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Impact Purchasing

The Impact Purchasing strategy aims to leverage the purchasing power of anchor institutions to create positive social and economic impacts in their local communities. This strategy calls for anchor institutions to prioritize spending with local, diverse, and high-impact (e.g., employee-owned) businesses who better reflect the socio-demographic diversity of their community to help strengthen local economies and address the racial wealth gap.

Impact Purchasing strategies have a place-based multiplier effect that can increase local economic activity beyond a single purchase, thus enabling wealth accumulation in communities. When done at scale through an anchor collaborative, Impact Purchasing allows for supply chain strategies that drive inclusive economic growth that would not be possible with any one institution alone.

Impact Purchasing strategies can complement anchor institutions’ business objectives by identifying and addressing pain points or vulnerabilities in the supply chain, while uncovering and building the capacity of local, diverse, and high-impact businesses to provide better quality products and services, therefore creating a more responsive and resilient vendor base.

Impact Purchasing strategies manifest in three core areas: creating connections, building capacity, and embedding institutional commitments.

Creating connections

Creating connections involves connecting existing local, diverse, and high-impact vendors to contracting opportunities with anchor institutions. Often, traditional procurement practices create barriers for local, diverse, and high-impact vendors—including ones that are cost-competitive and provide high-quality services. Adjusting internal practices to facilitate connections with local vendors not only shifts procurement dollars in a way that fosters local job growth, but it also helps grow these businesses over time.

Anchor collaboratives can create connections by hosting outreach and education events for vendors, embedding local and diversity goals into requests for proposals (RFPs), and “unbundling” contracts to carve out opportunities for new local, diverse, and/or high-impact vendors. For example, the Denver Anchor Network (DAN) leverages its ShopBIPOC platform—with over 500 small businesses in the directory—to facilitate connections between buyers and sellers in an online marketplace. Below, the South Florida Anchor Alliance shares some lessons learned on leveraging a technology platform to create connections.

Lessons on Leveraging Technology to Create Connections, South Florida Anchor Alliance (SFAA)

In May 2023, ten members of the SFAA embraced a technology-driven regional marketplace to better connect with local vendors. The technology solution streamlines vendor registration and uses artificial intelligence to connect vendors with bid opportunities. When developing the regional marketplace, each member signed its own agreement with the technology provider, with some shared provisions across anchors to allow for data sharing with the backbone institution (Health Foundation of South Florida).

Anchor institutions in Florida value the platform's alignment with their goals to provide greater opportunities for their local, small, and minority-owned vendors. Collaboratives interested in a technology solution for vendor matching should consider several factors, including bringing together the technology provider and the IT departments of the institutions early on in the process. Ample time for systems integration and a clear understanding of Application Programming Interface (API) requirements should be discussed early on. SFAA recommends that all partners identify which metrics the platform should be designed to track (e.g., number of vendors, matches made, award data) and understand the limitations, if any. Vendor engagement is key to success, and a communications toolkit has proven effective in empowering anchor institutions to engage with their vendors and encourage the use of the regional marketplace.

Building capacity

Building capacity means increasing the ability of local, diverse, and other high-impact businesses to meet anchor institution supply chain needs—growing the capacity of existing businesses as well as helping to incubate new businesses. A capacity-building approach helps address supply chain gaps, meet specific product needs, and improve the efficiency and resiliency of the supply chain. Capacity-building initiatives often incorporate philanthropic or public funding, bringing additional financial resources. Capacity strategies are most effective when employed in combination with internal policies that encourage connections with local vendors.

Examples may include creating mentor-mentee programs which pair experienced vendors with newer ones; embedding contractual expectations to subcontract to diverse, sustainable, and/or local vendors; and providing in-kind support—including space, expertise, and access to information (e.g., the importance of third party certifications). For example, the Denver Anchor Network (DAN) supports the Feeding Anchors program, which provides capacity-building support to Black, Indigenous, and People of Color (BIPOC) caterers and food trucks seeking to expand their business to include anchor institutions. Additionally, the South Florida Anchor Alliance (SFAA) facilitates vendor access to technical assistance providers within the network, including a subset of small business technical assistance providers collaborating to standardize assessment, referral, and linking to small businesses.

Barriers Facing Local Vendors in Philadelphia, Philadelphia Anchor Institutions for Growth and Equity (PAGE)

PAGE learned quickly that insurance, prequalification, and regulatory requirements differ across sectors, which can be difficult for suppliers to navigate. For example, PAGE has helped a business get ready to work with one group of anchor institutions, but the business was unable to work with another type of institution due to variations in requirements. One way PAGE reduces those barriers is through its Hurdle Fund program, which provides catalytic grants to cover third-party costs so businesses can more easily move between supply chains. These costs have helped suppliers overcome barriers related to requirements for insurance, specialized equipment, security infrastructure, and certifications.

Embedding institutional commitment

Embedding institutional commitment involves implementing the internal policies, processes, and organizational culture necessary to sustain Impact Purchasing strategies within anchor institutions. While many Impact Purchasing strategies and programs are started by one or two individuals, in order to have staying power within the organization, institutional policies, procedures, and cultures must align with the goals of the strategy. Examples may include developing or updating internal policies to support Impact Purchasing strategies (e.g., net-term payments, requiring participation from target vendors in RFPs), creating purchasing-evaluation criteria, tracking progress over time, and attaching Impact Purchasing priorities to performance metrics for relevant leadership and staff. For instance, West Side United (WSU) engages with its anchor institutions to monitor spending on Chicago’s West Side through its Local Procurement Dashboard, which tracks both the cumulative spending with West Side vendors since 2018, as well as the average overall spend with these vendors.

Creating a culture of learning and best-practice sharing can increase commitment and momentum around Impact Purchasing strategies. Of all anchor strategies, Impact Purchasing strategies can be especially nuanced by organization and sector. The anchor collaborative creates a supportive environment where members can articulate goals, share data in support of those goals, receive support from peers, and share best practices.

Below are some steps to implement a collaborative Impact Purchasing strategy:

  • Create collective goals around Impact Purchasing (e.g., increasing the amount of local, diverse, and high-impact spending) to ensure shared accountability and collaboration in the community.

  • Share vendor master lists, prioritizing those vendors who align with Impact Purchasing priorities (local, diverse, high-impact, etc.) so that all anchor institutions are aware of existing businesses in the community. For example, see Denver Anchor Network’s Curated Caterer List.

  • Investigate shared purchasing needs in order to combine purchasing power for upcoming supplier contracts to source in alignment with Impact Purchasing goals. By identifying shared needs, institutions focus on incubating businesses that help make their collective supply chains more efficient while simultaneously promoting job creation and wealth building.

  • Co-create and resource impact purchasing programs (e.g., mentor-mentee programs, business accelerator programs) to upskill vendors in the community to meet supply chain needs.

Sample metrics for Impact Purchasing strategies

Note on “local” spendingIt is beneficial for anchor collaboratives to establish a starting point and targets for monitoring Impact Purchasing strategies (see section 3.6 Quality Data and Impact Measurement). Below, we provide examples of specific and measurable metrics that health systems and anchor collaboratives use to track their Impact Purchasing strategies.

Example baseline metrics: Tier 1 Addressable Procurement Spend, disaggregated by ownership for at least the following ownership characteristics: minority-, women-, and employee-owned.

Example Impact Purchasing goal:

Within five years, the anchor collaborative will at least double spending with local minority and women-owned business (MWBEs). The collaborative may also set five-year goals and track spending with locally-owned, employee-owned, cooperatively-owned, and nonprofit enterprises.

Definition(s): Tier 1 vendors are direct suppliers to the organization whereas Tier 2 vendors are suppliers to the organization’s direct vendors.

Examples of Impact Purchasing strategies by anchor collaboratives

Started in 2005 and convened by the Cleveland Foundation as the backbone, the Greater University Circle Initiative (GUCI) convened anchor institutions to create “jobs, income, and ownership opportunities” for all Greater University Circle residents. Working together, the anchor institutions identified shared needs around laundry operation services, and in 2009, helped to launch the Evergreen Cooperative Laundry in a LEED Gold Certified facility with the goal of building wealth in GUCI neighborhoods and addressing the anchor institutions’ shared supply chain needs. Today, Evergreen Cooperatives has 250 employee-owners, 83 percent of whom are people of color and 55 percent of whom are returning citizens (i.e., people who were previously incarcerated), while offering “20 percent higher pay rates than comparable industries, [and] supportive benefit plans including healthcare, specific voting rights, and profit sharing.” For more on the Evergreen Cooperative, visit evgoh.com.

More recently, other anchor institutions have partnered to replicate this model in their own communities. West Side United is partnering with several organizations in Chicago, including the Steans Family Foundation, to establish Fillmore Linen Service, a local healthcare laundry linen service entity for hospitals to shift their business to and as a model to create meaningful local jobs. It is expected that the facility will provide up to 175 jobs by handling hospital laundry currently sent to out-of-state cleaners. As of 2024, SSM Health and BJC HealthCare (both members of the St. Louis Anchor Action Network) have formed a joint venture to build and operate a regional laundry facility in a historically disinvested community in St. Louis. The 100,000-square-foot facility will clean 35 million pounds of the health systems’ laundry annually, and create eighty new jobs for local residents.

As an anchor collaborative solely focused on supporting anchor institutions to localize and diversify their supply chains, PAGE has implemented a multi-pronged approach to building an equitable business ecosystem that supports both business owners and anchor institutions to create sustainable partnerships.

PAGE staff launched PAGE R&D to support anchor institutions in assessing procurement spending, advocating for spending shifts, and mapping contract opportunities for local Black and Brown businesses. PAGE R&D serves as a community of practice through which anchor institution members come together to identify and brainstorm how to address internal policy barriers around minority-owned business classifications, and rethink how economic opportunity planning is set up in order to support small business growth.

We work on internal policies because we feel like that is where we can have the most impact. We see a lot of barrier policies. You do not need your architecture firms to have the same insurance as your construction firms. They just don't pose the same level of risk, and all you're doing [by requiring parity in insurance] is making it so only giant firms can bid. Sometimes organizations just put up these policies without thinking about the effect they have on equity.

Kenyatta James, Director, Philadelphia Anchors for Growth and Equity (PAGE)

Two additional PAGE programs support local minority-owned business owners. PAGE Prep coaches minority-owned businesses on contracting with institutions, and recently launched a cohort consulting program to increase operational efficiency of seven participating suppliers. Additionally, PAGE Capital provides financial consulting and grant funding to minority-owned businesses to lower the cost burden of additional insurance, certifications, security infrastructure, and potential barriers to doing business with a large institution.

Since 2021, the PAGE program has participated in at least $50 million in new minority-owned business enterprise contracts. In partnership with ImpactPHL and the American Sustainable business network, the PAGE Capital program has deployed over $237,000 in catalytic grants, unlocking twenty-six contracts with local anchors and over $3.2 million in contract revenue for thirteen minority-owned businesses. PAGE is in the process of compiling a robust data set to further track and report purchasing impact. For more, visit economyleague.org/page.

Additional examples of anchor collaborative impact purchasing strategies:

As part of WSU’s goals to increase the number of dollars spent with businesses on Chicago’s West Side, WSU has orchestrated an annual small business grants program. Funded by both anchor institution partners and philanthropy, the small business grant program offers $10,000 grants to local businesses, which can be used towards operational expenses, equipment purchases, and more. Businesses that participate in this program are also connected with West Side anchor institution procurement leads, to explore contracting opportunities. This capacity-building program allows WSU staff to identify businesses who are not yet ready to be vendors with the anchor institutions, and provide timely financial support to increase their readiness for future anchor institution contracts.

Through its Farmer Infrastructure Project, HNA funds and supports the Sacred Roots Agricultural Site which is owned and operated by HNA’s community partner, Agri-Cultura Network. On the site, Agri-Cultura Network grows crops and provides technical assistance to farmers through training on soil health, business practices, food-safety regulations, and more. That site is the first of many that will help grow products to meet the needs of anchor institutions and the community year round. Additional support for farmers includes funding for hoop houses which allows them to prolong their growing season, and a cost assessment tool that farmers can use to adjust their growth cycles or estimate the profitability of different products. For more, visit hnaabq.org.

An assessment of anchor institution procurement and investment activity in 2015 revealed that institutions in the East Bay of San Francisco, California collectively spend $6.8 billion annually on products, goods, and services. Health Care Without Harm and Emerald Cities Collaborative formed ARC as a platform for shifting anchor institutions' food procurement spending to more sustainable, local, BIPOC farmers and food producers throughout the Bay Area. In 2023, ARC enabled total anchor food procurement purchases of over $270,000, and the collaborative is expanding its focus to climate equity initiatives in 2024. For more, visit anchorsinresilientcommunties.org.

With more than $3 billion in total annual spend, universities and health systems in the District of Columbia have an outsized impact on the region’s economy, but as of 2016 were spending less than 0.05% of their budgets with local minority-owned business enterprises (MBEs). Launched in 2017 with 4 institutions (2 health systems and 2 universities), DCAP has grown to 15 participating institutions and facilitated more than $440 million in spending with more than 300 local MBEs. The impact purchasing initiative is co-convened by the Deputy Mayor’s Office for Planning & Economic Development and is tasked with tracking and reporting on the local diverse spend of participating institutions, identifying and referring highly qualified local MBEs for contracting opportunities, and providing technical assistance to institutions as they re-engineer their procurement processes to be more transparent, fair, and equitable. For more, visit www.cnhed.org/dcap.

[33] Ryan Powell, A. Sheehy, and A. Kind, “The Area Deprivation Index Is The Most Scientifically Validated Social Exposome Tool Available For Policies Advancing Health Equity,” Health Affairs Forefront (2023), accessed February 1, 2024, DOI: 10.1377/forefront.20230714.676093.

[34] “Evergreen Cooperative Laundry,” Evergreen Cooperative Laundry, last modified 2023, accessed March 27, 2024, https://www.evgoh.com/evergreen-cooperative-laundry-2/evergreen-cooperative-laundry.

[35] Brian J. Rogal, “Fillmore Center project, touted as jobs engine for struggling North Lawndale, clears city commission,” Chicago Tribune, March 5, 2024, accessed March 28, 2024, https://www.chicagotribune.com/2024/03/05/fillmore-center-north-lawndale/.

[36] Dave Muoio, “St. Louis’ SSM Health, BJC HealthCare Launch Joint Venture to Iron Out the Wrinkles of Laundry Service,” Fierce Healthcare, March 22, 2024, accessed March 26, 2024, https://www.fiercehealthcare.com/providers/st-louis-ssm-health-bjc-health-systems-taking-out-their-own-laundry-new-joint-venture.

  • Impact Purchasing Toolkit, Healthcare Anchor Network (2016)

  • Case studies of HAN members’ Impact Purchasing strategies (ongoing)

  • The Local Multiplier Effect: How Independent Locally Owned Businesses Help Your Community Thrive, American Independent Business Alliance (2012)

  • The Future of Health is Local: A Field Guide for Health Sector Leadership, Business Alliance for Living, Local Economies (2016)

  • Billion Dollar Roundtable recognizes corporations that have achieved spending of at least $1 billion with minority- and women-owned suppliers, and publishes white papers on best practices in supply chain diversity excellence.

  • Health Care Without Harm seeks to implement ecologically sound and healthy alternatives to healthcare practices that pollute the environment and contribute to disease. It offers resources, tools, and best practices around healthcare practices for local food purchasing and environmentally preferable purchasing, among many other areas.

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