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Is it possible to build rich communities, but not gentrify?

Published at: 23 March 2016


As more and more South Africans return to the city after the blockbusting and urban flight of the last thirty years, people are increasingly being forced out of the neighbourhoods they used to be able to afford. For some this migration signals great things for their property values but for others, many of whom were pivotal in making the neighbourhood, there is less and less space for them in these new cities.

This sort of gentrification has left many wondering if area’s like Johannesburg’s Maboneng and Juta Street developments, and Cape Town’s Woodstock and de Waterkant neighbourhoods are really doing all that much good for the area. Yes they look better, and yes there is a better way of life for some, but does the addition of another organic coffee shop in the city really signal a better life for the communities outside its door?

It’s part of the life cycle of urbanity, but groups around the world are now working out how it is possible to build richer communities without repeating the same mistakes of the past. Most of the current thinking comes down to community wealth building which, in practice, has multiple drivers that work together to create a system that delivers the outcome sought: an inclusive, sustainable community economy where all can prosper—particularly those normally excluded. This system, as defined by the Democracy Collaborative – an American community wealth building organization - is defined as having seven key drivers:

1. Place

Community wealth building begins with loyalty to geographic place. If globalization is the hallmark of today’s mainstream economy, relocalization is the hallmark of the alternative. Globalization works well for capital, which can move across borders with a computer keystroke. But the real economy of jobs and families and the land always lives someplace real. The real economy is place-based. In contrast to luring companies from elsewhere, building community wealth is about developing underutilized local assets of many kinds - social networks, the built environment, cultural riches, local ecology, anchor institutions - and doing so in a way that the wealth stays local and is broadly shared. When families possess assets—skills, social networks, a home, savings, an ownership stake in a business - they are better able to withstand shocks like unemployment or illness. They can plan for their future, send a child to college, and feel secure in retirement. What’s true for families is true for communities.

2. Ownership

Ownership of assets is the foundation of every economy, for it determines who has control and who receives the lion’s share of benefits. Community wealth building deploys a whole spectrum of inclusive ownership models. When money is spent at locally owned firms, studies show that revenue recirculates locally at least three times as much. Local ownership is vital. But local ownership by a few wealthy families only gets us part of the way toward broad prosperity. Social enterprises are likely rooted in community over the long term, for they have a primary mission of providing social benefit, and many are owned by nonprofits and unlikely to be sold. When employees not only have a job but an ownership stake, they enjoy greater control of their economic fate.

3. Multipliers

While ownership shapes the skeleton of enterprise, demand is its lifeblood. Community wealth building asks: Where is the large-scale demand that can drive the growth of local, inclusive enterprise? What kind of demand cares about place?

A critical force generating momentum for local enterprises is the purchasing power of anchor institutions, like nonprofit and public hospitals and universities, which are rooted locally and have missions of service. Other types of anchor institutions include museums, community foundations, and local government. When anchors deploy their economic power to strengthen local enterprises, especially inclusive enterprises, they are engaging in what The Democracy Collaborative has termed an “anchor mission.” An anchor mission consciously links the well-being of an institution and its community.

4. Collaboration

In traditional economic development, collaboration involves the two traditional players of city government and the private sector. Community wealth building is more broadly collaborative - involving nonprofits, philanthropy, anchor institutions, community residents, local businesses, and workers.

5. Inclusion

Inclusion lies at the heart of community wealth building, adding a driver lacking in much of economic development. Economic inclusion is the opening up of economic opportunities to previously underserved social groups. It requires creating targets and indicators—as well as participative processes—to ensure that disadvantaged individuals and communities can participate in a meaningful way in the economy.Inclusion is both a moral imperative and an economic one. Research shows that areas extending greater economic opportunity to people of color enjoy longer periods of growth and shorter downturns. Inclusion is particularly powerful when combined with anchor strategies.

6. Workforce

If worker ownership is a key long-term goal of community wealth building, workforce participation is often a more immediate step toward prosperity. Economic development professionals serving an entire city do not have the luxury of focusing solely on ideal models. They face the tough job of helping those with barriers to employment find good work, and helping low-income workers move up.

Bringing a community wealth frame to workforce development means two things. First, adding a systems approach means linking training to the needs of employers and anchor institutions, and creating support services. Second, it means being intentionally inclusive - deliberately reaching out to communities of color and those with employment barriers.

7. System

Beyond time-limited programs, the aim of community wealth building is creating a new system. It does this by building institutions that stand over the long term, creating an ecosystem of support for a thriving local economy.

The seven drivers of community wealth building work together. Starting with a devotion to a place, this approach builds on local assets of many kinds. At the heart of it all is an inclusive focus on the needs of low-income families, people of color, and those with barriers to employment. The end goal is a new system that helps broadly held community wealth to flourish.

Read more about the Democracy Collaborative’s work here.

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