Local Anchor – Apex Project

Role Summary

Think about all the different ways that you spend money in the community right now. On physical space. On vendors. On programming for students. On transportation. Beyond that, think about how often you leverage your “institutional capital” to create business opportunities – like allowing students to use their dining dollars at a local restaurant or entering into a research partnership with a business.

Being a local anchor means creating a comprehensive strategy around how you use your existing spend and resources – and how you could leverage new spend and resource commitments – to support local investment opportunities.

Summary of Benefits

Of all the roles discussed in this Roadmap, being a local anchor might be the clearest path to creating financeable opportunities. If you can leverage institutional dollars or resources to provide direct or indirect backing for local deals, you’ll ensure they happen without spending the hundreds of hours you’d otherwise spend in staff time as an Opportunity Sponsor, a Capacity Builder, or a Capital Aggregator. And it may be the most time-efficient and cost-efficient means to create financeable opportunities if you can be creative about redirecting your existing spending.

Financial & Resource Commitment

FINANCIAL COMMITMENT

RESOURCE COMMITMENT

Functional Scope / Workflow

There are four big “buckets” in which you can play an anchor support role:

Backing Physical Space Development
Leveraging the Procurement Process
Facilitating Access to Capital
Creating Programmatic Relationships

BUCKET 01

Backing Physical Space Development

Space – Signing Long-Term Leases and Rent Guarantees

Imagine two off-campus historic rehabilitation deals with identical deal profiles and identical returns – but in one, the building is a credit-quality commercial tenant, and the other is a startup nonprofit organization. Even though both deals look the same, the latter is far riskier than the former – so investors will discount the return profile accordingly and choose the former over the latter almost every time. If a college or university is willing to place itself “on the hook” for those rent payments (either directly – by signing the lease – or indirectly – by guaranteeing the nonprofit’s lease payments), investors will look at the credit quality of the institution, not the nonprofit – and a deal gets done that might never have otherwise closed. Your tangible action steps, then, can be:

Entering into LOIs or full lease agreements to master-lease space within real estate developments you want to support. That space can then be used for university purposes (e.g., graduate student housing) or subleased to a third party for community purposes (e.g., a business incubator or childcare center).
Signing onto an existing lease or LOI as a guarantor. This route involves less up-front financial commitment (you’ll only be called to honor the guarantee if the tenant cannot pay), and is best suited for developments where the tenants have the ability to pay their own way (e.g., a coworking space, grocery store, or other potentially cash-positive operation).

BUCKET 02

Leveraging the Procurement Process

Vendors – Preferred Procurement and Purchase Orders

Imagine two pre-revenue biotech companies raising equity, both with similar growth patterns, leadership teams, and intellectual property – but one has a 3-year service contract with a university hospital, and the other does not. Investors flock towards companies they know will get repeat business (thanks to preferred procurement status) from credit-quality institutions. Pre-sales, purchase orders, contracts, and other indicators all help prove the validity of a business concept (although hard sales are always the best indicator!). To take tangible action on this step, you can:

Establish a preferred contractor or service provider program that prioritizes diverse, community-centric businesses – then make it as easy as possible for the people in that pipeline to do business with you (typically by signing long-term contracts with them and putting them first on bid lists, etc.).
Enter into a set, long-term contract or procurement relationship with those same businesses that make it through your pipeline.
Provide technical assistance and support services as a Capacity Builder (business planning assistance, etc.) needed to help those vendors/procurement partners continue to grow.

BUCKET 03

Facilitating Access to Capital

Access to Capital

Both the Space and Vendor examples above pre-suppose that the development firm (for space) and the vendor (for procurement) have or can get access to the capital they’ll need to complete the development and satisfy the contract. That might not always be the case, particularly if those developers are from underrepresented groups or if the suppliers are minority/women owned business enterprises. If you have a large number of suppliers you’re supporting that lack access to capital, consider building a pipeline of those suppliers and being a Capital Aggregator for them (either using your own endowment dollars to make revolving loans or by finding third parties who want to invest).

BUCKET 04

Creating Programmatic Relationships

Reputational Support / Indirect Assistance

Thus far, the ideas provided have mostly involved your institution spending its dollars to create places and improve businesses locally. There are other, indirect ways that institutions can leverage their reputations, their faculty, and even their students to provide financial assistance to community-oriented development. These include:

Housing Partnerships: Add a residential real estate project undertaken by a minority development firm using MWBE contractors and suppliers to a preferred off-campus housing list, then leverage student housing or affairs to drive traffic there.
“Dining Dollars” / Student Spend Partnerships: Let students spend on-campus meal plans or other controlled pools of funds within certain designated establishments (real estate or businesses).
Programming Partnerships: Run university programming (e.g., workforce development, student social events, etc.) or develop programming partnerships with off-campus facilities owned or developed by minority / underrepresented groups (to drive students or other traffic there).
Research Partnerships: Enter into an MOU or other arrangement with an operating business (hopefully a MWBE) that allows it to say it is jointly working on a project with your institution to customers / potential investors. Your name associated with the business may help those businesses close deals that lead to new revenue opportunities.

Arizona State

Phoenix, AZ

Similarities: Local Anchor

Arizona State moved its schools of nursing and journalism and other programs into a once-blighted section of Phoenix in a project that includes student housing and private development. Part of the anchor institution model is to invest in a suite of different programs and initiatives meant to connect them with the community.

The Local Anchor

Role Summary

Summary of Benefits

Financial & Resource Commitment

Functional Scope / Workflow

Backing Physical Space Development

Leveraging the Procurement Process

Facilitating Access to Capital

Creating Programmatic Relationships

Related Case Studies

Arizona State

Bates College

California State University, Dominguez Hills

Case Western Reserve in Cleveland

Clemson University

College of St. Joseph

Deep South Economic Mobility Collaborative (Multiple HBCUs)

Drexel University

Duke University

Howard University

Indiana University-Purdue University Indianapolis

Kansas State University

LaSalle University

Marquette University

Ohio University

Rowan University

Rutgers University – Newark

Tulane

UAB

University at Buffalo

University of Chicago (Housing)

University of Dayton

University of Iowa

University of Memphis

University of Pennsylvania

University of Virginia’s College at Wise

Related Resources