Contributions of Frog Hollow Institutions to the Economic Development of the NeighborhoodPrepared by: Diana Evans·Professor
of Political Science·Trinity College Prepared for: Hartford Areas Rally Together·660
Park Avenue Trinity Center for Neighborhoods Introduction This report investigates two approaches to the economic development of Frog Hollow. Both concern ways for the neighborhood and Hartford Hospital, the Institute of Living, the Connecticut Children's Medical Center, and Trinity College to work together to their mutual advantage. The first approach concerns the employment of greater numbers of neighborhood residents by the four institutions. The second addresses strategies for increasing the amount of purchasing done by those institutions within Hartford, and especially within Frog Hollow. The third question raised by HART concerns strategies for increasing retail purchases within the neighborhood by clients and employees of the institutions. With regard to that question, there was little information available; the information that could be ascertained is summarized briefly below. The Literature The literature in this area is small and for the most part not particularly helpful on a practical, applied level. As the authors of one article note, there is no adequate theory of neighborhood economic development, so it is necessary to look at practice for elements of an implied theory. In particular, books about economic development are thin theoretically and substantively; and assessment of different approaches has been rare (Wiewel, et al., 1993, pp. 80 and 94). Similarly, "locally-based development efforts of national or racial 'minorities' in U.S. cities have not been so inspired by 'academic theories' as they have been the result and basis of social praxis" (Betancur and Gills, 1993, p. 191). Nothing appears to be available on institutional purchasing initiatives. However, there is some research on local employment programs. For example, one article argues that the success of employment training and placement efforts depends on the "strength of the contacts with the private sector, the stability of the job base, and the support for basic skills, job readiness, as well as ongoing support" (Wiewel, et al., 1993, p. 92). Others have found that when new firms come into a neighborhood, failure to employ local people stems from a combination of mismatches between employers' needs and residents' skills, "employers' distrust of neighborhood residents, and residents' lack of access to job contacts and information." To be successful, programs must deal with these problems (Committee for Economic Development, 1995, 20). The programs surveyed for this report support these arguments. The Programs At least four programs in each category, employment and purchasing, were examined in detail. The programs are located in Boston, New Haven, the Bronx, Pittsburgh, Philadelphia, and Baltimore. Interviews were conducted with people in each program. Institutions in a number of other cities were contacted, but they either did not have such initiatives or their programs were so new as to be unhelpful. The employment and job training initiatives are described first, then the purchasing initiatives. At the end of each section is a list of those approaches that appear to be generally accepted as good practice. Describing these programs is relatively straightforward. Evaluating them is another matter. I found that very few kept usable data on outcomes. Others appear to have data but are unwilling to share it. This may either be taken as an indication that the programs are not as successful as their sponsors would like, or it may be indicative of the political sensitivity of such data. Indeed, many of those interviewed alluded to tense and sometimes openly hostile relationships between the community and the large institutions; these programs are attempts to change those relationships into positive, mutually beneficial ones. Employment and Job Training Initiatives Health Careers Program, Northside Leadership Conference, Pittsburgh, PA This is one of several initiatives of a partnership composed of Allegheny General Hospital (AGH), the Northside Civic Development Council, and 14 neighborhood groups that make up the Northside Leadership Conference. The hospital, which employs approximately 5,000 people, is located in a low-income area of Pittsburgh. Its partnership with the neighborhood groups was formed in 1989. Each initiative (others include neighborhood reinvestment and purchasing initiatives) is overseen by a committee composed of representatives from the neighborhood and the hospital. Staff work and general oversight are provided by the Northside Leadership Conference, whose executive director is Jack Hess. The employment committee includes the Vice President for Human Resources at AGH and a couple of her staff members. Additionally, the committee meets with the president of the hospital twice a year. The employment committee (like all of the others) negotiates a formal agreement every two years (enclosed) which specifies goals and objectives for hiring. These agreements are critically important, as they commit the hospital and the community organization to certain goals. 1. Origin of Program In the 1980s, AGH was in the process of expanding; it incurred neighborhood hostility by demolishing houses to build a large garage. People were also upset about helicopter noise from the hospital. AGH began losing some battles with the community and decided that they needed to improve their relationship with the neighborhood. The Partnership was initiated by AGH. 2. Program Goals and Objectives The Partnership's goal is to increase the number of neighborhood (known as the North Side) residents working at AGH as a percentage of the hospital's total work force. The employment committee agreed to the following program objectives (among others): give preference in hiring to neighborhood people, all other things being equal; provide job listings to a neighborhood employment center for possible referral of candidates; maintain liaison with the employment center concerning AGH's employment needs and the status of candidates referred to the hospital; issue quarterly reports on employment of North Side residents by neighborhood and job classification, compared with all hiring done during the quarter. For construction laborers (but not other job categories), AGH agreed to a target of 5% of all trade hours and 30% of all laborer hours being North Side residents. Otherwise, there are no quotas. 3. Program Staffing The program is staffed by the coordinator of the Northside Partnership who is paid by the hospital, although he is located at the Northside Leadership Conference; there is also one full-time employment counselor paid by the city. The program has had this staffing level since its inception. 4. Program Operation The employment counselor refers people not only to AGH but to anyone who is hiring in the city. She develops listings in several ways. She periodically visits the human relations directors at various employment sites to learn what openings they have and what skills they need. If the employment counselor sees a substantial need for a specific skill, she can counsel clients on what kind of training they should get. She gets 15-20 listings per day from employers and from the Pittsburgh Job Bank; AGH sends all job listings to her. She also trades listings with other neighborhood employment projects. When job seekers first come into the agency, the secretary gives them an information sheet to fill out and tells them to make an appointment with the employment counselor and to come dressed for an interview (all practice for real interviews). At the appointment, the employment counselor helps them to develop a marketable resume and a cover letter. She provides the applicants with a format for the resume and cover letter and encourages them to go home and write it in longhand. She sees this as a process of education for this and future job applications. Then they come back and use the agency's computer room, which has computers loaded with a resume writing program and WordPerfect, as well as printers. If the applicants still need help either with the computer or the resume itself, she sends them to the local library's career center, where they get coaching. She finds that all employers are looking for resumes for all jobs, and has had good results with resumes for people with industrial and technical experience who traditionally do not have resumes. She keeps the resumes on file and if necessary, calls people who are qualified for listings as they come in. With respect to interviewing, she provides practice sessions. She gives them a handout of the 20 most often-asked interview questions, which they discuss how to answer. She advises them on how to talk about especially difficult issues such as a criminal record. (It should be noted that this employment counselor came to the job with a number of years of experience in a similar job.) Before sending a client to an interview, she does some screening concerning their qualifications and references. She meets with them at least twice before steering them toward particular jobs. In turn, she sometimes calls employers to recommend a person; some employers prefer her to call about all applicants. Her effectiveness in placing people relies on carefully-developed relationships with employers. AGH has agreed to give Northside Partnership's applicants preference for interviewing as well as employment. Once an applicant is hired, the employment counselor follows up with the employer and the employee to be sure that everyone is happy. If a client later comes in with a job-related problem, she provides counseling. The employment counselor noted that the first week, before the employee gets a paycheck, money is often a problem, as the person may have trouble paying for transportation and clothes. She is working with the public transit company to try to get grants for one-week bus passes for that first week. Other neighborhood employment centers have a voucher program with clothing stores to get clothes for interviews and needed tools or supplies (this is funded by a local nonprofit organization). In a previous job, this counselor held three-day workshops once a month on job readiness and job searching and retention. In these workshops she covered communication skills, ethics, conflict resolution, goal-setting, and employment law. This agency does not do job training. However, AGH provides an educational assistance program (seen enclosed Northside Partnership Agreement, "Education Initiatives") in which they fund training for specific allied health occupations. They provide money for tuition, fees, books, lab fees, and uniforms. They fund 20 Northside residents per year and agree to employ them if jobs are available. In turn, students must accept employment for a specified period, at the end of which obligations to repay financial assistance are forgiven. 5. Outcomes 20% of the hospital's employees are Northside residents. In the first quarter of this year, 48% (28 full time employees) of the hospital's new hires were from the Northside area. It could not be ascertained what percentage of that total was due to the Northside Partnership's efforts; nor could the percentage of their own clients who get jobs through the program be determined. Some of the neighborhood people the hospital hires do not go through Northside Leadership Conference's program, but they are counted in the hospital's numbers. The hospital recently reduced its workforce, but did maintain the Northside share of employment at 20%. In the hospital's education program, 80% of participants are employed at the hospital or another health facility. 6. Essential Elements for Success According to the coordinator of the program, it is essential that the president and CEO of the hiring institution is totally committed to the program. If he or she is not, "it doesn't happen." In their case, if a member of the Partnership is unhappy, they can meet with the hospital president, and that has been very helpful. This commitment must filter down to department heads. Additionally, negotiations about the relationship and hospital commitments must occur with people who have decision-making authority. In their case, the appropriate hospital department heads come to the partnership committee meetings. Walk to Work, Fenway Community Development Corporation, Boston, MA The Fenway neighborhood in Boston contains a high concentration (the nation's highest) of medical institutions, including Brigham and Women's Hospital and Children's Hospital. A low income area, its residents are a mix of students, single heads of households, elderly people, and immigrants (Seedco, 1995, Appendix B, p. 11). The institutions employ approximately 23,000 people, but few are residents of the Fenway. The program began in 1995. 1. Origin of Program The Fenway Community Development Corporation initiated the program. They went to a community service vice president at one of the hospitals who was sympathetic with the Fenway CDC's goals, and together they came up with the Walk to Work program. Although run by the Fenway CDC, the program consists of a partnership of a number of community organizations, businesses, and large nonprofit institutions; many of the latter are represented by MASCO (Medical, Academic, and Scientific Community Organization, Inc.); other large members include the Museum of Fine Arts, Northeastern University, and the Boston Symphony. For funding, they took advantage of Boston's linkage policy, which requires developers to contribute to trust funds for jobs and housing. In this case, they received funds derived from a local hospital's development activities. 2. Program Goals and Objectives Overall, Walk to Work has three goals: increase residency in the Fenway by employees of the institutions in the neighborhood, increase employment of residents by those institutions, and increase the institutions' purchasing in the neighborhood. In terms of employment, the 1996 program objective is that 45 neighborhood residents be newly employed by the major institutions. The idea of establishing hiring quotas was considered but rejected because it was unacceptable to the institutions. 3. Program Staffing The employment program is staffed by an employment counselor who does client intake, cultivates ongoing relationships with human resources officers at the institutions, maintains job listings from all the local institutions and businesses as well as employment training listings, and coordinates pre-employment counseling. Additionally, human resources representatives from the institutions come in to the agency to do pre-employment counseling. Pre-employment counseling consists of evening courses of two hours per week for four weeks. Much other training for job readiness is contracted out to others; for example, the YMCA did a 24-week English as a second language (ESL) course. The agency also has volunteers who help clients learn to use the computers. 4. Program Operation As noted, the program provides 4-week pre-employment counseling courses. In addition to contracting out ESL training to the YWCA, they have plans to contract out a clerical training program. Clients use their computers for job search in the daytime (listings are on the computers) and at night they learn to use different kinds of software. They have 8 computers, both Macs and PCS donated by the Bank of Boston, and volunteers who teach applicants the basics of computer use. The employment counselor screens people for particular jobs. Applicants then go to interviews with a yellow card which shows that they have come from the Walk to Work program and have been screened for the position. The institutions made a "gentlemen's agreement" to tell Fenway what happened to these applicants. Walk to Work in turn has a tracking system to find out why people did not get the job for which they applied; if necessary they refer the applicant to a training program. If the applicant was qualified, they lobby the employer to hire the person. They feel that tracking is important because it makes the institutions sensitive to how they evaluate applicants from Walk to Work. 5. Outcomes Early in 1995, the program got no placements; then they began working more closely with human resources people and in the process got better at screening people for particular positions. Their goal in 1995 was to place 32 people; they met this goal, but only by including training placements in their numbers. The goal in 1996 is 45 placements, of which 75% must be in jobs. The biggest obstacle is that all the hospitals are downsizing their work forces. Another problem is that the neighborhood has many chronically unemployed people (it is home to a large shelter), many of whom have substance abuse problems. 6. Essential Elements for Success A program must have a reputation for sending only qualified applicants; it must also develop and maintain relationships with human resources people at the hiring institutions. Both are accomplished in part by doing effective screening of the applicants before sending them to employers. Job Links, Pittsburgh, PA This program is a link between the University of Pittsburgh, University Medical Center, a number of banks and other employers in the area and the neighborhood. Job Links is an independent nonprofit agency that provides pre-employment counseling, referrals to employers, and follow-up counseling to the mostly poor residents of the neighborhood in which the hiring institutions reside. 1. Origin of Program The program was started in 1988 by two community organizations; it consolidated pre-existing programs. The current program began at a time when the university was expanding and taking over real estate; the community reacted negatively, and this program helped to improve relations with the neighborhood. University Medical Center helped them get established by providing space in a building they owned in the neighborhood. The program is funded privately, not by the hiring institutions, but primarily through grants. 2. Program Goals and Objectives The goal is to increase the number of neighborhood people hired by these institutions. There are no quotas, but the agency's target is to place 70% of the approximately 100 people per year who complete pre-employment training. 3. Program Staffing There are three staff members: a "job developer" who maintains relationships with hiring institutions; a pre-employment coordinator who trains clients for job readiness; and a fundraiser. 4. Program Operation The agency maintains job listings. Clients must have at least a high school education or G.E.D. Job readiness training consists of a three-week program with classes 3 to 4 days a week. Clients are instructed in how to respond to advertisements; job interview techniques (described as the "bread and butter" of the trainings); how to write resumes and cover letters; how to dress and how to talk (in terms especially of acceptable language) at the interview and on the job. The agency has a resume-writing program and they help people use them to prepare resumes and cover letters. The employers also give the agency job application forms, which allows applicants to get help while filling them out. When appropriate, Job Links refers clients to education and training programs. The job developer cultivates human relations people and "makes the matches" between employers and job seekers. To do this she screens people for available jobs; gives them advice on applying; calls human resource people to tell them about particular candidates; and follows up with candidates after the interviews. In the future, they plan to maintain ongoing contact with their clients after they get jobs to counsel them on problems as they arise. Applicants usually indicate to employers that they are coming from Job Links, as they feel that it gives them advantage. One way that they do this is to use Job Links as a reference in their applications. 5. Outcomes Figures here were not available; the agency did estimate that they had nearly met their July-June objective of placing 70% of their 100 applicants, but the information provided was very uncertain. 6. Essential Elements for Success The job developer and pre-employment trainer have to work very closely. Both pre-employment training and job referral (in the form described here) are essential elements for a successful program. A major challenge is to change the expectations of their clients and to "get them to adapt to a different culture while affirming their own." As noted earlier, they do this in part by giving them guidance about acceptable workplace language and dress. They emphasize that to be successful, clients must adapt to what the employer is looking for rather than merely what the employer will tolerate. Johns Hopkins Hospital/Historic East Baltimore Community Action Coalition The Johns Hopkins Hospital and the Historic East Baltimore Community Action Coalition are beginning a systematic effort (still in the planning stages) to increase the percentage of East Baltimore residents hired by the hospital. The Director of Career Services at Hopkins said that the hospital already has a "preferential hiring" program, whereby they try to hire community residents. Forty percent of their employees are community people. However, East Baltimore is eligible for federal Empowerment Zone funds, and these two organizations plan to use the funds for pre-employment training for community residents. The hospital has established a goal of hiring 40% of their entry level people in 8 or 9 job categories, including environmental services and nutrition, from the neighborhood. The Career Services director at Johns Hopkins said that such programs can be difficult to implement because supervisors worry that neighborhood people will not be good employees. The impetus for this new program came from the mayor's office, inspired by people in the community. The Historic East Baltimore Community Action Coalition will be used by the hospital as a "gatekeeper"; that is, all community organizations will send applicants who need occupational training applicants there, and the Coalition will refer them to training programs. Applicants must pass the training program, read at the 12th grade level, and test negative for drugs before they are referred to Hopkins by the gatekeeper. Hopkins sees this as a pilot program that will eventually involve other local employers and higher-level skills. Educational Opportunity Center of the Bronx This is one of 9 or 10 Educational Opportunity Centers funded through state legislation. The Bronx center is based in a disadvantaged community and is part of the State University of New York. This is a large program (1,000-1,200 students per year) that concentrates on education and job training; it is not directly analogous to anything contemplated in Frog Hollow, so I will summarize it briefly, extracting elements that may be helpful here. 1. Origin of Program State legislation (see introductory paragraph). 2. Program Goals and Objectives Trains people (mostly AFDC recipients who have been moved into transitional benefits) to enter and maintain themselves on an occupational track. They stress critical thinking, mastery of written and spoken language, computational skills, and computer training, all to help them prepare for the 6 to 7 job changes that the average person makes. The courses are certificate programs, but not credit-bearing courses. Training typically lasts 6 months or less. 3. Program Staffing The program is staffed by a large number of instructors, case managers, and job placement specialists. Each student has his or her own team consisting of an instructional specialist, a case manager, and a job placement person. 4. Program Operation Funding is through not only state and city funds, but also JTPA funds and contracts with some employers. They train people in allied health fields, computer operation and technical support, security, etc. Remedial education is done, but it is targeted toward training for a specific occupation. The agency recruits students through public service ads on radio and public access cable TV as well as by mailings to community organizations and potential employers and unions. They provide a variety of support services, including a day care center (publicly funded) and resume writing on computers (with assistance), as well as tracking people once they get jobs for 90 days. In addition to maintaining job listings, employment counselors maintain relationships with employers. 5. Outcomes An estimated 50-60% of entering students get jobs or enroll in college at the conclusion of training; an estimated 60% of those who get jobs keep them for 30-90 days. 6. Essential Elements for Success A major element is finding job opportunities for which their clientele can be trained. For example, they responded to the increasing complexity of coding medical records for insurance purposes by creating a program to train medical records technicians. Also, as higher paid positions are cut, they have trained people for lower-paid technical jobs who often do what better-paid professionals previously did. One of their biggest challenges is acquiring expensive 21st century equipment to provide up-to-date skills. The most important element for success is establishing an environment that communicates seriousness to students. The program stresses punctuality, appropriate dress, and acceptable work. Summary of Findings for Employment Initiatives Except for the Bronx program, which is part of SUNY, none of the placement programs does extensive training. Educational efforts are either subcontracted out (if the program has substantial dollars to pay for it) or are funded and operated by the hiring institution itself. However, job readiness is a major issue, and neighborhood nonprofit employment agencies deal with it by doing extensive pre-employment counseling and by referral to training programs. Job retention is also an issue, and tracking programs that help people develop strategies for dealing with such problems as child care emergencies and personality conflicts are valuable. The elements that are common to all or most of the programs are the following (details are in the individual program descriptions):
Purchasing Initiatives West Philadelphia Partnership/University of Pennsylvania The West Philadelphia Partnership (WPP) is a coalition of educational and medical institutions, businesses, and community groups. Its goal with respect to purchasing initiatives is to increase the amount of purchasing done within West Philadelphia and with minority-owned businesses by institutions in the neighborhood. The University of Pennsylvania has taken the lead in this effort. The WPP hopes its efforts will serve as a model for the other institutions; however, expansion of this effort is in its infancy. 1. Origin of Program While community pressure has existed for years for Penn to become more involved in neighborhood improvement, the new (as of 1994) president of the University of Pennsylvania, Judith Rodin, made the revitalization of West Philadelphia a priority of her administration. Penn's "buy local" program is one manifestation of this effort (Seedco, 1995, Appendix B, p. 13). However, the current director of Penn's purchasing department was hired in 1984 in part to increase Penn's purchasing in the neighborhood. So this has been important to some extent for over a decade. 2. Program Goals and Objectives Penn's goals are to increase the amount of purchasing dollars that flow through community-owned and minority-owned businesses. 3. Program Staffing As it is now, the program is primarily Penn's, and purchasing is done in the usual ways, including through the purchasing department (many departments make their own purchases) which is the center of the effort. 4. Program Operation One of the partners in the community effort is the West Philadelphia chamber of Commerce. It sponsors a vendor fair to which the purchasing managers at the large institutions come; the Chamber also sends notices to local businesses, who come and talk with the purchasing managers one to one; under normal circumstances such access is sometimes difficult for small businesses. However, the Director of Purchasing at Penn, Bob Michel, considers such fairs of marginal usefulness; he thinks they serve mainly as fundraisers for the sponsoring organization (in fact, the Chamber of Commerce does charge the purchasing institutions $200 for a table) but produce virtually nothing in new business that would not have happened anyway. However, he did note that in the early stages of such initiatives, trade fairs can be helpful. Michel said that his staff members' job performance is evaluated partially on the basis of success in this area. He said that if that isn't done, "you're doomed," because people otherwise don't make the time to pursue local business. Penn's effort is two-tiered. The first is the traditional effort to give small contracts to community businesses. But the purchasing director said that Penn had moved to a higher plateau by using their leverage over their large suppliers. Because neighborhood businesses are primarily retail, not commercial, Penn's approach has been to require some of their major suppliers to develop links with small, minority-owned businesses. Penn has helped these suppliers to set up community-based distributorships; these include an office furniture dealer who opened a local office and a large copier supplier which opened a sales office and training facility where they recruit people from the community for training in copier repair. Penn has provided some technical assistance to local businesses that sought to develop a relationship with the university; for example, it helped one develop a business plan. 5. Outcomes The program resulted in the creation of six jobs in 1994 (Seedco, 1995, Appendix B. p. 14). In terms of dollars spent in West Philadelphia, the 1995 goal was $13 million. The actual amount exceeded the goal by $5.3 million. (The amount of money flowing through minority-owned business was tracked separately.) Additionally, they sought to aid in the creation of 5 new businesses in 1995 and accomplished it. However, when asked whether these major suppliers were required by Penn to employ people in the community, the purchasing director said that they were not; they were simply told that Penn hoped that they would. Thus, it is not clear how many neighborhood people benefit from local businesses set up by major suppliers. Moreover, the dual emphasis on community-owned and minority-owned businesses means that some of the energy is not necessarily going into developing businesses in the immediate community (as far as minority-owned businesses are concerned). 6. Essential Elements for Success Penn's purchasing director stressed the importance of credibility, that is doing what you say you will in order to maintain the institution's relationship with the local business community. He also said that trade fairs, local and minority business directories and business seminars offer some benefit in the early stages of such programs, but show declining marginal returns over time. "Buy in New Haven," Yale University 1. Origin of Program As part of his New Haven Initiative, Yale President Richard Levin announced in October 1994 the "Buy in New Haven" program, along with an effort to consolidate all of Yale's travel business with one New Haven travel agency and encourage use of Tweed-New Haven Airport. 2. Program Goals and Objectives In the 1994-95 fiscal year, the goal was to increase Yale's purchases in New Haven of "routinely purchased items" (RPIs) by 10% after inflation. 1992-93 spending on such items was $7.9 million. The "routinely purchased items" category was designed to exclude highly specialized products that could not be purchased in New Haven. Included RPIs are medical supplies, catering, data processing services and software, laundry, photocopying, printing of publications, equipment rental and maintenance, food and beverages, custodial services, office expenses, and equipment and furnishings. The first stage of the program involved purchasing from existing New Haven and minority-owned businesses; the second stage involves persuading major suppliers to open facilities in New Haven. 3. Program Staffing This is staffed by Yale through its new Office of New Haven affairs, although it is partially implemented by the Purchasing Office, Physical Plant, dining halls, and individual departments. 4. Program Operation The program was introduced to deans, directors, department chairs, and business managers in meetings that informed them of the program and asked for their cooperation. Yale's Purchasing Department has worked on developing new vendors and increasing business with existing New Haven vendors; its policy is to recommend New Haven vendors to end-users in the University where price, quality and service are comparable to those of non-New Haven vendors. Although the Purchasing Department makes many of Yale's purchases, each department makes its own buying decisions, so the program relies in part on voluntary compliance. Yale advertises its program in New Haven publications; these ads solicit contacts from businesses to the Purchasing Department. This is part of their effort to get more local businesses to participate in the bidding process. To do this, departments that make large volume purchases, such as Physical Plant and the Associate Director of Materials and Contracting, have met with New Haven businesses to inform them about what it takes to submit a winning bid. (Yale has not given preferences in bidding to New Haven businesses, however.) An example of the kind of assistance the Purchasing Department provides to local businesses relates to McCabe Office Furniture. The Purchasing Department held a series of meetings with McCabe Office Furniture and told them what merchandise and types of service would help it get more Yale business on a competitive basis. The Purchasing Department found that McCabe offered "c-grade" furniture; they looked through their own catalogues and found an inexpensive office chair that would be of use to the university. Yale then negotiated a volume price with the manufacturer and asked it to distribute the chairs through McCabe. By doing this, Yale got the benefit of their university-wide buying power and helped a local business as well. They also advised McCabe to put their information, fabric samples, etc. in the Purchasing Office's library. They told them they needed to have someone to answer the telephone at all times, and that their proposals should be typed, not "scribbled on a piece of paper." Similarly, Physical Plant representatives met with a company that offered a substandard product; they told the company how its product could be improved; as a result, Yale is now a regular customer of that company. Yale sees these as mutually-beneficial mentoring relationships. The Purchasing Office finds that they particularly need to give this kind of assistance to businesses just starting out, especially women- and minority-owned businesses. The Purchasing Office develops a list of qualified New Haven and minority-owned vendors by doing a semi-annual investigation of such businesses. They get recommendations from a variety of sources: other vendors, manufacturers, the Connecticut members of the National Association of Education Buyers, minority business directories, and the Internet. The buyer in charge of each type of commodity then formulates a report on what is available from what local or minority sources. They call those businesses in for an interview and develop a file on each one, which is the basis for the Purchasing Office's recommendations to end-users. Additionally, Yale will soon advertise its program internally by maintaining a "Yale Purchasing Home Page" on the Internet; it also has hard copy directories of local businesses. 5. Outcomes By January 1996, Yale announced that it had increased its spending with businesses in New Haven by 16% over two years. As the original goal was a 10% increase in the 1994-95 fiscal year, it is not clear whether they accomplished that in that time period. Indeed, early in the program (as of April, 1995), a memo from top administrators to Yale business managers and people responsible for purchasing projected a decline in spending in New Haven in FY 1995. Thus, the two-year reporting done in 1996 may mask considerable variation in New Haven purchasing during that period. Specific businesses seem to have benefitted. For example, Yale purchases at McCabe Office Furniture rose 100% in 14 months. Yale has also given campus departments pre-approval in the form of "University-wide standing orders" at two local photocopy businesses (however, it is not clear that this is a direct result of the local purchasing initiative). Some businesses located elsewhere in the state have opened New Haven facilities, such as Electrical Wholesalers, a Hartford company, and have successfully bid for Yale business. Additionally, although Xerox closed its Long Wharf office, they opened a new one in New Haven, rather than moving those operations to Hartford (presumably costing some jobs), as they had considered doing. However, overall it is not clear how many if any jobs came to New Haven residents as a result of these efforts. In the newest phase of this initiative, Yale is trying to get large suppliers to open facilities in New Haven. They have particularly been working with Steel case to get them to establish a dealership in New Haven. The company is thinking about it, but there is a feeling that Yale has limited leverage here. It is this effort that has the most potential for creating new jobs, according to a representative of the Purchasing Office. 6. Essential Elements for Success Key to this program is the commitment of the Secretary of the University, Linda Lorimer, and Joseph Mullinix, Vice President for Finance and Administration, who provide the push for the program. Also, the community contacts by people in the Office of New Haven affairs and the purchasing departments are essential. University of Maryland Medical System 1. Origin of Program The initiative began in 1988 as a two-pronged effort to stimulate minority entrepreneurship and to enhance employment of African Americans at UMMS. In this effort, UMMS has worked with the Council for Economic and Business Opportunity (CEBO), a nonprofit group that seeks economic advancement for minorities in Baltimore. The Board of Directors of UMMS, a number of whose members were active in the African American community, was a driving force in this initiative. 2. Program Goals and Objectives The major goal is to maximize the money spent by the University of Maryland Medical System (UMMS) through African-American-owned businesses in Greater Baltimore. In recent years, it has become clear that the goal sometimes meant bypassing white-owned businesses that may have employed local blacks within Baltimore in favor of businesses in the suburbs, some as far away as the District of Columbia. Thus, UMMS is in the process of shifting their emphasis to greater stress on developing and purchasing from inner city businesses. Like other purchasers in such programs, they are opposed to set-asides; they require that the businesses they use be competitive. 3. Program Staffing UMMS staffs this effort. 4. Program Operation In the second phase of this effort, which involves targeting vendors within Baltimore itself, UMMS is working with CEBO, which in turn works with the mayor's office, to identify qualified vendors that will not be opposed by CEBO, an important organization in the minority business community in Baltimore. UMMS is using its purchasing leverage to get major corporate suppliers to locate and create jobs in the city. Several years ago, in collaboration with CEBO, UMMS helped to set up a minority-owned medical/surgical supply business called QualitiCare, committing $3 million in contracts to help with start-up. By mid-1995, QualitiCare reportedly had generated 65 jobs and appeared to be a notable success (Seedco, 1995, Appendix B, p. 10). However, by the time of my March interview with an administrator at the hospital, QualitiCare was failing and UMMS had withdrawn its business. The problem was apparently too-rapid expansion with too little capital. In addition, CEBO sponsors vendor fairs; they also help screen prospective companies for business with UMMS and have brokered some deals with the medical system. 5. Outcomes In 1995, UMMS built a new facility, spending $9 million with minority-owned firms in the process. With respect to normal purchases of supplies, they spent $4 million of $75 million with minority-owned businesses. However, 3 of the 4 million dollars were spent with QualitiCare, with which UMMS has ended its relationship. Thus, their business with minority-owned firms will probably be down in 1996. However, the hospital is working to attract businesses to Baltimore. For example, Baxter Health Care has opened a city plant to recondition used Goretex surgical gowns. Additionally, at the urging of the hospital, Baxter is also working to bring in a linen finishing plant. Baxter has put up $4 million for this effort, which involves moving a business from the suburbs to the city. In addition, UMMS has shifted their laundry service to a local company; it had formerly gone to the prison system. The hospital also contracted with a psychiatric outpatient facility to hire residents and clients to provide record retention for the hospital. They hired a neighborhood person to run the facility. Once again, however, the hospital does not track how many residents of West Baltimore are employed as a result of any of these efforts. In fact, their emphasis on minority ownership has not necessarily provided direct incentives for companies to employ local residents. 6. Essential Elements for Success Companies need to be price-competitive and have a broad base of customers so that they are not totally dependent on one large institution. Companies need to be adequately capitalized. They often must use all their cash for daily operations and lack the funds needed to grow. Walk to Work, Fenway Community Development Corporation, Boston This purchasing initiative differs from the others in that the primary impetus appears to be coming from a CDC. It does not appear to be dramatically successful, but it illustrates many of the problems and challenges of such programs. 1. Origin of Program The program was started two years ago by the Fenway CDC, which arranged for Harvard Business School students to research institutional purchasing patterns. Fenway used the data to try to identify niche markets for neighborhood businesses. The hospitals cooperated with the business school researchers, but played no role in initiating the purchasing program. 2. Program Goals and Objectives Fenway CDC's goal is business expansion and job production in the Fenway. Although there are 37 institutions in the neighborhood, they targeted the hospitals for this program. An initial goal was for neighborhood businesses to compete with the hospitals' vendors, but they quickly concluded that they could not compete with the large multinational corporations that can deeply discount their prices. Instead, they have decided to focus on "niche markets" for local businesses. 3. Program Staffing The Executive Director of the Fenway Corporation staffs this program, with assistance from her Board of Directors' Economic Development Committee. 4. Program Operation Fenway produced a neighborhood business directory and distributed it to the institutions and stimulated the development of a Fenway Board of Trade. In their research, they found that even those purchases done in the city were also being made outside the neighborhood, such as catering. So Fenway Corp. highlighted the neighborhood's ethnic restaurants by holding a "Taste of the Fenway" festival and getting people from the institutions to come. Additionally, the local association of medical institutions (MASCO) negotiated an agreement with the hospitals to ensure faster payment of local businesses; the usual 30-day delay was a serious impediment to local vendors, as it created cash-flow problems that they could not absorb. The Bank of Boston, which is represented on Fenway's Economic Development Committee, worked with a local pizza parlor to help them with an expansion that they undertook as a result of increased catering business from the hospitals. Fenway is now investigating a micro-lending program, and they plan to contract out technical assistance for neighborhood businesses. They are also investigating the possibility of setting up or attracting a glass-blowing business to serve the a new research facility's needs for custom-sized beakers. 5. Outcomes The catering emphasis has produced some results. A local pizza parlor hired a delivery person and doubled in size as a result of catering business from the hospitals. Two other restaurants are also now getting catering business, but it is not clear that they have hired more local people as a result. 6. Essential Elements for Success According to the Executive Director, it is essential to have people at the helm of the large institutions for whom community development is important. To motivate that she thinks it would take a loss of market share for the institutions as a result of people refusing to come into the area . As it is, there is no mandate in the hospitals to work with neighborhood businesses, and it is often not good business for them to do so. Like other hospitals, these are downsizing and suffering fiscal stress. Additionally, she said that they are "at each other's throats" because of the fear of mergers, and it is hard to build a coalition among people who are frightened for their jobs. University Park Program, Clark University, Worcester, MA This is a purchasing collaborative which consists of 10 colleges and approximately 30 smaller nonprofit institutions in Worcester. It is aimed primarily at saving money for its members. Buying from local vendors is a secondary goal; thus, this program is not directly analogous to others examined here, but it contains some useful elements for locally-focused purchasing initiatives. 1. Origin of Program The program has been in existence since the mid-70s. 2. Program Goals and Objectives The major goal is not to direct business locally, but to save money for members of the collaborative by maximizing their purchasing power by maximizing economies of scale. When consistent with the goal of getting the best possible price for a given set of specifications, they spend their money in Worcester. 3. Program Operation Members of the collaborative meet monthly; committees of 2-3 members develop specifications for specific purchases and research potential vendors. They then put the contract out to bid and accept the best bid. If a Worcester company can compete, they give the contract to that company. 4. Outcomes Of 15 to 17 contracts per year, about half usually go to local businesses. 5. Essential Elements for Success Pricing and quality of local businesses' products and services must be competitive. To maximize the chances that a local company will get the contract, advertising must go to all possible local vendors. Northside Leadership Conference/Allegheny General Hospital, Pittsburgh, PA Pittsburgh's Northside Leadership Conference is in the process of developing a purchasing initiative with Allegheny General Hospital. In the Partnership Agreement among the two organizations (referred to above and included with this report), AGH agreed to the following:
Summary of Findings for Purchasing Initiatives Minority-owned businesses do not necessarily have to be in the neighborhood; the University of Maryland and Penn both include or stress purchasing from minority-owned businesses. It's not clear how many neighborhood residents if any are employed by the subcontracting agreements with major suppliers, especially when an existing business is persuaded to move in from the suburbs. The wording that the purchasing directors use is interesting: they talk about money from major suppliers going through local or minority-owned businesses. To the extent that the business is doing some of the work of the contracting company, it may bring jobs to the area; however, the potential for them to serve as a minimally-staffed administrative front for the large supplier also exists. Efforts must be made to get these businesses to hire locally. Sometimes existing local businesses need assistance to help them compete effectively with larger companies. They may need help with bidding procedures, with understanding the institutions' requirements so that they can make a viable bid, and with obtaining loans and developing business plans. Also, prompt payment of bills is important, as cash flow is often a problem in small businesses. Those programs that appear to have made progress in local purchasing (although reliable figures are not available) share the following characteristics:
Employee and Client Neighborhood Purchasing Little information was available on programs to encourage employees and clients of large neighborhood institutions to make purchases in the neighborhood. Initiatives that do exist appear to be very low-key. For example, Marquette University makes an informal effort to promote neighborhood businesses to its students and employees in two ways: by placing announcements of new neighborhood businesses in its campus-wide newsletter and by selling advertising in the student newspaper to local businesses. Similarly, Yale promotes local businesses to their students, although they have not targeted personal spending in the city by staff and faculty. Undergraduate students at Yale do most of their shopping close to campus. The University's 1993 study "Economic Impact: Yale & New Haven," estimated that Yale students (undergraduate, graduate, and professional) spent $54 million in New Haven in 1991-92. A book which gives thorough information about stores, restaurants, etc. in the city is distributed each year to students. An open-air fair in the Fall, "New Haven 101," introduces new students (undergrad, grad. and professional) to the city, its attractions and businesses. However, efforts of the scale of the institutional employment and purchasing initiatives do not appear to be common. It is likely that "walk to work" programs, which try to get employees of the large institutions to live in the neighborhood, are the major means of giving them a reason to shop in the neighborhood. General Conclusions Not surprisingly, the research indicates that for any of these programs to work, the large neighborhood institutions must see their participation to be in their own self-interest. The source of that perception varies. In some institutions, it appears to originate primarily with the CEO, although it is usually preceded by a history of tension and even adversarial relationships between the neighborhood and the institution. In other cities, Baltimore in particular, the mayor's office is a catalyst for such efforts, working with the hospital's leadership to develop a commitment to community development. In Baltimore as well, tension preceded the development of the relationships. Self-interest is defined a little differently for the two types of programs. In employment and job training programs, the hiring institutions find that they benefit from receiving applications from people who have been previously screened by an outside agency. In addition, those agencies sometimes direct people for training for skills that are in short supply. In institutional purchasing initiatives, self-interest is defined more generally in terms of institutional benefits from a vibrant retail and commercial community surrounding the institution. By requiring that community vendors be competitive with outside vendors, they do not pay a high price for using them. However, it must be noted that these local businesses often do need special assistance from the purchasing institutions to get them established in a competitive position. Such assistance requires time and resources from the institutions. Along with housing development programs, neighborhood employment and purchasing initiatives together serve the interests of the large institutions and the neighborhoods in which they exist by creating a stable, safe, and economically viable area in which people are willing to come not only to use the services of the hospitals and educational institutions, but where people also want to live and shop. REFERENCES Betancur, John J. and Douglas C. Gills. 1993. "Race and Class in Local Economic Development," in Theories of Local Economic Development, ed. Richard D. Bingham and Robert Mier, Newberry Park, CA: Sage. Committee for Economic Development. 1995. Rebuilding Inner City Communities: A New Approach to the Nation's Urban Crisis. New York, NY: Committee for Economic Development. Seedco. 1995. Jobs and Economic Development: Capitalizing on Opportunities in the Health Care Sector, New York, NY: Seedco. Wiewel, Wim, Michael Leitz and Robert Giloth. 1993. "The Economic Development of Neighborhoods and Localities," in Theories of Local Economic Development, ed. Richard D. Bingham and Robert Mier, Newberry Park, CA: Sage. |