How Cities’ Big Nonprofits Are Tackling Income Inequality

First seen in POLITICO Magazine

By some measures, Chicago has one of the country’s largest and most diversified economies with 4 million workers, but the city has struggled to uplift historically segregated and economically depressed communities on its West and South sides.

“Our city faces and experiences racial disparities that are among the nation’s largest racial disparities on pretty much every social issue you can think of,” Niketa Brar, co-founder and executive director of Chicago United for Equity, said.

The problem is not that there are no jobs; unemployment dropped in the Chicago area to 3.2 percent, which is even below the national rate. It’s that the people who could use them the most, like in Austin, on the West Side of Chicago, where nearly a third of households live below the poverty line and over one fifth of adults are unemployed, are not benefiting. In fact, the very success of the city’s economy is having a negative impact on those communities, according to some urban policy experts. Most often gentrification decreases employment opportunities for longtime residents in neighborhoods it effects, Rachel Meltzer, an associate professor of Urban Policy at the New School, found in a 2015 paper on gentrification and employment opportunity.

Anchor institutions, those that are community cornerstones throughout economic changes, offer enough buying and hiring power to attempt to shift this pattern. And specifically, nonprofit universities and hospitals can nimbly move to local resources because of their complete control of funds.

Chicago started CASE, Chicago Anchors for a Strong Economy, in 2014, to study the supply and employment needs of anchor institutions and encourage them to source jobs and materials locally. It has helped 237 businesses secure new contracts with anchor institutions, leading to 180 jobs.In 2019, CASE helped a local business win a $3-million contract with multiple public universities to develop a knowledge management platform.

The program is going through a revamp, but it has inspired similar programs nationally. Philadelphia launched PAGE, Philadelphia Anchors for Growth and Equity in 2018.

Jeff Hornstein, executive director at Economy League of Greater Philadelphia which is PAGE’s partner, said PAGE focuses on two sides of increasing local economic growth: employment of local residents and supply chains that source locally. Universities and hospitals are ideal institutions to partner with because it “allows those institutions with multimillion-dollar contracts to go to suppliers and ask them to prioritize local sources,” Hornstein said.

EMSCO scientific, a minority-owned laboratory supply firm, contracted with Penn State after PAGE helped negoitate a contract. The partnership has it positioned for “explosive growth.”

According to Hornstein, PAGE is not yet tracking the impact through the number of jobs generated. “It took decades for supply chains to get the way they are, and will take five to 10 years for us to reorganize them so that they produce significant numbers of new jobs,” he wrote in an email.

CASE was able to provide Chicago health service provider AMITA with analysis of its suppliers and highlight areas where it can redirect employment or supply sourcing to minority-owned local businesses, such as pest control, furniture, IT and legal services.

For AMITA, stepping into the role of tackling local economic inequality is “the right thing to do,” Pamela Mitchell-Boyd, systems director for diversity and inclusion at AMITA, said. But it also improves the services it offers.

When staff in hospitals match their surrounding demographics, clients are more comfortable, and the community is more engaged with the institution as a local resource. The health services provider employs over 20,000 people. CASE is assisting with a diversity symposium geared at “enhancing our connections with minority-, women-, small- and veteran-owned businesses, particularly in the construction area,” Mitchell-Boyd said.

“It’s providing in many areas that might be blighted, an avenue out of the blight,” Mitchell- Boyd said. “It’s really important to be servants of the population that we serve.”