Living Cities Disrupting Inequality

A Living Cities Perspective in 2013

Disrupting Inequality
A Living Cities Perspective in 2013

01CEO Report Ben Hencht

By Ben Hecht
President & CEO

Twitter @benhecht
#DisruptingInequality

Dear Friends of Living Cities:

America's cities have long been the gateway to individual economic opportunity. For centuries, people from all over the country and the world, including my own grandparents, came to our cities for economic opportunity. A growing economy, especially post World War II, together with smart public investments in education and infrastructure, helped make the United States the world's greatest engine of prosperity. America’s bargain with its citizens, rich and poor was, in many ways, a model for the world. In the words of President Obama, "Whether you owned a company, swept its floors, or worked anywhere in between, this country offered you a basic bargain—a sense that your hard work would be rewarded with fair wages and benefits, the chance to buy a home, to save for retirement, and, above all, to hand down a better life for your kids."

Sometime in the 1970s, despite the dismantling of many obstacles to opportunity enabled by the Civil Rights movement, this engine began to sputter. Our K-12 and higher education systems failed to keep up with a changing global economy.  While productivity continued to rise, wages stagnated. Our shared prosperity, long the signature of the American form of democracy and capitalism, deteriorated. Today, inequality in income, wealth and access to opportunity is at historic levels especially for people of color.

Here are some critical facts illustrating the state of inequality in America:

up and down dollar sign

Wealth and Income Inequality

The widening gap between the rich and poor in the U.S. has become the focal point of a growing national conversation and movement across the U.S.

U.S. income inequality has been increasing steadily since the 1970s, and now has reached levels not seen since 1928.

Income Inequality

From 2009 to 2011, top 1%
incomes grew by 11.2%
while bottom 99%
incomes shrunk by 0.4%

2009

2011

2009 income 11.2% 2011 income
2009 income -0.4% 2011 income
The top 1% captured 121% of the income gains in the first two years of the recovery from the Great Recession.
(University of California, Berkely)

Wealth Inequality

Median Wealth

Median wealth of white households is 19 times that of African American households and 14 times that of Hispanic households.

(Pew Research 2011 Median Net Worth)
whiteWhite: $91,405
hispanicHispanic: $7,843
blackBlack: $6,446
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pencil

Education:

The most reliable indicator of long term economic success today, college graduation, eludes many Americans.

2013 Weekly Earnings

college graduate $1,108
high school dropout $472

On average, Americans with college degrees earn 234% more than Americans who didn’t graduate high school.

(Bureau of Labor Statistics)
whiteWhite
blackBlack
hispanicHispanic

36% of whites in the 100 largest US metros hold college degrees vs.
just 19% of African Americans and 14% of Hispanics

(Brookings)
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wrench

Jobs:

America’s middle class jobs have been rapidly disappearing since 2007, replaced largely by low wage jobs

Recession

60 Percent

Mid-wage occupations, paying between $13.83 and $21.13 per hour, made up about 60 percent of the job losses during the recession.
(Federal Reserve Bank of San Francisco)

Recovery

27 Percent

But those mid-wage jobs have made up just 27 percent of the jobs gained during the recovery.
(Federal Reserve Bank of
San Francisco)

58 Percent

Low-wage occupations paying less than $13.83 / hr have dominated the recovery, with
58 percent of the job gains since 2010.
(Federal Reserve Bank of San Francisco)

75 Percent

75% of jobs created in 2013 were part time
(Reuters)

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rocket

Lack of Upward
Mobility

Lack of upward mobility threatens the
ideal of the American Dream– the idea that
if you work hard, you will succeed here

A child born in the top 20% of the
income distribution has a 2-in-3 chance
of staying at or near the top.
A child born into the bottom 20% of the
income distribution has a less than 1-in-20
shot at making it to the top.
(Remarks by President Barack Obama on Economic Mobility)
ladder
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hand

Poverty

All these factors drive the hardship and inequality that are visible in a poverty rate.

1/6 people, or
46.5 MM Americans
live below the poverty line.
(Census Bureau)

above the line
below the line
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At a Unique Moment in Time to Disrupt Inequality

We are at a unique moment in time to disrupt inequality for these reasons:

venn
Recognition: There is a growing recognition that inequality of income, wealth, and access to opportunity is the issue of our time, posing a serious threat our place in the world, as well as our economy, democracy and way of life.
Changing Demographics: Our shift from a majority white, to a majority of people of color means that when we talk about race as a long-acknowledged barrier to opportunity, we now talk about it as an obstacle for a soon-to-be majority of our citizens. So, we must tackle with the urgency of now
Primacy of Cities: There is a huge spotlight on cities these days. As gridlock proliferates at the federal level, cities are increasingly being looked to as the places where change really happens.

Given these trends, it is not surprising that cities are at the epicenter of those public, private and nonprofit leaders working to disrupt this 40 year old narrative. Cities and large metropolitan areas are home to more than 80% of the nation's population and generate 85% of our GDP. And, 74% of the nation’s African American population, 80% of its Latino population, and 88% of its Asian population live in cities. It is clear that if we are going to move the needle on these inequities, then cities are the unit of change to focus on. Indeed, mayors of Boston, New York, and Seattle, for example, had expanding opportunity and addressing inequality as key parts of their inaugural addresses. Our Living Cities 2013 annual report focuses on the ways that we are helping these ambitious leaders to disrupt inequality - through new ways of working, focusing on outcomes, leveraging capital and working to accelerate the adoption and pace of needle moving change.

Ben Hecht Signature

Ben Hecht

Disrupting Inequality
A Living Cities Perspective in 2013

02Our Framework
to Disrupt Inequality

Our portfolio is structured to help cities address the root of the problem: Reengineering long-broken systems to achieve substantially better results and shared prosperity for low-income people and communities. We believe these outcomes are possible when low-income people are prepared for 21st century employment opportunities; places enable and connect people to those opportunities; and sufficient opportunities are created to grow income and reduce income inequality.

Improve the economic well-being
of low income people.

Prepare

More working-age adults are prepared for employment

Prepare Prepare

Connect

Places enable people to connect to available opportunities

Connect Connect

Create

More quality jobs are created for residents

Create Create

Collective Impact

Capital Innovation

Public Sector Innovation

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We recognize that transforming systems so they prepare all people for, and connect them to, opportunity; and that opportunities are created; is a complex undertaking with no existing solution. However, we believe that there are levers that Living Cities is uniquely positioned to promote that can accelerate the pace of systems change.

 

Disrupting Inequality
A Living Cities Perspective in 2013

03What We're Doing
to Disrupt Inequality Tynesia Boylea-Robinson

Tynesia Boyea-Robinson

Director of Collective impact

Twitter @tyboyea

Disrupting the Teams and Scorekeeping: Applying the Principles of Collective Impact

#CollectiveImpact

Einstein said that the definition of insanity is doing the same thing over and over again and expecting a different result. Against that, we are helping places to implement new problem-solving mechanisms—new teams of civic leaders who have the power and willingness to make lasting structural changes to long-broken systems. This work is being driven and supported by the ever expanding availability of data that is enabling leaders to create new ‘scorecards’ that hold those driving local efforts accountable for real, meaningful outcomes around ensuring that low-income people are prepared and connected to economic opportunity, and that sufficient opportunities are created to grow income and reduce income inequality. Living Cities is working to disrupt the teams and scorekeeping by working closely with networks of ‘coalitions of the willing’ around the country:

Prepare

Preparing people to engage in a 21st century workforce is central to our nation’s economic vitality. Ensuring that low-income people have access to quality education and training opportunities that allow them to access employment with family sustaining wages, benefits, and ladders of growth is an important starting point for this work.

classroom

We support local efforts that align leaders from the education system, workforce training providers, and local employers to identify a set of common outcomes, use data to track progress towards achieving success, and align their resources and influence in new ways for greater impact. cursor READ: The Transformational Power of Data

Connect

There was a time when it was expected that people would access opportunities, like jobs and education, in close proximity to where they lived. But today, the geography of opportunity has expanded. Physical accessibility and affordability are cornerstones of opportunity. People traverse cities and counties in order to get an array of essential products and services such as education, jobs, housing and childcare. We must think about “connect” systems — from public transit, to car and bike sharing, to broadband — in this context. We are identifying metropolitan regions that are taking innovative approaches to both creating healthy communities (building affordable housing, community facilities or other neighborhood enhancing uses) near transit, and also finding ways of improving affordability and increasing access to jobs and services wherever they exist, using other forms of access beyond public transit (e.g. car-sharing, bikes, broadband). We are particularly interested in learning how collective impact strategies, public sector innovation and capital investment can contribute to the successful implementation of these strategies. cursor READ: 3 Ways Local Leaders Can Connect Cities for Growth

The Integration Initiative

Living Cities began working in 2010 on our signature effort, The Integration Initiative (TII), to apply the principles of collective impact to stimulate systems change in workforce (Baltimore), economic development (Cleveland), urban revitalization (Detroit), equitable transit-oriented development (Twin Cities), and education and health (Newark) resulting in

round table

needle-moving, consistently better outcomes for low-income people. In these cities, we are helping aggregate local talent, knowledge and dollars; integrate leadership across multiple sectors; and drive private capital to work on behalf of low-income people. related icon RELATED CONTENT: At the Table: Ideas
and Insights from The Integration Initiative,
Volume 4

Working Cities Challenge

Our partnership with the Federal Reserve Bank of Boston around the Working Cities Challenge is catalyzing collective impact to improve the lives of low-income people in smaller cities in the state of Massachusetts. There, we are working with public and private partners to support leaders in identifying and focusing on outcomes, rather than on programs, towards enduring change.

City Scape

related icon RELATED CONTENT: Working Cities
Challenge moves forward - 3 Qs with Prabal
Chakrabarti
related icon RELATED CONTENT: 5 Elements That
Could Fix What Ails America's Cities

Disrupting the Flow of Resources: Innovating with Capital

#CapitalInnovation

Capital investment, deployed in ways that enhance the health and vibrancy of cities and improve access to opportunity, can be a powerful tool to improve the lives of low income people. Through our work in the past three years on the Integration Initiative, capital absorption, transit-oriented development and the Catalyst Fund, we have learned about the need to rethink many of the assumptions that underlie the current community development finance system. In place of “business as usual,” we are exploring how to:

  • Find ways to integrate community development with the workforce, health, education and economic development systems
  • Develop solutions that finance investment in human capital as well as in real estate and small businesses
  • Take advantage of new sources of investment
  • Foster the development of institutions and processes that can attract and deploy capital for public good
  • This includes building the capacity of places to deploy capital for public good and exploring new financial tools and approaches.
light rail

Capital Absorption

In the course of developing the Integration Initiative, the Living Cities team was repeatedly struck by gaps in what we have begun to refer to as “capital absorption capacity” – the ability of communities to make effective use of different forms of capital to provide needed goods and services to underserved communities. As a result of this experience, Living Cities has developed a research agenda meant to illuminate the political, social, cultural, and financial elements that create capacity for the effective deployment of investment capital in underserved communities. This research has resulted in the publication of a series of papers and the development of a set of tools to help communities to strengthen their ability to deploy investment for public purpose.

cursor READ: Expanding the Geographic Reach of Community Investment:
The IFF Case Study

Pay for Success

Among investors and social change leaders alike, there is a vibrant discussion around the emerging field of domestic impact investing. Yet, despite this interest, there are few investment opportunities to unlock private capital seeking both social and financial returns. Meanwhile, there is a growing movement in the social sector towards focus on outcomes rather than outputs: An acknowledgement that we need to think far beyond counting programs and how many people participate. Instead, we should be measuring progress towards fixing underlying, enduring, systemic problems. And, with fewer resources and increasing needs, the public sector is adopting new and innovative ways of working to address pressing social problems that lead to disparate outcomes in education, employment, mobility, housing and health; and high levels of inequality.

Harnessing all three of these forces for change is the Pay for Success model whereby private sector investment is driven to support high-performing social service interventions. Commercial and philanthropic investors assume the risk by financing the service up front, with the expectation that they will achieve both social and financial returns linked to the achievement of measurable impact. This means that precious government resources are spent only in the event of proven success and government savings. To prime the pump and prove if PFS is a viable channel for investing in human capital, Living Cities, through the Catalyst Fund, invested $1.5 million in the Massachusetts PFS transaction. This seven-year, $27 million deal is focused on reducing recidivism and improving employment outcomes for at-risk youth in the Boston, Chelsea and Springfield, Massachusetts areas. This is the largest PFS transaction in the world to date. related icon RELATED CONTENT: Mass Infographic

Disrupting the Status Quo in Government: Supporting Public Sector Innovation

#gov20

For most of our history, public sector actions have been critical for achieving an unprecedented degree of shared prosperity, through education and job creation, in particular. Yet for the past four decades, those results have been elusive. Local government must overcome innovation-sapping, bureaucratic structures and better leverage scarce public resources if cities are going to achieve the large scale results that low income people need. While government does not have to be the catalyst for change, its unique spending and regulatory authority makes it an important player with outsized influence. We believe that this influence can be harnessed for greatest impact through focus on the following elements:

  • Operations: New ways of organizing the work of the public sector to overcome outdated, ineffective structures
  • Capital: New approaches to combining public, private, and philanthropic dollars and roles to improve outcomes at a time of fiscal constraint
  • Systems Change: New models of how to connect the public sector with cross-sectoral groups of problem-solvers to address problems at the systems level

Here is what this looks like in practice at Living Cities:

Operations

We are partnering with cities and other leaders to support the public sector in modernizing operations by building institutional culture and structures that support innovation, as well as by defining and solving problems through the effective use of data and engagement of residents

conference room

related icon RELATED CONTENT: Introducing #VizLou, an Experiment in Technology, Civic Engagement and Public Sector Innovation related icon RELATED CONTENT: The “Ambidextrous City:” How America’s Local Government Leaders are Thinking About the Challenges of Today and Tomorrow

Capital

We are working with cities to align revenues and expenditures with intended results and to attract and leverage private and philanthropic capital to achieve them, whether through our capital absorption agenda, our work around Pay for Success, or supporting research around smart subsidy.

homes

related icon RELATED CONTENT: Smart Subsidy in Community Development: An Interview with Jeremy Nowak

Systems Change

We are working with cities to build their capacity to be even more effective participants and catalysts of collective impact efforts that are focused on large-scale systems change to benefit low-income people

related icon RELATED CONTENT: Lessons from the Field: The Role of the Public Sector in Collective Impact related icon RELATED CONTENT: Restoring Cities as Engines of Opportunity: Data, Tech and Systems Change

Project on Municipal Innovation

Our Project on Municipal Innovation, in partnership with the Harvard Kennedy School’s Ash Center for Democratic Governance and Innovation, is a unique forum that enables us to work with and learn from city halls from across the country to learn about and act on integrative and transformative policy ideas and innovation around operations, capital, and systems change. More than 35 cities have designated their chief-of-staff or policy director to participate in a highly engaged set of activities that include online policy forums and biannual in-person meetings at the Ash Center.

related icon RELATED CONTENT: The Ambidextrous City: How America’s Local Government Leaders Are Thinking About the Challenges of Today and Tomorrow

Disrupting the Speed of Adoption: Adopting an Open Sourced and Networked Approach

#OpenSourceChange

Despite all of our best efforts in the non-profit, government, impact investing and other sectors, forty six million Americans are still living in poverty. The pace of social change is simply too slow; the scale, too small. In order to accelerate the pace of change, Living Cities is doubling down on our focus on networks and learning.

We know that the problems that are being addressed by the work that we support and catalyze are also being addressed by the work of organizations and individuals across the country. And, there is a palpable hunger for innovative approaches to social change that transcend sector, locale, and issue. Meanwhile, disruptive technologies offer previously unimaginable opportunities to share learning and co-create solutions across geographies. To foster the spread of experimentation and adoption of promising approaches, we are intentionally weaving together networks of practitioners, innovators and real-time knowledge towards achieving a ‘network effect’.

We’ve created and disseminated a wide variety of knowledge products from brief tweets, diagnostic tools, and blog posts to webinars and substantive reports. The demand for this information is reflected in the 20,000+ thought leaders and institutions that follow Living Cities on Twitter. And, we know that many in our problem-solving network have knowledge that is of value to us, so we have adopted an open sourced and networked approach with dialogue and engagement at its core.

white board

Disrupting Inequality
A Living Cities Perspective in 2013

04About
Living Cities

Living Cities harnesses the collective power of 22 of the world’s largest foundations and financial institutions to develop and scale new approaches for creating opportunities for low-income people and improving the cities where they live. Its investments, research, networks, and convenings catalyze fresh thinking and combine support for innovative, local approaches with real-time sharing of learning to accelerate adoption in more places. Our member institutions are not simply our funders; they serve as our Board of Directors and contribute the time of over 100 of their expert staff.

Our Members

  • The Annie E. Casey Foundation
  • AXA Equitable
  • Bank of America
  • Bill & Melinda Gates Foundation
  • Citi Foundation
  • Deutsche Bank
  • Ford Foundation
  • The John D. and Catherine T. MacArthur Foundation
  • JPMorgan Chase & Co.
  • The JPB Foundation
  • The Kresge Foundation
  • The McKnight Foundation
  • MetLife, Inc.
  • Morgan Stanley
  • Prudential Financial, Inc.
  • Robert Wood Johnson Foundation
  • The Rockefeller Foundation
  • Surdna Foundation
  • W.K. Kellogg Foundation
  • Wells Fargo
  • AFFILIATE MEMBERS
  • The Cleveland Foundation
  • The Skillman Foundation

Our Board

CHAIR

  • A. Dennis White, President and CEO, MetLife Foundation

VICE CHAIR

  • Rip Rapson, President and CEO, The Kresge Foundation

TREASURER

  • Pamela Flaherty, President and CEO, Citi Foundation

EXECUTIVE COMMITTEE

  • Gary Hattem, President, Deutsche Bank Americas Foundation/Managing Director, Deutsche Bank, Deutsche Bank
  • Phillip Henderson, President, Surdna Foundation
  • Lata Reddy, President and VP Corporate Social Responsibility, Prudential Foundation
  • Kate Wolford, President, The McKnight Foundation

BOARD

  • Tonya Allen, CEO, The Skillman Foundation
  • Xavier Briggs, Vice President for Economic Opportunity and Assets, Ford Foundation
  • Audrey Choi, Head of Environment, Social Finance, and Community Reinvestment Group, Morgan Stanley
  • Craig Howard, Director of Community and Economic Development, The John D. and Catherine T. MacArthur Foundation
  • Risa Lavizzo-Mourey, President and CEO, Robert Wood Johnson Foundation
  • Patrick McCarthy, President & CEO, The Annie E. Casey Foundation
  • Bruce McNamer, CEO, JP Morgan Chase Foundation
  • Michael Myers, Managing Director of Centenial Program, Rockefeller Foundation
  • Jill Nishi, Senior Advisor, U.S. Program, Bill & Melinda Gates Foundation
  • Barbara Picower, President, The JPB Foundation
  • Andrew Plepler, Global Corporate Social Responsibility and Consumer Policy Executive, Bank of America
  • Ronald Richard, President and CEO, The Cleveland Foundation
  • Michael Rizer, Director, Community Relations and CRA Risk Management, Wells Fargo
  • La June Montgomery Tabron, President and CEO, W.K. Kellogg Foundation
  • Emilia Wiener, Lead Director, Portfolio Management, AXA Equitable

Advisory and Learning Committee Co-Chairs

COLLECTIVE IMPACT ADVISORY AND LEARNING COMMITTEE

  • George McCarthy, Director, Metropolitan Opportunity Unit, Ford Foundation
  • Kate Wolford, President, The McKnight Foundation

CAPITAL INNOVATION ADVISORY AND LEARNING COMMITTEE

  • Gary Hattem, President, Deutsche Bank Americas Foundation/Managing Director, Deutsche Bank, Deutsche Bank
  • Lata Reddy, President and VP Corporate Social Responsibility, Prudential Foundation

PUBLIC SECTOR INNOVATION

  • Phillip Henderson, President, Surdna Foundation
  • Andrew Plepler, Global Corporate Social Responsibility and Consumer Policy Executive, Bank of America

EVALUATION

  • Patrick McCarthy, President & CEO, The Annie E. Casey Foundation
  • Craig Howard, Director of Community and Economic Development, The John D. and Catherine T. MacArthur Foundation

Our Staff

  • Ben Hecht, President & CEO
  • Juan Sebastian Arias, Program Associate, Collective
    Impact
  • Tonya Banks, Capital Innovation Senior
    Administrative Associate
  • Elodie Baquerot, Chief Operating Officer
  • Tynesia Boyea-Robinson, Director of Collective
    Impact
  • Arthur Burris, Director of Public Sector Innovation
  • Amy Chung, Senior Investment Officer & Associate
    Director of Capital Innovation
  • Sherrie Deans, Executive Director, the Admiral
    Center at Living Cities
  • Alison Gold, Assistant Director of Knowledge &
    Impact
  • Ronda Jackson, Assistant Director of Public Sector
    Innovation
  • Nigel Jacob, Urban Technologist in Residence
  • Tracey Jarmon, Program Associate, the Integration
    Initiative
  • David Lafleur, Director of Finance & Administration
  • Eileen Neely, Director of Capital Innovation
  • Tamir Novotny, Senior Associate, Public Sector Innovation
  • Elizabeth Ogunwo, Special Assistant to the CEO
  • Nadia Owusu, Senior Associate, Knowledge & Organizational Development
  • John Portacio, Operations and Development Associate
  • Jeff Raderstrong, Program Associate, The Integration Initiative
  • Brittany Ramos, Program Assistant, Collective Impact
  • Brian Reilly, Director of the Integration Initiative
  • Carmen Rojas, Associate Director of Collective Impact
  • Hon. R.T. Rybak, Senior Advisor for Municipal Practice
  • Elizabeth Vargas, Strategic Communications & Engagement Associate
  • Sara Draper Zivetz, Program Assistant, Public Sector Innovation