3 Ways To Build an Inclusive, Equitable Model of Economic Opportunity
By Alysa Hannon, Senior Project Manager, Center for Economic Transformation's Social Capital Desk
How do cities build a new urban practice?
On September 16, NYCEDC staff gathered for a discussion on this very question as part of our Policy to Practice Speaker Series featuring Ben Hecht, President and CEO of Living Cities. The event was organized by NYCEDC's Social Capital Desk and Chief Diversity and Innovation Officer Valerie Kennedy.
Hecht shared insights on innovative urban practices across the U.S. that are catalyzing lasting change and achieving better results for low-income neighborhoods and people faster, including new models for job and firm creation and community engagement.
"Once-in-a-lifetime developments, such as the internet and globalization, have transformed the way people live and how the world works.
[Public] systems that we always thought were going to produce more opportunities for the next generation than they did for the last, no longer do so.”
We've summarized three key takeaways from Hecht's remarks below. Not only were the new models and developments cited inspirational for their creativity and demonstrable success, but the urgency of their consideration was underscored.
“Unless we ferociously change course,” he said, “the majority of our citizens in 2040 will be less educated, less prosperous, and less free than our current majority, due to decades of dysfunctional systems, disinvestment, mass incarceration, and disenfranchisement of people and communities of color.”
Job and Firm Creation
Despite the emphasis on entrepreneurship in recent years, access has dramatically decreased over the last few decades.
As a percentage of bank balance sheets, small business loans have fallen from 51% in 1995 to 29% in 2014 and contrary to the popular narrative, new business creation in the U.S. is at its lowest point in 30 years.
On the upside, the 2015 Local Economic Conditions report found that large urban areas have seen and benefited from an influx of young workers and talent in search of jobs and opportunity. With this framing, Ben noted that systematic supports for new, innovative pathways to entrepreneurship, like the rise of “urban-serving businesses”, are vital to urban growth. He called attention to the catalyzing role mission-oriented support institutions like Tumml, an urban-focused, impact-oriented accelerator, and DC’s Digital Tech Fund, can play.
On the access side, Ben discussed innovative tools presently employed on the margins of the financial sector.
Practices like character-based lending facilitate capital flow to entrepreneurs who cannot meet the collateral requirement that many traditional financial institutions demand, one that leaves many of our most innovative thinkers deterred and many new businesses unfunded.
Other trends, like the seismic shift in millennial wealth both from inheritance transfers and the tech boom, stand to serve as significant channels of funding for impact investments. High-net worth millennials are actively seeking social return alongside financial gain and this is an important signal for urban entrepreneurs.
Within this framework, there is a movement afoot to also see these investments take hold in places and cluster in communities to which investors feel connected. Historic cities like New York City are uniquely well-positioned to capitalize on these developments, and campaigns like the Calvert Foundation’s Ours to Own and Kiva’s Kiva City have already begun to pave the way at the community level.
Finally, as governmental institutions grow more outcome-focused and data-driven, Ben highlighted the realm of possibility before us and cited a number of recent wins or experimentations in the public-private partnership space.
The pay-for-success financing model of the Social Impact Bond has received sustained attention at the highest levels of government and buy-in from some of the biggest players in the private sector. While the model has not been perfected, the idea of putting private capital to work in innovative ways and prioritizing outcomes over outputs has sparked productive conversations about collective problem-solving and has brought many of the relevant actors out of their silos. What powers this kind of approach is data, and governments are quickly thinking big on data. New York City led the nation in the open data movement and now there is an echoing call for even more dynamic platforms to collect, refine, and synthesize the information that drives decision-making.
Armed with a suite of technological tools, it has never been more important for governments to engage communities in the decision-making process and cities like Philadelphia have found creative ways to give many decisions entirely back to citizens.
We appreciated the opportunity to learn more about the innovative work Living Cities does to equip governments with tools of equitable urban practice. While the challenges we face were brought into stark view, we shared Ben’s optimism in seeing the great opportunities present in great challenges.
To learn more about Living Cities, visit their website.