A network of 16 private and public anchor institutions in Chicago, including hospitals, universities and city and county government, has struck $51.6 million in contracts with small local businesses, creating 180 new jobs in the process. The network is led by World Business Chicago, a non-profit public-private partnership chaired by the mayor. It uses a data- and demand-driven program to both analyse the procurement policies of the anchors and to identify which local businesses are equipped to provide for them. Those businesses come from a wide range of sectors, from professional services to construction and food provision.
Results & Impact
16 anchor institutions have signed almost 50 multi-year contracts worth $51.6 million with small local businesses. 180 new jobs have been created as a result. World Business Chicago has also helped build the capacity of 368 small businesses that were not yet ready to become suppliers for anchor institutions.
World Business Chicago, City of Chicago, Polk Bros. Foundation and 15 anchor institutions including businesses, universities and hospitals
World Business Chicago (WBC), a non-profit public-private partnership chaired by the mayor, brought together 16 anchor institutions from Chicago’s public and private sectors to form Chicago Anchors for a Strong Economy (CASE). WBC uses data-driven analysis to identify where portions of the anchors’ spend can be redirected to local businesses. They look at both the supply and demand sides, assessing the procurement policies of the anchors and the capacities of local business. Where appropriate, they match the two and help develop the relationship between them, in part by showing small businesses how to work with much larger organisations. CASE also offers strategic direction and support programs for local business that lack the capacity to serve as suppliers for institutions.
Chicago, United States
Cost & Value
Unknown, but Polk Bros. Foundation, a local family foundation, provided the initial capital and all anchor institutions pay an annual contribution.
Running since 2014
Although the network of anchor institutions is not a new idea, several elements of CASE were novel, such as its focus on a data-driven approach and the diversity of its anchor institutions. This meant that, in some respects, there was no existing template that they could draw on. The diversity of anchor institutions in particular, while a strength, brought its own challenges. Each institution has its own priorities, and sometimes these do not align. Moreover, in some ways several of the anchors are actually competing in the market place. Therefore, it has at times been challenging to balance these priorities for the common goal of benefiting Chicago. Aside from that, the difference in the pace and nimbleness in decision-making and action between a startup like CASE and the giant anchor institutions it works with is something that both sides have had to adapt to.
CASE was partly inspired by Evergreen Cooperatives of Cleveland, a network of anchor institutions focused on creating green jobs and economic stability in low-wealth communities. Similar projects have also taken off in Detroit, Memphis, Albuquerque and Philadelphia.
A network of 16 anchor institutions in Chicago has struck $51.6 million of multiyear contracts with local businesses, creating 180 new jobs as a result.
Chicago Anchors for a Strong Economy (CASE) was founded in 2014. Anchors are major institutions that procure millions of dollars of goods and services and can be harnessed to act as engines of economic activity in their communities through local purchasing, hiring and investment.
This particular network of anchors is an initiative of World Business Chicago (WBC). WBC is a non-profit public-private partnership that is chaired by the city mayor. Since 2014 it has brought together a range of public and private anchors, including universities, hospitals, banks, and two levels of government: Cook County and the City of Chicago.
“In other cities, you stand out when you do something in the sphere of civic engagement—in Chicago, you stand out if you don’t,” said Nikita Nautiyal, Executive Director of CASE. “We started with seven anchors and now we have 16. There was a lot of positive peer pressure involved: our anchors acted as ambassadors.”
Getting the anchors on board was made easier by virtue of the association with WBC, which has strong ties to the city and its businesses, and the backing of Polk Bros. Foundation who provided the money to start CASE. Once the anchors had signed on, CASE had to show them how they could redirect a portion of their spend towards local businesses and communities.
“We are trying to impact four areas: procurement, workforce development, business development and neighbourhood development. We do this with a data-driven approach to find where the gaps are and to build programs that address them.”
First, they analyse the data on the demand side of the problem, such as the procurement policies of the anchors. Nautiyal gave the example of a medical anchor on the West side of Chicago. In that instance, CASE analysed the anchor’s data at two levels: spend and hiring.
“It took a considerable amount of work because these institutions are often decentralised when they do their buying and hiring, but with a bit of coaching, they came around to the idea of bringing their data together and trusting us with it. Once we had the data, we helped them identify what their total spend was, what they weren’t buying locally—and then we got into the question of why and how we could help them.”
“Similarly, on the hiring side, we were looking at trends from the past few years. How have they been hiring, who have they been hiring, where do they see the most turnover, where do they typically hire from—and then let’s come to how we can help. We don’t make assumptions about demand; we look at the data and come to revealing and actionable conclusions. They find opportunities that would otherwise have been missed.”
Having analysed the needs of the anchors on the demand side, prospective local businesses on the supply side are thoroughly assessed too.
“At the moment, the minimum qualifications for small businesses are two years in business, three employees and between $150,000 and $20 million in annual revenues,” said Nautiyal. “But the average revenue size is between $5 million and $7 million. It’s important to understand that if you are trying to be a supplier to a large institution, you need to be of a certain scale or you may not have the capacity. We would be doing a disservice to both sides by making that sort of connection.”
Having analysed both the supply and demand sides, CASE, where appropriate, brings anchors and local businesses together and helps develop the relationship. So far, almost 50 multiyear contracts have been signed as a result, worth $51.6 million.
CASE has promoted local businesses from a wide range of sectors, from catering to manufacturing to security. For example, one business that works in site preparation for construction, Ocean Mist, grew more than 40% in 2015 in part thanks to a contract secured with the City of Chicago.
However, some local businesses are not ready to serve as suppliers for anchor institutions. For them, CASE has a support program to help them build their capacity.
“We realised that capacity building was something that many community partners were already doing a pretty good job of,” said Nautiyal. “But they were not able to figure out how exactly they should be training these businesses to become suppliers for institutional buyers. So that’s where our diagnostic tool to identify gaps in a business’s capacity came in.
Using this data-driven tool, CASE places small businesses into two service levels depending on their size, experience and capabilities. One is for businesses that are already mature enough to interact directly with anchors. The second is for those that require some additional support, and they are directed towards local business support services.
Since CASE started in 2014, some 368 businesses have graduated through this capacity building program. By nurturing and helping link them to Chicago’s anchors, CASE has accelerated the development of local businesses and strengthened community wealth.
While there are many other networks of anchor institutions around the world, CASE stands out on three levels: the diversity of its anchors, its data-driven approach, and its funding model. It’s notable that whereas most such networks are funded solely by philanthropy, anchors in CASE pay an annual membership fee—perhaps on account of the quality of the service they receive.
(Picture credit: Pixabay)