, one-size-fits-all, debt and subsidy-dependent solutions. In: locally-driven, collaborative solutions that foster community ownership and prosperity.
Opportunity Zones legislation, aimed at long-term equity investments in neighborhoods, is accelerating the shift. The emerging community wealth model focuses on “developing people rather than buildings, with a blend of public, private, civic and community leadership and capital,” write Ross Baird and Daniel Palmer of Blueprint Local, Accelerator for America partner Bruce Katz and Jihae Lee of the Nowak Metro Finance Lab at Drexel University in Towards A New System of Community Wealth.
The approach “has the potential to bring hundreds of billions of market and civic capital off the sidelines and spark transformative outcomes for disadvantaged communities.”
Among the strategies the authors suggest:
Uncover community assets
Big data can reveal hidden economic potential, for example, by identifying street corners that are ripe for market rejuvenation or categorizing the nation’s 8,762 opportunity zones into distinct typologies, facilitating investment.
Expand businesses owned by people of color
Increasing the number, size, and scale of businesses owned by their residents is central to the new community wealth building. Key ingredients: capital, physical spaces, rich ecosystems and the support of anchor institutions. In Chicago, where just 2% of local businesses are Black-owned and less than 6% are Latinx-owned, Accion Chicago and Small Business Majority have stepped up to take on the role of ecosystem builders.
The ‘two-pocket” divide between philanthropic giving and market investment is beginning to give way as investors align their investments with their values. That’s especially important when it comes to place-based investment. “One-pocket investment marries private and civic capital and channels the vast stores of local wealth back into local communities,” write the authors.
Spread the wealth
New structures and mechanisms are needed to enable residents to share in the value created by investments in their neighborhoods. Rent-to-own models, employee stock ownership, and ‘neighborhood trusts’ build local ownership and control. One example: Shift Capital is looking to test the idea of a neighborhood trust, a mashup of a community development corp. and community land trust, in Philadelphia.