Module 1
Social Procurement Principles
Effective social procurement requires strong, committed leadership at the top. The entire anchor institution, from senior leadership to front-line staff needs to be aware of the institution's commitment. In this module, learn about the strategic policy steps you should take to set yourself up for success.
checklist:
- Understand the anchor mission and how social procurement can contribute to that mission.
- Partner with the community to provide leadership
- Empower the entire organization to adopt social procurement practices
Mission Statement
Toronto's anchor institutions will use their procurement to create economic opportunities for residents and neighbourhoods experiencing inequitable economic challenges.
1. Create your anchor mission.
Anchor institutions are large, often but not exclusively, public sector institutions that have significant economic power in the communities they serve. Often, these institutions referred to as the "MASH" sector (municipal, academic, school boards, hospitals), or the "Meds and Eds" sector. No matter what they are called, these anchor institutions have purchase significant amounts of goods and services, develop major capital infrastructure projects, and often have substantial real estate assets. Most importantly, anchor institutions are rooted in place. Because of their unique role in the community, or the nature of their operations, anchor institutions are unlikely to leave a community, regardless of the broader economic environment.
The Context
By many accounts, Toronto is thriving. It is the economic engine of Canada. But not everyone benefits from this prosperity.
In Toronto, 1 in 5 adults and 1 in 4 children live in poverty (City of Toronto, 2017). Some are more likely to experience poverty than others, such as racialized communities, newcomers, and seniors. There are also neighbourhoods across the city that continue to experience economic challenges, despite growth happening around them. As of 2015, "a majority of all neighbourhoods in the GTA are now segregated into high- and low-income. Middle-income neighbourhoods are vanishing from our region" (United Way of Toronto and York Region, 2017)
Click here to learn more about poverty in Toronto and the steps the City of Toronto has identified to reduce poverty in our community.
Percentage of the Population in Low-Income
The OPPORTUNITY
Continued and growing poverty hurts everyone. That is why the Province of Ontario and the City of Toronto have both developed poverty reduction strategies. It is also why over a dozen anchor institutions signed the AnchorTO Pledge in 2016 to champion practices that would help to address long-standing systemic issues that contribute to poverty in the region.
These anchor institutions spend billions of dollars every year on good and services and capital infrastructure investments. They hire thousands of employees. They hold, develop and sell millions of dollars worth of real estate. They are major economic actors in the city. By working together, anchor institutions can use this economic power to help ensure that the region's prosperity reaches everyone. In other words, the goal of AnchorTO is inclusive economic development.
Signing the AnchorTO Pledge on September 26, 2016
$17 billion
Estimated annual operating and capital investment by Toronto's anchor institutions.
Learn about the anchor institution opportunity and how it works in practice in Toronto and around the world at anchorinstitutions.ca.
Characteristics of an Anchor Mission
An anchor institution can adopt an anchor mission in a variety of ways. Institutions may opt to develop a statement of principle(s) that clearly positions the institution as an anchor institution. Institutions can also opt to develop a more formal framework or strategy.
In Toronto, anchor institution missions tend to include the following characteristics:
- Acknowledges the the institution in embedded in the community and has a key role as a community builder
- Includes inclusive economic development, city building, or the wellbeing of the broader community as part of its work
- States that the anchor mission is to be embedded in all parts of its operations
Case Studies
- University of Toronto Anchor Institution Framework
- Metrolinx Sustainability Strategy
- Metrolinx Community Benefits Framework
- AnchorYork
WHAT to Do:
- Identify your community mission
- Develop and release a statement outlining the institution's community commitment
- Develop an anchor institution framework or strategy
2. Connect the community engagement side of your organization with operations and capital.
Social procurement is about aligning community engagement and community development goals with operational goals. There are four components of work that most anchor institutions engage in that would be relevant to a social procurement initiative:
- Operations and capital projects
- Community engagement and outreach
- Workforce development and business incubation
- Procurement and vendor relations
, there are four broad categories of wor
3. Commit to using your purchasing and capital investment to achieve the anchor mission.
In the AnchorTO Blueprint, the anchor mission is achieved through the practice of social procurement. At the most basic level, social procurement is a way to use everyday purchasing activities and large capital infrastructure development projects to "generate economic and social value, well-being or benefits across regions or in specific communities" (Dragicevic and Ditta, 2016).
This can include:
- Purchasing from small community businesses that are qualified to do the work and also contribute to the neighbourhood economy.
- Asking vendors to hire graduates of local employment programs.
Why would an organization do this? Traditionally, when organizations purchase goods and services, cost and quality are the primary considerations. Over the past few decades, organizations have included environmental sustainability in their considerations. This recognizes that environmentally sustainable goods and services can not only reduce the long-term costs of harm to the environment, but can also lead to more innovative solutions. Social procurement adds a new third consideration as part of the triple-bottom line: social impact.
Private and public sector organizations in Toronto and around the world are already incorporating these three considerations in their procurement activities. In fact, the International Organization for Standardization (ISO) has adopted guidance which defines sustainable procurement as "making sure that the good and services an organisation acquires have the lowest negative and the most positive environmental, social and economic impacts feasible" (ISO 20400:2017).
Get concrete examples of social procurement projects in Toronto in the AnchorTO Showcase.
Get even more examples from around the world on community-wealth.org.
“It won’t be long before the most progressive companies designate specific team members to develop and implement social procurement strategies, establishing partnerships and working hand-in-hand with local non-profit agencies to build community capital.”
Where does social procurement Apply?
Social procurement can apply whenever the anchor institution purchases goods or services or develops capital infrastructure, from small-scale, low-dollar value contracts to multi-million dollar construction and service contracts. In practice, certain categories of purchasing are more likely to produce positive social procurement outcomes (see Module 4 on Planing your Procurement). It is completely appropriate to take a targeted approach.
Case Examples:
- As part of its social procurement program, the City of Toronto includes employment and skills training requirements in some of its larger service and construction contracts. It does not, however, include these requirements in all contacts. Instead, it selects procurements over $5M in value and at least 2-years in length that have the best likelihood of achieving results.
- As part of its Social Enterprise Strategy, the Government of Ontario has established a Social Enterprise Hospitality Community of Practice. This group focuses on encouraging officials to procure catering, and other hospitality goods and services from social enterprise.
Make a Commitment and Empower Staff
Adopting social procurement is a change management exercise. It requires staff who are not traditionally involved in community engagement and social development initiatives to become familiar with these goals. It involves a cultural shift away from traditional public procurement practices. It also involves a level of trust building to reassure staff concerned with risk management and risk mitigation that social procurement can be done with minimal risk to the organization.
As with any change management process, leadership at the top is essential to success. It is important for senior leadership, including those in finance and operations roles to proactively and explicitly allow staff to develop and adopt social procurement practices in the institution.
Things to Do:
- Learn about social procurement initiatives that have already taken place in the Toronto region.
- Ensure senior finance, operations and communications executives are familiar and accepting of social procurement practices.
- Include social procurement in your organization's broader sustainability or community engagement agenda.
- Develop a formal communication or statement to the entire organization that indicates the anchor institution's commitment to social procurement practices.
UTSC
- As part of its social procurement program, the City of Toronto includes employment and skills training requirements in some of its larger service and construction contracts. It does not, however, include these requirements in all contacts. Instead, it selects procurements over $5M in value and at least 2-years in length that have the best likelihood of achieving results.
- As part of its Social Enterprise Strategy, the Government of Ontario has established a Social Enterprise Hospitality Community of Practice. This group focuses on encouraging officials to procure catering, and other hospitality goods and services from social enterprise.