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Wednesday, April 23,2014

When anchors spend, we win

How the local economy could thrive if major institutions adopt local-purchasing policies

by Terry Link
In the last column, I referred to Michigan State University as an anchor in our community. It is the kind of institution that isn’t likely to pick up and move away because profits don’t meet the owners’ expectations. Other anchor institutions like hospitals, government and schools are more deeply connected to place. It is possible that ownership of hospitals may shift and schools can close because of demographic trends, but it is rare for them to just get up and leave town. Since each of these anchors wants to draw the best employees, they need to offer a community that provides good schools, health care and other services that support a good quality of life.

So it makes sense that they should invest in the community that supports them. This can be done not only by being charitable on occasion, but by also utilizing the power of the purse to strengthen and support other local business. If, for example, the cities of Lansing and East Lansing, the counties, the state, Sparrow and McLaren hospitals put a significant portion of their investment dollars into the community, it would reap the additional benefits those investments would make: more employment, more circulation of money and, therefore, more economic security.

But beyond the investment pool of dollars are the purchasing dollars lost. How intentional are MSU, Lansing Community College, the hospitals, schools and government shopping to support local production and services, thereby strengthening the prosperity of the region we share? Do any of them have a local or state preference policy in place that provides a small incentive to purchase from the locally owned businesses? Cities like Columbus, Ohio; Madison, Wis.; Albuquerque, N.M.; and states as diverse as Wyoming, California, Indiana, West Virginia and Alaska have adopted various formulations of purchasing preference policies for local businesses. In my research, I could not find any Michigan communities doing so.

When we consider the full economic purchasing power of our anchor institutions helping them rethink how they spend money can help strengthen their community, thus making it a more attractive place to draw and keep quality employees.

In 2006, U.S. colleges and universities purchased over $373 billion in goods and services (more than 2 percent of the nation’s gross domestic product) and hospi tals’ annual purchasing now exceeds $750 billion, according to research done by the Democracy Collaborative. The research also showed “local purchasing carries with it added benefits in terms of environmental concerns and infrastructure stability. Purchasing goods locally requires less transportation, decreasing costs and offsetting carbon emissions. Similarly, buying locally reduces both pressure and dependency on our nation’s overtaxed transportation infrastructure and illuminates the risk of inconvenience or stoppage due to weather, as well as natural (and man-made) disasters.”

• The University of Pennsylvania has pumped more than $90 million into its west Philadelphia neighborhood since it established a policy to make a minimum of 10 percent of its purchases from local vendors.

• Gundersen Lutheran, a Wisconsin-based health care system, set the goal of purchasing 20 percent of its food locally. As a result, Gundersen helped create the Fifth Season Cooperative, a multistakeholder farm cooperative that connects local famers and producers of meat and dairy products to local purchasers (in addition to Gundersen).

• Cleveland’s Evergreen Cooperatives are a network of workerowned green businesses linked to the supply chain of area anchor institutions. Three businesses have been launched to date: the Evergreen Cooperative Laundry, Evergreen Energy Solutions and Green City Growers.

The Democracy Collaborative suggests a few ways anchor institutions can directly purchase locally:

• Establish institution-wide local purchasing goals.

• Create incentives that encourage decision makers to purchase goods locally.

• Work with local community-based groups to reach out to local vendors as well as to build the capacity of local vendors.

• Start a center, office or program that coordinates local purchasing efforts.

Of course, this purchasing effort doesn’t need to be limited solely to anchor institutions. Other businesses, organizations and consumers can make an effort to move more of our dollars into the community where we’ll see more of those dollars stay and circulate. The benefits are many. Other policy changes would also help local independent businesses, according to a national survey conducted earlier this year by the Institute for Local Self-Reliance and the Advocates for Independent Business coalition. These include collecting a sales tax on Internet sales, eliminating subsidies for big companies and regulating the swipe fees that Visa and Mastercard charge.

There are no shortages of possibilities. But if we want our community to thrive, we need to be more mindful of our purchasing habits.

Consultant Terry Link was the founding director of MSU’s Office of Campus Sustainability and is a senior fellow with the U.S. Partnership for Education for Sustainable Development. He can be reached at link@lansingcitypulse.com.

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