(Header photo, courtesy of The Coalition: Local furniture distributor, Shauna Stallworth, is inducted into the DCAP Portfolio, an initiative launched in 2022 positioning high-performing local small businesses for contracts with anchor institutions).
Co-authored by Stephen Glaude and Phil Berkaw. Glaude is the President & CEO of The Coalition in Washington, D.C., a local community development nonprofit and membership association. Berkaw is the Senior Director of Strategic Initiatives at The Coalition.
What does an entrepreneurship-led economic development strategy look like for cities? This is the question the City Inclusive Entrepreneurship (CIE) initiative at the National League of Cities posed to city leaders between 2019 and 2025. The program, financially supported by the Kauffman Foundation, identified a menu of 10-15 evidence-backed interventions that cities could receive technical assistance and catalytic funding to implement. These included things like launching new capital access programs for small businesses, streamlining local procurement processes and helping businesses in the informal economy become registered and eligible for government programs.
More than 100 cities participated, effectively creating a national learning lab for what works and what doesn’t in the entrepreneurial support landscape. Those findings are elegantly summarized in NLC’s program evaluation of CIE.
In the District of Columbia, our CIE-supported intervention has yielded results that have gone far beyond what anyone expected.
The DC Community Anchor Partnership: A Local Procurement Collaborative
The Coalition, a local community development nonprofit and membership association, in partnership with the DC Deputy Mayor’s Office for Planning & Economic Development (DMPED), spearheaded the creation of the DC Community Anchor Partnership (DCAP).
DCAP is a collaborative of major health systems, universities and other large employers that are committed to leveraging their $3B+ purchasing power to create economic opportunity for local small businesses.
The Coalition’s participation in the CIE program provided us with direct access to technical assistance and a network of peer cities, helping us scale the initiative beyond its original conception. What started as a pilot with four institutions grew into a critical pillar of the city’s economic development strategy with 17 participating institutions, unlocking new markets for underrepresented business owners.
Since launching, more than $1.5B in contracts have been awarded by DCAP’s institutions to local business enterprises and more than $946M awarded to 440 DC-based minority owned businesses. To put that into perspective, this rivals — and likely far exceeds — the total value of locally funded small business grants and loan programs over the same period.
On an institutional basis, the results are also impressive. Since launching, the median institution increased its local MBE spending more than fivefold, equivalent to roughly $2.5M more per institution per year flowing into local businesses. One institution, for example, increased its local MBE spend from under $100,000 to nearly $2 million. Another expanded from under $1 million to almost $8 million.
How It Works
The Coalition and DMPED co-convene the initiative, with the Coalition serving as the backbone organization. It coordinates meetings and events, tracks progress towards spending targets and pre-qualifies local businesses for competitive contracting opportunities. Its team also includes procurement experts who help provide technical advisory support to both institutions and local firms.
DCAP’s impact has hinged on its ability to change how private sector procurement systems function. Once we demonstrated that small and local vendors could be an asset and not a risk, procurement teams became more willing to engage new suppliers, unbundle contracts and create local spending targets.
Lessons Learned
The “anchor collaborative” model is not new. It currently exists in at least 12 cities and regions in the U.S., each with its own financial, organizational and service delivery model with pros and cons. Taking our own experience into account, as well as lessons learned from peer cities, here are some practical insights for city leaders interested in mobilizing anchor institutions for economic growth:
- Local governments play an important convening role. Institutions tend to benefit financially and reputationally when they have a strong working relationship with their local government. With government involved, minimally as a co-convener, it makes their participation much more feasible. And governments should want to be involved. Economic development offices care about job creation, tax base growth and local competitiveness. This model, when executed well, advances all three objectives.
- Careful selection of initiative leadership. More important than which organization is selected to serve as the backbone organization is who leads the organization. The individual should be a well-known, respected and politically connected leader; ideally, someone who can easily connect the dots between government, institutions and the small business community. Without savvy leadership, these initiatives often flounder.
- Formalizing partnerships with MOUs and data-sharing agreements. The initiatives that ultimately succeed are based on formal agreements between participating institutions and the backbone organization. At a minimum, these agreements should include data-sharing agreements, clear expectations around engagement and an expectation of executive participation by institutional leaders.
- Avoid marginality. Without formal partnership agreements or ambitious leadership, these initiatives often devolve into “buy local” programs where institutions are encouraged to use a list of local companies for events and other small, one-time purchases. There is nothing wrong with supporting direct-to-consumer businesses, but the higher return on investment exists through creating long-term strategic relationships between institutions and business-to-business (B2B) firms that employ larger numbers of residents.
- Don’t underestimate subject matter expertise. Procurement has its own language, including a laundry list of confusing jargon and indecipherable acronyms. Establishing credibility with procurement leaders is key to this model’s success, so incorporating procurement expertise — people who speak the language — into the initiative’s design and, preferably, ongoing operations, is an important success factor for developing institutional trust.
Conclusion
In Washington, D.C., this model has worked because it has proven that changes in procurement can open new markets, strengthen local firms and deliver results at a scale traditional small business programs have not matched. The City Inclusive Entrepreneurship program broadened our perspective on how other cities are pursuing entrepreneurship-led growth, what pitfalls to avoid and what becomes possible when anchor institutions are mobilized to support local and under-resourced entrepreneurs.
Economic Growth That Delivers
Inclusive growth is not a buzzword. It is a strategy cities are already using to deliver results. Read “The Experience and Impact of the City Inclusive Entrepreneurship Network” to see how communities are aligning leadership, resources and partnerships to build stronger entrepreneurial ecosystems.
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