Two years ago, we began studying the Capital Absorption Capacity of Places – which we describe as “the ability of communities to effectively use [private] investment capital to serve pressing needs” – with a focus on understanding community investment as an ecosystem, with many different kinds of actors – public, private, and nonprofit– doing many different kinds of things. We were looking for a way to describe all those things that, along with investors and projects, were necessary to invest for social benefit in marginalized communities.
One of the points we emphasized in our original paper on this project is that community investment activities “can be performed by a wider variety of local, regional, and national actors than are typically considered” in discussions of place-based investing. When we wrote this, we were drawing on interviews with practitioners, and the experience of Living Cities in the Integration Initiative, as it related to bringing in outside community investors into new places.
The arrival of new entrants into a community is a good way to make this perspective clear – it reveals something about how a place-based system works, and it is also an opportunity to change system dynamics. This case study of IFF’s expansion into the cities of Milwaukee, St. Louis, and Indianapolis shows a bit of how places and actors interrelate, and how outside skills and resources can become part of effective place-based community investment ecosystems.
How does extra-local capacity become integrated into a local system? This is a crucial question for advocates of community investing. Among other things, we hope the case:
• Helps community investing intermediaries who are considering expansion to think about their role not only executing deals, but also in developing local ecosystems to channel private capital to the benefit of marginalized communities.
• Highlights a few lessons that local actors can draw on to inform their potential roles in integrating local, regional, and national actors into an effective local ecosystem for community investment.
We would love to hear about your experiences of or thoughts on this topic. Please comment on this blog or share your insights and questions via twitter @Living_Cities using #CapitalAbsorption .