Build Relationships
How will your institution identify community wealth building opportunities in your community?
Educate internal audiences to help crowd-source opportunities
- How will the program be communicated to those from the health system who are actively engaged in the community?
- Will there be a website, brochure, or other information readily available?
- What type of education will be provided to Board members?
Pablo Bravo, vice president of community health at Dignity Health, offered, “Building awareness of your community investment program, both internally and externally, is critically important to the success of the program. Awareness raising can elicit new partnerships that lead to investment opportunities that might not have otherwise surfaced.”1Pablo Bravo, phone interview by David Zuckerman and Katie Parker, March 18, 2016.
Start with existing partners
- Who are your current community partners?
- What are their revenue models, growth plans, and what is their access to capital?
- Are they knowledgeable about local community economic development opportunities?
Health systems across the country are evaluating how they can strengthen their partnerships with community organizations to better serve local health needs. An initial step towards place-based investing is to initiate conversations with existing and potential nonprofit partners on their growth needs, their ability to access capital, and ways in which the health system can address capital gaps through investments, not grants. In the process, the health system can help map the capital and growth needs of the nonprofit and community development sector that serve communities in their service areas. This knowledge helps inform cross-sector strategies, as healthcare, public health, social services, and community economic development seek to collaborate more effectively.
Build new relationships
Many existing health system community partners do not have revenue models that allow them to effectively utilize investments. To find projects that can address critical community health needs while also earning a target rate of return, many health systems will need to build new relationships with organizations that focus on community and inclusive economic development.
| Type of Organization | Local Organizations of that Type that Serve Area of Need | Need Addressed |
| Community development financial institutions | Access to capital for affordable housing, small business development, federally qualified healthcare centers, childcare centers, and other investments in low-income communities. | |
| Credit unions or community banks | Access to capital for small business and homeownership | |
| Local business chamber | Access to capital for small, diverse, cooperatively owned, and/or employee-owned businesses | |
| Community development corporations | Provide affordable housing and equitable real estate, commercial and small business development | |
| Nonprofit affordable housing organizations and community land trusts | Provide and maintain affordable housing | |
| Nonprofits addressing poverty | Improve anti-poverty measures and social services | |
| Other inclusive economic development support networks | Access to capital for nontraditional businesses, | |
| Partners interested in local renewable energy projects | Increase local economic development and reduce negative environmental impacts | |
| Other anchor institutions and local or national philanthropic organizations | Scale local impact of investments in community economic development |
More information, including on national best practices and support networks, about many of these types of organizations, such as community development corporations, community development financial institutions, and community land trusts, as well as other anchor institutions, can be found at community-wealth.org and democracycollaborative.org.
Communicate Wins
How will you tell the story of community health improvement?
After identifying one or two compelling place-based investment opportunities, find ways to communicate the impact stories to key audiences at your institution and within the local community. These stories are critical for growing support for place-based investment within your institution, among hospitals and health systems nationally, and among investors more broadly.
Monitor Borrowers
Maintain loan integrity
What steps will you take to ensure loans do not become grants?
Setting a precedent of forgiving a loan is a poor practice and Ed Gerardo, director of community commitment and social investments at Bon Secours Health System, emphasized the importance of this distinction, “Occasionally an organization will request that a loan be forgiven and turned into a grant. We are not willing to do that since these are investments for us.”2Ed Gerardo and Ross Darrow, interview by David Zuckerman and Katie Parker, Marriottsville, MD, December 16, 2015.
Minimize surprises with borrowers
How will you monitor the relationships with borrowers on an ongoing basis?
To aid with ongoing due diligence, St. Joseph Health requires that most direct loan recipients have a St. Joseph staff person serving on the organization’s board. This practice also helps strengthen relationships between the system and local nonprofits, allowing the borrower to benefit from a committed partner and for St. Joseph to learn about any potential issues with repaying the loan early on.3Lisa Laird, interview by David Zuckerman and Katie Parker, May 9, 2016.
Tracking place-based investment internally
How will you clearly identify community investment loans as such for auditors?
It is important that a health system establish defined terms for investments. Ross Darrow, director of treasury services at Bon Secours Health System, explained that auditors will want to know that these dollars will be recovered. Without a clear timeline for doing so, auditors may account for an investment as a grant.
Scaling Impact
What comes next? How does your health system take a more active role in local economic development to increase the pipeline of investible and equitable local projects?
In seeking to leverage investment portfolios to benefit local communities, health systems face a range of high impact opportunities across asset classes, themes, sectors, and risk/return profiles. The strategies included in this toolkit represent many of the strategies currently being employed by healthcare systems across the country, including shifting cash and cash equivalents to local community banks and credit unions, or investing in low-risk fixed income products offered by community development financial intermediaries that are providing key financial services and resources to underserved communities.
Yet other asset classes, such as private equity, venture capital, real estate, and fixed income, offer compelling opportunities to invest in local community health and well-being, allowing health systems to take a total portfolio approach to aligning investments with community impact. The healthcare sector has significant opportunity to seek more targeted place-based investment strategies that can help move the needle on critical social, economic, and environmental conditions for low-income and minority communities.
In 2016, Bon Secours broadened its community investment policy to consider investment vehicles beyond loan funds. As Darrow explained their approach, “We went through a period of getting our feet under us, learning what vehicles are available. We spent time internally socializing the idea of expanding beyond loans prior to doing so. Our plan is to start small and expand as the organization grows more comfortable and we find additional avenues that reach our social and financial goals.” 4Ed Gerardo and Ross Darrow, interview by David Zuckerman and Katie Parker, Marriottsville, MD, December 16, 2015.
Tracking Dollars
Deciding Your Approach
Managing your Place-based Investment Portfolio
Allocating Assets
Creating Forms and Templates
References
