Policymakers around the world are increasingly interested in place-based programs that use tax incentives, zoning regulations, and other measures to promote investment, economic growth, and positive changes in low-income, underdeveloped communities.
Yet the towns and cities that have used the approach—exemplified by Opportunity Zones in the United States and Enterprise Precincts in Australia—have gotten mixed results. For one, the programs have tended to reallocate existing economic resources within a community rather than generate new ones. The low-income households that were supposed to be helped often fall below new poverty thresholds and are squeezed out of their communities. And the benefits that are realized—such as increasing property values and the creation of higher-skilled employment opportunities— mostly go to landowners and savvy, mobile workers.
How did things go so wrong? How could these programs perversely end up displacing and impoverishing the people they meant to help?
We lay much of the blame on the lack of a comprehensive framework that meaningfully identifies and measures public benefits that reflect a community's unique character and helps evaluate the delivery of those positive changes.
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Yes, there are guiding principles for prioritizing community engagement in US Opportunity Zones and Australian Enterprise Precincts. Five come from the US Impact Investing Alliance and the Beeck Center for Social Impact. The Victoria state government in Australia shows developers how to weigh their floor plans against public benefits.
But we must go further to identify the results that actually help communities in need and ensure place-based programs earn the policy advantages they enjoy. The Net Community Benefit Methodology (NCBM) that we at the Impact Investment Group (IIG) are developing gathers our own and other resources that can help guide us all toward robustly defining, designing, and measuring public benefits and the successful delivery of them by place-based programs. Our work-in-progress has five components:
1. Define the Dimensions of Community Benefit
A number of organizations and disciplines have already made great strides toward identifying meaningful dimensions of public good that could inform the structure and benefits of place-based programs. They include:
- United Nations-Habitat’s City Prosperity Initiative (CPI)
- United Nations Sustainable Development Goals (SDGs)
- Green Building Council of Australia’s Green Star
- In Australia, Bioregional's One Planet Living
- Social determinants of health (SDOH) , which examine the upstream social causes of downstream inequities
- The 1943 psychological breakdown of human motivations known as Maslow’s hierarchy of needs
Among these, the UN’s City Prosperity Initiative stands out. It provides six dimensions to define how community benefits could be designed and assessed:
- Productivity: measuring income, employment, and equal opportunity in city life.
- Quality of life: providing services like education, healthcare, and social support to help people live fulfilling lives.
- Environmental sustainability: valuing the natural environmental assets of a city, such as parks, clean air, and urban waterways.
- Infrastructure development: accounting for necessary urban assets, such as water, power, and roads.
- Equity and social inclusion: addressing issues of poverty and marginalization to create inclusive and equitable communities.
- Urban governance and legislation: requiring strong leadership and institutional arrangements, including policies and laws.
2. Identify Indicators for Each Dimension of Community Benefits
What indicators might help measure each of the six community benefit dimensions taken from the UN’s City Prosperity Initiative? Identifying them will provide the yardsticks by which to measure success or failure. Here are some initial ideas:
- Productivity: gross city product per capita, unemployment rates, and employment demographics.
- Quality of life: proximity to infrastructure that makes cities healthier and happier, such as parks, hospitals, schools, and childcare facilities; levels of mental and physical wellness or disease.
- Environmental sustainability: air and water quality, energy consumption, and emissions data.
- Infrastructure development: arterial roads, walkability rating, bike paths, sources of energy, median home price, and proximity to public transportation.
- Equity and social inclusion: demographic data, social inclusion scores, social capital and cohesion data, percentage of young people who are not working or going to school, and number of affordable housing units per capita.
- Urban governance and legislation: voter participation rates and other civic engagement scores, public-private collaborations and partnerships, corruption levels, and public spending on civil society partnerships.
3. Find or Develop Data to Inform Indicators
To understand how a community changes in response to place-based programs, the next step would be to create a score, before and after a program's implementation, for each of the indicators. But how? In some cases, information already exists that could help. For example, there are many sources of demographic, environmental, and economic data. If there are gaps, developers could work hand-in-hand with community members to create scoring mechanisms based on a location's unique needs, strengths, vulnerabilities, and priorities.
4. Co-design Projects
Developers should work with community members, industry partners, investors, and government officials to make sure their projects address any shortfalls revealed by the scores from step three. To then evaluate whether their projects would create outcomes that respond well to a community's unique needs, we can turn to Impact Management Project and its five factors for assessing an impact investment:
- What issues are being addressed?
- Who benefits?
- How much impact is created?
- What is the project's contribution to positive or negative changes in the community?
- What risk is there of the project failing to help the community or damaging it?
5. Follow Up and Improve
After a project is up and running, developers should assess whether they've helped or hurt the communities they're working in. Those evaluations should produce ideas for what to do differently in the future to ensure success and avoid failure.
Intent Isn't Good Enough
The premise of place-based development incentive programs is that investors can achieve their financial goals while creating meaningful benefits for distressed communities. Too often they fail, leaving public good by the wayside. To ensure intent matches results, we need a comprehensive framework that allows us to meaningfully define community benefits and effectively evaluate our efforts to achieve them. We believe our methodology can help show the way forward for developers, policymakers, and community members who want to go beyond good intentions.
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Read more stories by Mitra Anderson-Oliver, Erin I. Castellas, Darren Brusnahan & Courtney Cardin.