Greater Louisville Project Releases 2019 Competitive City Report: The Flow of Community Investment

July 7, 2020
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On July 7 at 11 a.m. the Greater Louisville Project (GLP) held an online community conversation about its 2019 Competitive City Update: The Flow of Community Investment. The report takes a comprehensive look at how the public, private and government sectors invest in our community. Recordings of the event are available on the Greater Louisville Project’s YouTube page:  https://www.youtube.com/channel/UCFlgC694fkdp9fdluyD81fw

As the report was going to print in early 2020, COVID-19 was declared a pandemic. Beginning at the end of May, discriminatory practices around the world were openly contested by massive protests. Locally, Breonna Taylor’s death brought national attention to Louisville’s race relations. The GLP policy board postponed the original date for a community conversation in order to better understand how these events will impact our community and how the GLP data can best be leveraged to spur community engagement so that Louisville can come out stronger than we began.

“How we respond will define what kind of city Louisville becomes after the crises,” said Jeff Polson, Executive Director of the Jewish Heritage Fund for Excellence and chair of the GLP Policy Board. “By coming together to understand the data we can ensure that we get the best return on our community investment.” 

For more than a decade, The GLP has provided research and data analysis to catalyze action and engage the community in a shared agenda for long-term progress. This year, they investigated the resources being invested in our community across the social, public, and private sectors. That analysis was complex, but the results clear: Louisville is investing less than the majority of our peer cities in both the public and social sectors in terms of per capita dollars. Our private sector investment and resources are comparable with the middle tier of our peers. 

“This is an historic opportunity for transformation, in our city and in our nation. A critical component of seizing that opportunity is rethinking our investment in human capital,” said Mayor Greg Fischer. “This report shows we have a lot of work to do, but I believe that our city has the commitment and the social muscle to get it done, and be a model for the nation. I pledge my team’s full commitment to doing just that.”

According to data in the report, more than 90% of high-income households (those who make more than $200,000/year) give to nonprofits. However, they give about 3.5% of their total income, compared to a peer city average of 4.5%. If we were to give at a comparable level to our peer average,  our community could invest more than $75,000,000 of additional funds in nonprofits and religious entities each year. This is compounded by the relative lack of endowed foundation assets, which means that Louisville’s nonprofit sector is in the bottom tier of our peer cities in terms of donations.  

In the public sector, while the actual ranking varies somewhat depending on the methodology used, Louisville’s government spending per capita is also in the bottom tier of our peer cities. 

Private sector investing has fewer reporting requirements, but across some important metrics (small business loans, home loans, and venture capital investment), Louisville is in the middle tier of our peer cities, although we are not taking full advantage of federal or CDFI resources. 

The conclusion is clear, Louisville has the capacity to invest more in itself to advance a more competitive city. 

“It is important to understand that the data itself does not change anything. It is only by understanding the data, taking action to improve the data, and collaborating across sectors to make the most of our investments that we will build the city we aspire to be,” said Ben Reno-Weber, Director of the GLP.  “As a next step to starting the conversation, we are asking Louisvillians to tell us the answer to one question, ‘If you had the resources to invest in  one thing tomake Louisville better, what would it be?’ You will hear some of these suggestions during the release event.”

ABOUT THE GREATER LOUISVILLE PROJECT

For more than a decade, The Greater Louisville Project has provided research and data analysis to catalyze action and engage the community in a shared agenda for long-term progress. The GLP is an independent, non-partisan initiative supported by a consortium of philanthropic foundations including: the Community Foundation of Louisville, James Graham Brown Foundation, Brown-Forman Foundation, The C.E. & S. Foundation, Gheens Foundation, Humana Foundation, The JPMorgan Chase Foundation, Jewish Heritage Fund for Excellence, Kosair Charities, Novak Family Foundation, Augusta Brown Holland Philanthropic Foundation, Brooke Brown Barzun Philanthropic Foundation, The Owsley Brown II Family Foundation, Owsley Brown III Philanthropic Foundation, and the Stephen Reily and Emily Bingham Fund. 

The Greater Louisville Project presents data and compares findings to 16 peer cities, including Indianapolis, Cincinnati, Nashville and others. To order a hard copy of the report or to access a digital download of the report as well as the appendix with supporting data, visit https://www.greaterlouisvilleproject.org/.

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Natural Breaks Algorithm

For each indicator, Greater Louisville Project assigns cities into one of three groups (high-performing, middle-of-the-pack, and low-performing) based on how they compare to other cities. The assignment is based on how cities naturally cluster on that indicator. Sometimes, the differences between cities are very small, and the difference between a city ranked 5th and 6th could simply be a matter of the sampling error that arises from using survey data. Thus, rather than always make a division that declares the top 5 to be the top tier, we use a natural breaks algorithm to look for a cluster of cities that is outperforming the rest, a cluster that is about average, and a cluster that is lagging. This clustering gives us a better indication of where Louisville is thriving and where Louisville has room to learn from cities that are doing better.

Z-Scores

Z-scores (or standardization) is a way to combine data with different units of measurement into a single index. The z-score is a measure of how far away a city (or census tract, etc.) is from the average city. In order to be comparable across different units of measurement, the z-score is the distance from the mean measured in standard deviations (e.g. if Louisville has a z-score of 1 it means Louisville is 1 standard deviation above the mean of its peer cities).

Data from the Robert Wood Johnson Foundation's County Health Rankings use z-scores and all z-scores are relative to the mean of Louisville's peer cities. (On the County Health Rankings site z-scores are relative to all the counties in each state - thus z-scores reported by GLP will be different, because we are using a different reference group). The Greater Louisville Project also uses z-scores in our multidimensional poverty index, which compares each census tract to the mean of all census tracts in Louisville.