Home 9 Impact Economy 9 Circular Economy 9 Place-Based, Impact-Driven Economies

“Impact investing has a long way to go before it is fully enfranchising the people who are supposed to be benefitting from impact investments”.

Jamie Broderick,
Advocate for Social Impact Investment and Board Member,
Impact Investing Institute

A recent report by BlueMark found that only 11% of impact investors engage with communities, customers, workers, and other local stakeholders to understand their impact. Place-based investing has a long way to go, and even though we at In Place Impact fully believe that it is an imperative cog in the wheel of any design for a sustainable future, the status quo needs to be changed for it to work.

Prior to the pandemic, increasing numbers of people were starting to realize that “bottom-up” and “middle-out” changemaking were equally, or, quite possibly, more important than “top-down”. Research through the era of the pandemic has shown that for anything to be sustainable it must first be resilient, that levels of community-based resiliency correlate to levels of local equity, and that levels of local equity correlate to levels of local inclusion. Therefore, there is a direct correlation between how sustainable a community is and how inclusive it is. The pandemic has also shown us that focusing on building vibrant local economies may be more important than ever before.

Place-based investing has been around for a long time; however, because of the above, it is now even more critical that we support our local communities. One of the reasons that, to date, it has not worked as well as people had hoped is because of which community stakeholders were included, and at what stage of the process.

Mural of man in blue hoodie

Having conducted almost 30 years of research into this subject, we created a new model of inclusion, and determined in our model the stage at which each community stakeholder is embedded in the process. The information below might surprise you as, in many ways, we have turned the old process/model on its head; but we have tested it, and proven that it works.

1. The creation (where necessary) and redesign of the intersection between each and all of the community segments, stakeholders, and sections mentioned below.

Why: Because it is at and within the intersections between community stakeholders that most of the choke points blocking progress are to be found.

Research through the era of the pandemic has shown that for anything to be sustainable it must first be resilient, that levels of community-based resiliency correlate to levels of local equity, and that levels of local equity correlate to levels of local inclusion.

2 (Tied). The People Living the Problems – especially those in underserved, marginalized, and/or disenfranchised communities.

Why? Because when you work in those community segments you quickly realize that the people living there have remarkable solutions to the problems they face, and that they have just never received the kind of information, structure, frameworks, capital etc., required to bring them to life. To date, (at least in the US), some money has been funneled into these community segments through welfare, charity, or trickle-down-economics; however, the problems still persist, and in many instances are worse. It is time to place a major focus on providing the people that have the solutions with the information, tools, contacts, context, and, yes, appropriate capital, to build their own solution-focused companies, within their own community segments.

2 (Tied). Modern Business leaders

Why? While work is being done to create the frameworks required in the community segments mentioned above, modern business leaders are also the most important people in the room, because as a cohort they touch virtually every family, every community, and every environment in the world. In America alone, there are 16,000,000 active companies employing over 130,000,000 people in almost every community you can think of. Extrapolate that globally and the impact of adopting leadership and management through the lens of profit-for-purpose becomes palpable. Narrow it down to “in place” and, if nothing else, the pandemic alone has shown the importance of supporting local businesses and the decisions local business leaders make.

There is a direct correlation between how sustainable a community is and how inclusive it is.

3. Academic Institutions & Students

Why? Because schools, colleges and universities can become hubs for impact innovation (student and community classes on impact entrepreneurship) that use consequential learning to help develop the future leaders we need.

4. Impact Entrepreneurs & Investors

Why? Every community should start creating vibrant place-based hubs of impact for the good of the community.

5. Local Governments

Why? Because whether we like it or not, local governments are important stakeholders in our communities, local politicians are the most important we have as they are the closest to us, and every local government should be focused on building a community that is economically, socially, and environmentally sustainable for all residents.

6. All Community Segments, Sectors, and Stakeholders

Why: Because in today’s world win/lose is actually lose/lose and hence we must create place-based economies that are 100% inclusive, that increase economic vibrancy throughout all community segments, and in a manner that ensures it is not left to luck — that if one benefits, all benefit.

Place-based investing has been around for a long time; however, because of the above, it is now even more critical that we support our local communities.

7. NGOs

Why: Because the goal over time is to eradicate the majority of them by solving the problems they have been focused on. Poverty and marginalization are economic models. Thus, for the past 70 years, when we fought economics with charity, that is like taking a knife to a gunfight. The results of this strategy have been self-evident, and few have been prepared to tackle the status quo.

Children after school

In future editions of my column, we will walk through how each stakeholder, segment, or sector of a community is brought into the model, what immediate benefits they receive, and how, by either creating or redesigning the intersections between each and all, communities can unlock the historic choke points that have prevented the progress we need to see.

It is time to place a major focus on providing the people that have the solutions with the information, tools, contacts, context, and, yes, appropriate capital, to build their own solution-focused companies, within their own community segments.

If we want our communities to be economically, socially, and environmentally sustainable for all residents, we must use place-based strategies to create them. If enough communities do so, we may have a chance of attaining the SDGs (not by 2030 as that is a delusion that needs to be brought down to reality) and creating a sustainable future. However, if communities do not do this themselves, no one else is going to do it for them, and the writing is on the wall.

In 1993, Stuart Williams co-created the global platform of "Making A Profit While Making A Difference", since then, he has remained a global leader in the field and more latterly is the creator of Impact Economics, which uses business and economics to re-build civil society.
Sankalp Global

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