Increasing Institutional Civic Engagement through Local Purchasing

John Hamerlinck, Minnesota Campus Compact

There is no doubt that higher education institutions are tremendous economic engines. The total measured economic impact of the University of Minnesota on the state economy has been estimated by the University to be $9.6 billion, representing just over 5 percent of Minnesota’s Gross State Product.1 The total statewide economic impact of Minnesota State Colleges and Universities (MnSCU) in 2005 was estimated to be approximately $3.5 billion.2 Minnesota’s private colleges and universities report that they add more than $1 billion annually to Minnesota’s economy through direct operating and capital expenditures.3 Despite these numbers, a variety of opportunities exist for higher education institutions to demonstrate even greater support for area economies through targeted local purchasing of goods and services.

A significant portion of the economic impact described above comes in the form of purchasing. According to Anton and Behling1, annual direct purchases of services by all MnSCU campuses in 2005 totaled just over $157.2 million. Though much of this spending was for utilities, it also included spending on contract services provided by local vendors. Their estimated figure for “instate spending” on supplies was $67.5 million.

Money spent “instate” does not necessarily deliver the maximum benefit to local economies. Many of these dollars are spent at national chains. Compared to chain stores, locally owned businesses return a significantly larger share of their own revenue back into the local economy. According to the St. Paul-based Metro Independent Business Alliance:

“Supporting locally owned, independent businesses keeps more of your money in your community. When you spend $1 at a local independent, an average of 68 cents is re- circulated into the local economy. In contrast, when you spend $1 at a national chain, only about 43 cents stays at home. If Twin Cities consumers shift even 10% of their spending from chains to locals for one day, the Twin Cities economy gains some $2 million.”4

Stacy Mitchell of the Twin Cities-based Institute for Local Self-Reliance writes extensively on local economies. Her “10 Reasons Why Supporting Local Business Is Important,” argues that buying from locally-owned businesses has additional benefits in areas including, but not limited to civic engagement, community well-being and public cost/benefit ratios.5

Leveraging the purchasing power of colleges and universities more effectively should not require a great deal of front end investment. No needs assessment is necessary. Seizing opportunities to support locally owned businesses demonstrates an asset-based approach to community building that benefits both the campus and the community. What can we do right now, with the assets at our disposal, to increase the impact of institutional purchasing on local economies?

Fortunately, policy doesn’t appear to be a primary barrier to increasing the amount of local purchasing. In fact, MnSCU purchasing policies indicate that "whenever practicable" campuses can target purchasing from "economically disadvantaged businesses, small businesses, and other business enterprises owned by women, minorities, and people with disabilities."6

The University of Minnesota’s Purchasing Services department maintains a “find a vendor” section on its Web site. The site links to useful resources including The State of Minnesota's, Targeted Business Groups (TBG) site.7 The State's Materials Management Division maintains a list of Minnesota-based minority, woman and disabled-owned small businesses, and small businesses in Economically Disadvantaged Counties in Minnesota. Departments are encouraged to select vendors from the list.

Recommendations

Knowing that the desire and some useful tools already exist, what can we do to support campuses in efforts to increase local purchases of goods and services? Actions that could be helpful include: 1. Campuses should survey common purchases to identify goods and services currently purchased from out-of-state vendors 2. Expand the TBG data base to create regional vendor directories of all locally-owned businesses. In cases where there are no vendors in the current categories the next screen should be local ownership. 3. Align the growing commitment by campuses to entrepreneurship support with capacity inventories like the TBG site 4. Encourage faculty and students interested in community-based research to develop capacity inventories that would facilitate increased local business-to-local business activity.

1 Hongliang Zhang, The Economic Impact of the University of Minnesota, Hubert H. Humphrey Institute, University of Minnesota, May 2003 2 Paul A. Anton and Nicole Behling, The Economic Impact of Minnesota State Colleges and Universities, Wilder Research, July 2006 3 Minnesota Private College, The Facts: 2007 http://www.mnprivatecolleges.org/research/facts.php#11 4 http://www.metroiba.org/about 5 Stacy Mitchell “Why Vermont’s Homegrown Economy Matters” http://www.ptvermont.org/publications/HomegrownEconomy/Homegrown%20Economy.pdf 6 http://www.mnscu.edu/board/procedure/514p5.html 7 http://www.mmd.admin.state.mn.us/mn02001.htm THE ENGAGED CAMPUS BUYING LOCALLY www.mncampuscompact.org

ANCHOR INSTITUTIONS As anchor institutions, colleges and universities have a unique responsibility to their communities. Because they have deep roots, and intend to be around for a long time, they must uphold a special commitment to maintain the quality of life in their communities. That quality of life requires a vibrant local economy.1

IMPORT SUBSTITUTION Support the local economy by identifying goods and services MORE FOR YOUR MONEY you might be able to buy a Local spending and investing can little closer to home.4 complement educational, and other institutional goals such as:

STUDENT ACCESS & SUCCESS There is a direct correlation between student success and family income.2 When you support local livelihoods, you help local students succeed.

ETHICS & LEADERSHIP SCALING UP DEVELOPMENT Work with local vendors to Students also have great buying increase their capacity to power. Purchasing decisions reflect meet your purchasing needs. their values and ethics. Also, today’s students often become local entrepreneurs and leaders. VENTURE CAPITAL Your deposits support ENVIRONMENTAL & FISCAL local small business STEWARDSHIP and housing loans. Goods that travel less distance consume less fuel. Campuses are also great incubators for “green economy” businesses.

Institute for Local Self-Reliance's Top 10 Reasons to Support Locally Owned Businesses

1.Local Character and Prosperity 2.Community Well-Being DOUBLE BOTTOM LINE 3.Local Decision-Making Deposit cash accounts and fixed- 4.Keeping Dollars in the Local Economy income endowment investments in 5.Job and Wages locally-owned banks that maintain 6.Entrepreneurship “outstanding” Community 7.Public Benefits and Costs Reinvestment Act ratings, and you can 8.Environmental Sustainability 9.Competition participate in community investing at 10.Product Diversity no risk . 3 www.ilsr.org/why-support-locally- owned-businesses/

1 CEOs for Cities with Living Cities. How to Behave Like an Anchor Institution. http://www.ceosforcities.org/pagefiles/behave_anchors.pdf 2 M. Lacour and L. Tissington. The effects of poverty on academic achievement. Educational Research and Reviews, v6 n7 p522-527 Jul 2011 http://www.academicjournals.org/err/pdf/pdf%202011/july/lacour%20and%20tissington.pdf 3 For more information see: Maximizing Returns to Colleges & Communities: A Handbook on Community Investment www.carseyinstitute.unh.edu/docs/REC-handbook.pdf and A Student Handbook on Community Investment by Colleges and Universities www.equitytrust.org/docs/Investing%20in%20Social%20Change.pdf. 4 Avik Basu. Import substitution as economic development. University of Michigan. http://www.umich.edu/~econdev/importsub/