Fuel for the Field

Change is in the air, and we will need plenty of it to move the needle on poverty in the U.S. It has remained stuck at around 12-13 percent of the population for decades, officially reaching 37 million in 2007. At REDF, we are developing a new partnership that gets directly to the heart of this issue. We know that the most predictable route out of poverty is getting a job, and staying in the workforce. For most Americans, spells of poverty are actually relatively short. But for a smaller subset – people with histories of homelessness, incarceration, limited education, health conditions and other high barriers – poverty is chronic and exacts huge personal and societal costs.

For more than a decade, REDF has helped to foster a social innovation that puts people to work by investing in San Francisco Bay Area nonprofits that create employment-focused social enterprises. Building on the lessons of Goodwill, which employs about 80,000 people and provides services to more than one million people nationally, San Francisco’s own Delancey Street, which not only provides housing but also creates businesses to employ people who have been incarcerated, and other iconic programs, REDF’s portfolio of nonprofit organizations has started income-earning businesses deliberately meant to employ people whose personal challenges have kept them poor and outside of the workforce. These enterprises are the key to workforce entry for those least likely to be hired by traditional employers.

Outcomes are promising – among individuals interviewed two years after hire into a social enterprise, 74 percent were working, and 12 percent more were in vocational education. [1]

Despite the existence of other similar employment-focused social enterprises around the country, scaling this model has proven daunting. Our hypothesis is that the key to scale is “procurement” – increasing the amount of goods and services purchased by government and private companies from these enterprises so that they can create more jobs.

REDF is thus increasingly focused on how to increase procurement by the public sector and private companies, while at the same time investing in and building the nonprofit enterprises’ capacity to deliver the recycling, street cleaning, park maintenance, landscaping, screen printing, and other goods and services demanded.

Jeremy Nicholls, advising the government in the U.K. on social investment, states,

“On the demand side the largest opportunity would appear to be in changing public sector procurement. Existing public contracts for goods and services will often not only include outputs but will also score on the basis of delivery, capacity and innovation, and may include community benefit clauses. In the short term, approaches to understanding and managing value could help increase the scores for delivery and capacity, and show the clear links between activity and community benefits. In the medium term, they may provide a way for potential buyers to make results of expenditure part of the core criteria of a contract, aligning the procurement with both corporate and other departmental objectives.” [2]

In the U.S., the prison population presents an excellent case in point of the value of social enterprise. In California, parolees from state prisons [3] number around 120,000. Among the myriad challenges they face is finding a job; an estimated 60 to 80 percent of parolees in California are unemployed one year after release from prison. For many ex-offenders, not having a job is related to returning to a correctional setting. One New York State study documented that 89 percent of individuals who violated probation or parole were unemployed at the time. [4] Meanwhile, California’s Legislative Analyst has noted that less than 20% of the 120,000 parolees are in an employment program and has suggested that most of them are not engaged in programs with a proven track record of success in reducing recidivism. [5]

People with criminal records face a daunting lack of employment prospects upon release, not the least of which is reluctance from employers. According to the Re-Entry Policy Council Report, “surveys have found that 60 percent of employers, upon initial consideration, would not hire an individual released from prison or jail.” [6]

There are more difficulties for this population on top of this pervasive stigma, including the challenges mentioned above – limited education, low skills, spotty job history, health issues, and general work-readiness.

Comparisons with other states indicate that California can do more to prevent recidivism. The Legislative Analyst’s Office puts California’s cost of re-incarcerating individuals on parole at $2 billion annually. [7]

The kind of employment-focused social enterprise that REDF supports is a proven vehicle for bringing those who have been incarcerated into the workforce. New York, which now has 9,000 fewer inmates than ten years ago, has actively supported enterprises, such as the Center for Employment Opportunities (CEO) in New York City, which are widely credited with helping to reduce recidivism. CEO places more than 1,000 ex-offenders in jobs each year after employing them on a transitional basis to deliver maintenance services under contract with State agencies. An MDRC study indicates that CEO cuts re-incarceration rates by 40 percent for the commitment of a new crime two years after participation in the social enterprise job.

CEO and REDF have formed a new partnership and are working with State and local officials and local nonprofits to bring the CEO model to California. REDF has acted as a procurement “agent” for the project and is negotiating with the State for a potential $1.5 million contract that would provide the wherewithal to local social enterprise to create jobs, while leveraging additional resources to replicate CEO’s placement and job retention services. Stay tuned for updates on our progress.

This article is from REDF’s Summer 2009 eNewsletter

……………………………………………………………………………………………………

……………………………………………………………………………………………………