Policymakers around the world are increasingly interested in place-based programs that use tax incentives, zoning regulations, and other measures to promote investment, economic growth, and positive changes in low-income, underdeveloped communities.
Yet the towns and cities that have used the approach—exemplified by Opportunity Zones in the United States and Enterprise Precincts in Australia—have gotten mixed results. For one, the programs have tended to reallocate existing economic resources within a community rather than generate new ones. The low-income households that were supposed to be helped often fall below new poverty thresholds and are squeezed out of their communities. And the benefits that are realized—such as increasing property values and the creation of higher-skilled employment opportunities— mostly go to landowners and savvy, mobile workers.
How did things go so wrong? How could these programs perversely end up displacing and impoverishing the people they meant to help?
We lay much of the blame on the lack of a comprehensive framework that meaningfully identifies and measures public benefits that reflect a community’s unique character and helps evaluate the delivery of those positive changes.
Yes, there are guiding principles for prioritizing community engagement in US Opportunity Zones and Australian Enterprise Precincts. Five come from the US Impact Investing Alliance and the Beeck Center for Social Impact. The Victoria state government in Australia shows developers how to weigh their floor plans against public benefits.
But we must go further to identify the results that actually help communities in need and ensure place-based programs earn the policy advantages they enjoy. The Net Community Benefit Methodology (NCBM) that we at the Impact Investment Group (IIG) are developing gathers our own and other resources that can help guide us all toward robustly defining, designing, and measuring public benefits and the successful delivery of them by place-based programs. Our work-in-progress has five components:
1. Define the Dimensions of Community Benefit
A number of organizations and disciplines have already made great strides toward identifying meaningful dimensions of public good that could inform the structure and benefits of place-based programs. They include:
- United Nations-Habitat’s City Prosperity Initiative (CPI)
- United Nations Sustainable Development Goals (SDGs)
- Green Building Council of Australia’s Green Star
- In Australia, Bioregional’s One Planet Living
- Social determinants of health (SDOH) , which examine the upstream social causes of downstream inequities
- The 1943 psychological breakdown of human motivations known as Maslow’s hierarchy of needs
Among these, the UN’s City Prosperity Initiative stands out. It provides six dimensions to define how community benefits could be designed and assessed:
- Productivity: measuring income, employment, and equal opportunity in city life.
- Quality of life: providing services like education, healthcare, and social support to help people live fulfilling lives.
- Environmental sustainability: valuing the natural environmental assets of a city, such as parks, clean air, and urban waterways.
- Infrastructure development: accounting for necessary urban assets, such as water, power, and roads.
- Equity and social inclusion: addressing issues of poverty and marginalization to create inclusive and equitable communities.
- Urban governance and legislation: requiring strong leadership and institutional arrangements, including policies and laws.