Capital & Collaboration was a Boston Fed initiative with a goal of exploring ways to increase the scale and impact of community investment in Massachusetts Working cities. Launched in July 2015 in partnership with the Kresge Foundation and the Initiative for Responsible Investment at Harvard’s Kennedy School, this effort was designed to foster capital investment in smaller, postindustrial cities through thoughtful, cross-sector engagement of the local investment community and civic leaders. Although public, private, and philanthropic investors may wish to tap the abundant human and physical assets of these smaller cities, the mechanisms by which to do so are not always evident.

Inspired by the capital absorption framework developed jointly by Kresge and the Initiative for Responsible Investment, Capital & Collaboration harnesses the Boston Fed’s work to build collaborative civic infrastructure through the Working Cities Challenge by better aligning the goals of investors and communities, ultimately linking low-cost, flexible capital investments with communities that need them.

Capital & Collaboration employed a three-phased approach. We began with an assessment of the capital absorption ecosystem in Massachusetts Working Cities, using data analysis and interview to better understand the capital flows (sources and uses, duration, cost, and terms) in these cities, as well as the barriers and challenges that currently limit access to capital investment. We sought to understand the current demand for low-cost, flexible capital—how much is being used, by whom, and for what.

Next, the initiative engaged the cities through a series of workshops that dug more deeply into exemplary deals and pipelines for capital investment. These workshops were informed by a committee of Working Group members including leaders from community development financial institutions (CDFIs), and other intermediaries (including small business technical assistance providers/micro-lenders), banks and financial institutions, state and quasi-public agencies, statewide advocacy organizations, and philanthropy.

In the final phase, the Working Group consolidated findings, developed a set of recommendations, and formulated ways in which to advance their implementation. These findings and recommendations are presented in the Working Group's 2016 report, Capital & Collaboration: An In-Depth Look at the Community Investment System in Massachusetts Working Cities.