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“For further definitions of these asset classes and others, see: “Glossary,” Mission Investors Exchange, accessed December, 2016 www.missioninvestors.org/glossary)) Community Benefit Activities of hospitals and health systems that contribute to the health and well-being of their surrounding co…”
Anchor institutions are nonprofit or public institutions that are firmly rooted in their locales, including hospitals, universities, local governments, and utilities. These institutions often have a social or charitable purpose, and unlike for-profit corporations that can relocate, are place-based and tend to stay put. As such, they have a vested self-interest in helping to ensure that the communities in which they are based are safe, vibrant, healthy, and stable.((See Tyler Norris and Ted Howard, Can Hospitals Heal America’s Communities? “All in for Mission” is the Emerging Model for Impact (Takoma Park, MD: The Democracy Collaborative, 2015), 8))
A commitment to consciously apply the long-term, place-based economic power of the institution, in combination with its human and intellectual resources, to better the long-term welbeing of the community in which the institution is anchored. ((See Tyler Norris and Ted Howard, Can Hospitals Heal America’s Communities? “All in for Mission” is the Emerging Model for Impact (Takoma Park, MD: The Democracy Collaborative, 2015), 7))
Asset classes refer to groups of securities or financial instruments that have similar risk and return characteristics and behave similarly in the marketplace. In this toolkit, we focus on the following asset classes: cash and cash equivalents; fixed income; private equity and venture capital; and real assets:
- Cash and cash equivalents refers to short-term, highly liquid investments. Place-based investment strategies in this asset class include deposits in local community development banks and credit unions.
- Fixed income refers to investments that generate income at an established, fixed rate. Place-based investing strategies for fixed income include geographically targeted private and public debt investments.
- Private equity refers to illiquid equity investments in existing, private companies with growth potential; venture capital is private equity focused specifically on new and start-up businesses. Place-based investing strategies in these asset classes include equity investments in local private enterprises with positive community benefits.
- Lastly, real assets refer to debt and equity investments in physical assets—primarily infrastructure, land, real estate, and commodities. Place-based investment strategies for real assets include investing in local affordable housing, sustainable farmland, and renewable energy assets.((For further definitions of these asset classes and others, see: “Glossary,” Mission Investors Exchange, accessed December, 2016 www.missioninvestors.org/glossary))
Activities of hospitals and health systems that contribute to the health and well-being of their surrounding community. Non-profit hospitals and health systems must report on their community benefit activities in order to maintain their federal tax-exempt status. Traditionally, community benefit reporting has included free and discounted care, unreimbursed care, community health improvement efforts, efforts to expand access to care, training for health professionals, and research. In 2011, the IRS issued guidance that “community building activities” also counted as community benefit. Defined as hospital activities that foster health improvement through physical and environmental improvements, community capacity building, and economic development, this expanded the range of community benefit activities to include sectors such as housing and workforce development.((For further definitions and information about Community Benefit, refer to: “Jargon Buster,” Build Healthy Places Network, accessed August 2016 www.buildhealthyplaces.org/jargon-buster/; and “What are hospital community benefits?” (Baltimore, MD: The Hilltop Institute, 2013), accessed August 2016 www.hilltopinstitute.org/publications/WhatAreHCBsTwoPager-February2013.pdf;))
Community Development Financial Institutions (CDFIs)
CDFIs are mission-driven financial institutions that leverage funding from private and public sources to finance businesses and projects—including small businesses, microenterprises, nonprofit organizations, commercial real estate, and affordable housing—in financially underserved communities. There are four primary kinds of CDFIs: community development banks, credit unions, loan funds, and venture capital funds.
Community Health Needs Assessment (CHNA)
A research process non-profit hospitals must implement as part of their community-benefit reporting. Instituted by the Affordable Care Act of 2010, CHNAs must be completed by hospitals and health systems every three years and identify the most pressing community health concerns. An implementation plan must then be developed to address identified community health needs. CHNAs and the resulting implementation plans are publically reported, and subject to review by the IRS.((For further definitions and Community Health Needs Assessments, refer to: “Jargon Buster,” Build Healthy Places Network, accessed August 2016 www.buildhealthyplaces.org/jargon-buster/))
Community Wealth Building
A systems approach to economic development that creates an inclusive, sustainable economy built on locally rooted and broadly held ownership. Community wealth building calls for developing place-based assets of many kinds, working collaboratively, tapping large sources of demand, and fostering economic institutions and ecosystems of support for enterprises rooted in community.((See Marjorie Kelly and Sarah McKinley, Cities Building Community Wealth (Takoma Park, MD: The Democracy Collaborative, 2015), 16))
Concessionary investments refer to investments that sacrifice some financial return compared to market rates in order to achieve greater social or environmental returns.((Paul Brest and Kelly Born, “When Can Impact Investing Create Real Impact?” Stanford Social Innovation Review, (Fall 2013), accessed at ssir.org/up_for_debate/article/impact_investing))
An employee-owned business is one in which the ownership of a company is held broadly by the employees themselves, rather than a sole proprietor. Employee ownership can take multiple forms: Worker cooperatives are businesses that are owned and governed by their employees. Workers, who are member-owners of the cooperative, invest and own the business together and are voting members of the board of directors and have equal voting power. This creates a more democratic and equitable governance structure, as well as wealth building opportunities for employees through profit sharing. Employee Stock Ownership Plans (ESOPs) allow employees to become shareholders in the business, often through holding company stocks in the form of a retirement plan. This structure provides additional financial benefit to employees through profit sharing and can increase participation through decision making for employees. ((For more information about worker cooperatives, see “Worker Cooperatives,” Community-Wealth.org, The Democracy Collaborative, accessed November 2016, community-wealth.org/content/workercooperatives and “Worker Cooperative FAQ,” Democracy at Work Institute, accessed November, 2016, institute.coop/worker-cooperative-faq#Q2. For more information about ESOPs see: “Employee Stock Ownership Plans (ESOPs),” Community-Wealth.org, The Democracy Collaborative, accessed November 2016, community-wealth.org/strategies/panel/esops/index.html and “An Introduction to the World of Employee Ownership,” National Center for Employee Ownership, accessed November, 2016 www. nceo.org/employee-ownership/id/12/))
Health & Health Equity
More than just the absence of illness, these toolkits utilize the World Health Organization’s definition of health, “a state of complete physical, mental, and social well-being, and not merely the absence of disease or infirmity.” Health equity refers to the notion that all people should be able to achieve their highest level of health, regardless of their race, gender, class, sexual orientation, or other identities. Achieving health equity requires addressing the systemic factors shaping the social determinants of health.((Health and health equity are defined by The Build Healthy Places Network, which utilizes definitions from the World Health Organization.. For more information, see: “Jargon Buster,” Build Healthy Places Network, accessed August 2016, www.buildhealthyplaces.org/jargon-buster/; and “WHO definition of Health,” World Health Organization, accessed August, 2016, www.who.int/about/definition/en/print.html. For further definitions of health equity, see “Glossary of Terms,” National Partnership for Action to End Health Disparities, Office of Minority Health, accessed August 2016, minorityhealth.hhs.gov/npa/templates/browse.aspx?lvl=1&lvlid=34))
Integrated Capital Approach
An integrated capital approach is one that aligns investments, grant dollars, and technical assistance to create the conditions for health and well-being in all communities. In this “capital stack” approach, all institutional assets, including discretionary operating dollars, philanthropic resources, and human and social capital, are coordinated and deployed to achieve community health and wellness goals
Throughout this toolkit, the term investment portfolio refers to the collection of capital assets in which an institution has invested in order to meet its financial objectives. Hospitals and health systems often manage various asset pools, including defined benefit pension plans, long-term investment pools, professional/ malpractice insurance pools and others. In some instances health systems also have endowment funds, which are set aside explicitly for the purpose of maintaining an organization into the future.((“Endowment Fund,” Mission Investors Exchange, Glossary, accessed December, 2016 www.missioninvestors.org/glossary?name=principal)) Investment portfolios can serve a variety of purposes, including enabling an institution to better access the bond market when they need to borrow money or to supplement operating resources in years with shortfalls. This toolkit explores how health systems are also considering aligning their investment to more effectively achieve their organization’s community health and well-being goals, while also achieving these other institutional objectives
Locally Owned Business
A locally owned business refers to one in which the company is owned and operated by residents of a designated geography. Purchasing at locally owned businesses has a multiplier effect for local economic activity. Dollars spent at locally owned businesses recirculate in the community at a greater rate than money spent at national chains and absentee-owned businesses((For further information about locally owned businesses and the multiplier effect see: BALLE, “Local Economy Framework,” BALLE, (2016) accessed November, 2016, bealocalist.org/local-economyframework-8-strategies-build-healthy-local-economies/ and “The Multiplier Effect of Local Independent Businesses,” American Independent Business Alliance, accessed November, 2016, www.amiba.net/ resources/multiplier-effect/))
Place-based investing is an investment approach that targets positive social and environmental impacts in specific communities and geographies. In this toolkit, we focus on place-based investment strategies that generate inclusive economic development and address community health needs. Place-based investing is similar to and often used interchangeably with “community investment,” “impact investing,” or “mission related investing.”
Principal refers to the amount owed on a loan, excluding interest accrued.((“Principal,” Mission Investors Exchange, Glossary, accessed December, 2016 www.missioninvestors. org/glossary?name=principal))
Social Determinants of Health
A complex of social, economic, and environmental factors that drive health outcomes. The World Health Organization defines the social determinants of health as “the conditions in which people are born, grow, work, live, and age.” They represent the wider set of forces and systems shaping the conditions of daily life that drive health outcomes, such as inequality, social mobility, community stability, and the quality of civic life. Sometimes referred to as “upstream” determinants, research indicates that 40 percent of the factors that contribute to health are social and economic.((See “Social Determinants of Health,” World Health Organization, accessed April 2015, www.who.int/social_determinants/en/; Tyler Norris and Ted Howard, Can Hospitals Heal America’s Communities? “All in for Mission” is the Emerging Model for Impact (Takoma Park, MD: The Democracy Collaborative, 2015; and “County Health Rankings & Roadmaps,” University of Wisconsin Population Health Institute, accessed September 2015, www.countyhealthrankings.org/Our-Approach))
Total Portfolio Approach
A total portfolio approach is one that integrates place-based investment opportunities across asset classes – including private equity, venture capital, private debt, real assets, and public fixed income – allowing an institution to maximize positive community impact.
Transit-oriented development (TOD) refers to municipal development strategies that prioritize the creation of walkable, mixed-used communities around accessible public transportation. TOD strategies overlap with many community health strategies, as they often look to increase activities such as walking and biking, reduce pollution generated by traffic congestion, and encourage inclusive, economic growth.((For more information about transit-oriented development, see: “Transit Oriented Development,” Community-Wealth.org, The Democracy Collaborative, accessed December, 2016, community-wealth.org/ strategies/panel/tod/index.html))
Upstream Community Benefit
Upstream community benefit refers to channeling discretionary health system resources, such as community benefit grant dollars, towards interventions that address the underlying social determinants of health (see above definition). This includes supporting local community economic development; increasing stable and affordable housing; and, improving access to healthy and affordable food. This allocation is not considered an investment for the purposes of this toolkit since it does not preserve the value of the initial principal allocated, and therefore can be reported as community benefit if it is addressing an identified community health need.