Making the Most of Community Benefits Plans

For decades, community engagement and benefits plans have been an important component of capital projects and infrastructure investments. Community benefits planning has been implemented by publicly funded projects to ensure that programs and investments support the requirements needed by local stakeholders and increase the public good of people and communities. Energy companies have found success in utilizing community engagement, relationships, labor agreements, and community benefits plans to facilitate regulatory approval, permitting, and acquisition. These efforts have allowed them to build trust with local stakeholders, increase participation in public programs and services, and ensure that their projects have a positive impact on the communities they serve. This approach has ultimately resulted in increased reliability and saved time and cost. Community benefits plans have become a required component of several federal grants and are considered a standard practice in the energy industry. While some firms are familiar with community benefits plans and its engagement process, others may find difficulty. This article will outline the steps needed to optimize community benefits planning.

Impacted Communities

Many communities have been impacted by economic trends, natural disasters, capital projects that were built without sufficient planning around local impacts, and social trends that have resulted in higher-than-average rates of poverty, unemployment, lack of quality education, lack of quality housing, poor access to fresh food, and other challenges. Community benefits offer an opportunity to partner with local community, business, labor, and civic groups to work together on ways to provide resources to address key community needs. When done poorly, local engagement can harm communities, lead to erosion of trust, and create a challenging pathway that can cost time and money. But, when done right, community benefits plans can increase trust in relationships with local stakeholders, set expectations around access to jobs and economic opportunity, address needs in affected communities, develop innovative programs, and build long-term relationships that can help ease the path for future infrastructure investments. 

Key outcomes of a successful community benefits strategy:

1. Data-informed understanding of affected populations
2. Authentic stakeholder engagement process that builds trust
3. Benefits that are targeted, address local needs, and empower local stakeholders
4. Benefits that focus on access to economic and social opportunity
5. Community benefits plan that is specific, actionable, and measurable
6. Long-term framework for maintaining trust, measuring impact, and strengthening relationship with local stakeholders

Key Federal Grant Requirements

The Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA) allocated nearly $1 trillion toward programs focused on rebuilding our nation’s infrastructure — with uses ranging from upgrading our electric grid, to developing clean hydrogen energy hubs, and investing in home energy efficient upgrades. Community benefits plans are required for all U.S. Department of Energy (DOE) BIL and IRA funding opportunity announcements (FOAs) and loan applications. For projects that are seeking grant funding from DOE, community benefits plans generally represent 20% of the technical scoring on proposals for funding. Further, after an applicant is selected, “[T]heir Community Benefits Plan will be part of the contractual obligation of the funding recipient. A summary of the Community Benefits Plan will be publicly posted on DOE’s website for transparency and accountability.” The DOE-funded BIL and IRA programs generally require four key components:

• Investing in America's workforce —The community benefits plan may include how the recipient will address wages and benefits, recruiting and training, job-site conditions, worker health, diversity, and the right to organize, and support of apprenticeship programs. 
• Engaging communities and labor — A core component of DOE’s approach and any community benefits strategy is around engaging affected stakeholders. Recipients should perform a social characterization assessment (see discussion later) to help identify those stakeholders. Equally important to identifying stakeholders is to identify successful venues for engaging people in a way that builds trust, establishes equal footing, and facilitates honest and open dialogue.
• Advancing diversity, equity, inclusion, and accessibility — DOE stresses its commitment to advancing equity and racial justice. This component, established through Executive Order 13985 in 2021, requires “that all federally assisted contractors make good faith efforts to meet goals that 6.9% of construction project hours be performed by women and a certain percentage of construction work hours, varying based on geography, be performed by people of color.”
• Implementing Justice40 — This component was also established by executive order (EO 14008), which “directs 40% of the overall benefits of certain federal investments…to flow to disadvantaged communities.” 

Community Benefits Agreements and Project Labor Agreements

While not all community benefits plans result in agreements that are formal or legally binding, some do. These agreements can take several forms — the most common of which are Project Labor Agreements (PLAs) and Community Benefits Agreements (CBAs). PLAs and CBAs can be useful in terms of clearly establishing expectations and providing guidance both for the developer and the community. PLAs are collective bargaining documents typical for construction projects, negotiated between the owner and labor — often represented by a union. PLAs may have provisions around wages, benefits, work hours, conditions, and hiring practices.

CBAs, in contrast, are much broader and are typically negotiated by community stakeholders, represented by local community groups — sometimes with the support and guidance of local elected officials. CBAs can allow for creativity in terms of how projects can serve communities, including components like local hiring and workforce training, investment in local facilities (such as recreation centers and schools), and providing financial support to a community fund. There are other types of agreements as well. Good Neighbor Agreements establish a set of terms around how the developer/contractor will reduce its local impact, and a commitment to resolving disputes amicably. Community Workforce Agreements are similar to PLAs in that they relate to labor and workforce issues, but typically involve community groups and stakeholders as parties, representing commitments to areas like local hiring, local purchasing, and workforce diversity/equity.

Different Communities, Different Challenges, and Solutions

The success of community benefits plans relies on the approach taken to reach them — the way that local stakeholders engage to build trust, empower local voices, and build a collaborative relationship where all sides are satisfied with the outcome. If the process can result in a trusted relationship, it will lead to a better outcome where benefits are targeted at addressing local needs and making the greatest impact. Although it can feel daunting to acknowledge the need for a unique process and plan in each community, this aspect is essential. There are vastly different needs in urban and rural areas, in tribal communities, and even between communities that share the same context. One rural community, for example, may have recently experienced the closing of a factory and the resulting job loss and economic impact. Another community that appears similar on paper may have completely different challenges. Communities also have varying levels of social infrastructure — the level of organization needed to represent a community’s interests. Some communities have well-established avenues outside of government, such as community and civic associations. Others may have more of a leadership vacuum and lack those types of well-organized entities.

Start with Data

Before engaging stakeholders and starting the engagement process, energy companies analyze data to get a sense of the communities they are working in. This work includes identifying populations that are impacted, demographic and socioeconomic trends, and start identifying community needs based on quantitative data. This process may involve analyzing data from sources like the U.S. Census and American Community Survey, sources from the U.S. Department of Housing and Urban Development such as Comprehensive Housing Affordability Strategy, and using available tools like the Climate and Economic Justice Screening Tool. The data analysis should focus on disadvantaged communities as defined under the Justice40 initiative. If the applicant has relationships with key stakeholders already, it may be helpful to talk to them and collect data on what they feel are local needs, who the impacted groups are, and who are other key stakeholders that should be part of the process. By overlaying quantitative and qualitative data, it is possible to start to identify trends such as population shifts, housing costs, and changes in median income. This analysis can be used to develop a social characterization assessment, or summary of the community that identifies key stakeholders, local needs, and trends that will be important background in framing the engagement process. 

Stakeholder Engagement

The most important component of any community benefits planning process is stakeholder engagement. It is important to identify who the key stakeholders should be. A good starting point is to talk to local government officials, and business, civic, and labor leaders. In areas that are proximate to tribal lands, it is essential to include representatives from tribal governments. Initial engagement should also seek to identify key civic and business groups, nonprofits, and philanthropies. Stakeholders should represent a range of affected groups, viewed through multiple lenses. This could include geographic distribution, major industry sectors, public sector, racial and ethnic diversity, labor, faith-based groups, and key interest groups.

It is essential to be open and honest with community stakeholders, and act in good faith to solicit reciprocal openness and honesty. Companies should have decision makers available for meetings, rather than sending delegates who do not have decision-making power. They should spend more time listening and asking questions and, when possible, compensate community members for the value of their time and local knowledge. The venues, formats, and cadence will be different for each engagement process, but in communities with larger interested and engaged stakeholders, it may make sense to engage people through one or more town hall-style meetings. Roundtables are a more intimate format to engage people through group exercises. For a highly hands-on approach, stakeholders can be actively engaged in idea development through a charrette format and should incorporate a combination of presentation, activities, conversation, and feedback. 

Developing the Plan

Stakeholders should work to identify community needs, identify solutions, convert those solutions to community benefits, and map those benefits into a strategy and plan. When needed, the stakeholders may agree to formalize the benefits into a CBA, PLA, or other agreements. DOE stresses that “plans must be specific, actionable, and measurable.” Being clear and specific and providing a way of benchmarking and measuring impact also helps all parties assess whether things are on track and to make course adjustments. It helps maintain trust, transparency, and openness that hopefully were established during the engagement and planning process. While developing the plan, consider where and to whom benefits will flow, and whether the plan elements are aligned to community priorities.

Ensuring that elements of plans are specific and actionable requires the parties to map out strategies, programs, and investments in sufficient detail. This can be achieved with mapping exercises during engagement and planning through workshop-style sessions. There are several strategic planning methodologies that may offer effective structure to connect needs with goals, desired outcomes, and commensurate actionable benefits. One common approach is to create milestones that meet the SMART framework (Specific, Measurable, Achievable, Relevant, and Timely). 

Community benefits plans that are not part of a federal grant can appear in several formats. For plans that are part of federal grants, DOE provides a community benefits plan template.¹ DOE stresses flexibility, and the template notes when certain sections may not apply. It also provides guidance on the level of specificity that is required. Energy companies should include affected locations and communities that are part of the proposed project’s supply or waste life cycle in the plan. 

Measuring Impact

Tracking impact adds to the success of the plan, the transparency of the efforts, and presents the ability to adjust benefits as needed. Some benefits, like a commitment to hire a certain number of people locally, or to purchase a certain amount of material from local suppliers, are straightforward. That is, if they are being tracked. It is important to establish a thorough process for tracking data, warehousing data, and dashboarding that data. Other benefits, however, can be more intangible and harder to measure. For example, an investment in a community fund to create economic opportunity and reduce poverty could be challenging to measure. The investment into the fund is clear, but is the fund being impactful in the long term? Note that data collection and tracking produce different metrics. Measuring social impact requires developing a four-step model that tracks inputs, outputs, impacts, and outcomes. 

How Guidehouse Can Help

Guidehouse offers experts with deep experience in community engagement, community benefits strategy development, drafting community benefits agreements, and social and economic impact evaluation. We have community development practitioners working together with our best-in-class energy experts to build community benefits approaches that are tailored for utility providers and energy contractors. Our key capabilities include: 

• Community Engagement — Our team includes people who specialize at working in historically disadvantaged communities across the U.S., utilizing trauma-informed approaches to build trust and facilitate authentic and effective engagement. 
• Energy and Utilities Strategy — Our leading Energy, Sustainability, and Infrastructure practice is trusted by utilities providers and energy contractors to help address their most complex challenges.
• Program Evaluation and Continuous Improvement — We help companies carry out rigorous evaluations of their benefits programs, utilizing mixed-method approaches to provide insights that can be transferred to continuous process improvement to drive greater benefits.
• Benefit cost analysis — Our experts apply proven, data-driven analytics methodologies to carry out benefit cost analysis on a diverse set of activities. Our toolkits and output models help companies with decision making when evaluating community benefits approaches.
• Data Analytics — We have data analysts who have significant experience relating to population and demographic trends, economic impact modeling, and geospatial analysis.
• Impact Evaluation and Benchmarking — We are experienced in data collection, tracking, dashboarding, and benchmarking complex community and economic development programs. 
• Federal Grants Management — Our best-in-class grants management experts are working in dozens of states, counties, and cities to ensure compliance and provide real-time insights relating to federal grants.

1 Energy.gov. "About Community Benefits Plans." 2023. https://www.energy.gov/infrastructure/about-community-benefits-plans.