Good reading

Worth reading this week – Bay Area social entrepreneur Paul Lamb’s fine piece on social enterprise in the Huffington Post — The Business of Hope; and an interesting article on a Johnson and Johnson sponsored program to help people with mental illness get into the workforce in the Stanford Social Innovation Review — Employment Power.

There was also a good article in the New York Times about how Charity Navigator is updating its ‘ratings’ of nonprofits to move away from crude measures about overhead ratios to more thoughtful appraisals of efficiency and results delivered.  Although the evidence still affirms skepticism about whether donors really use on line services to decide on their giving priorities, more than 4 million people hit the Charity Navigator site, and as the Bay Area’s Sean Stannard Stockton notes in the article “The fact is that most people don’t read tech reviews of smartphones to educate themselves before buying one, but some people do, and that influences the rest of us”.

Thanksgiving and the American Dream

The term American Dream was coined during the Great Depression by the historian James Truslow Adams who said it was,

“that dream of a land in which life should be better and richer and fuller for everyone with opportunity for each according to ability or achievement.”  He added, “It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Dreamers and innovators, outcasts and misfits have populated America for centuries – a place full of contradictions of all kinds.  We are fiercely independent, but willing to lend a hand to others in need.  We are deeply religious, but of multiple religions, evolving doctrines and affiliations.  Creative, full of drive and hope, but stirred at times by fears of change and decline.

With tens of millions of Americans jobless, enormous holes in our personal and government budgets, and political scandals that don’t seem to quit, we are restless and uncertain about the American Dream, while we posture as though confident and bold about our political views.

As I anticipate my teenagers arrival from college for Thanksgiving, I am thinking about our tradition – going around the table and inviting each person to talk about something they’re thankful for.  We’ve heard answers that are profound, profane, pithy, long-winded, painful and joyful.  Often about our dreams for ourselves, our families and friends and our country.

Thinking about REDF’s list – it’s all about that American Dream.  So here are a few of the small victories that we are thankful for this year.  Each one fires us up to meet our goal of creating jobs for thousands more people so that they have the opportunity to achieve….regardless of birth or position.  Each one meets the test of a public worried about costs and wanting America and Americans to succeed:

  • Resources and assistance will now offer help with housing and jobs to foster youth who have no permanent family to help them transition to independence.  California’s new legislation does not add to State costs – because it allows us to tap existing federal funds available for this purpose.  About 5,000 foster youth age out of the foster care system each year in California and estimates are that roughly half end of homeless, and many jobless.   National research demonstrates that every dollar expended on former foster youth ages 18-21 will produce a $2.41 return to the public coffers.
  • Believe it or not, a 2010 report shows an overall decline from 49.1% to 47.4% in one-year recidivism rates for California parolees since 2005, the year “Rehabilitation” was added to the California Department of Corrections (and Rehabilitation) title and mission. Because more than 100,000 offenders are released in California each year even these slight changes in recidivism rates mean that the families and children of about 1,500 more people have a parent home for the holidays – not locked up. Lower numbers in prison = lower costs.  Jobs are proven to be key in reducing these numbers farther.
  • The nonprofits that REDF has worked with over the years to create businesses put about 550 people to work in this incredibly tough economy, pushing past 5,700 the number that these social enterprises have helped move into the workforce over time.

What are you thankful for?  How does it connect with the American Dream?

Spending money well builds public trust

As our newly elected Governor and other representatives prepare for the coming year, and the highly partisan public debate about government spending rages, those of us working at the community level know that the fight over cutting or increasing taxes does not tell the whole story.  We know that business as usual is neither possible nor productive in the current environment.  It’s not going to put people to work, make America more competitive or grow our economy.

What is? Clarity about objectives and expected results in the context of basic values like integrity.  Excellent implementation on the ground.  Accountability – internally and externally – for achieving results.

This is just as true of nonprofits and government as it is in private sector businesses.  The economy blew up because many private sector companies forgot this, and their funders, overseers and regulators neglected to hold them accountable.   I would argue that one of the factors undermining support for government and the programs it funds is a perception and too often a reality – of similar issues.

An important clue to improvement can be found in the results of a recent  national survey, whose initial results were released this week by Public/Private Ventures (P/PV).  The Huffington Post spotlights it,

The United States spends billions of dollars every year on workforce training programs funded by 12 federal agencies, 50 states and at least 240 large foundations. One of the challenges to understanding what works best is that most of the programs use different data and different benchmarks for success.

Many don’t even agree on what constitutes a job. …Job retention is even trickier to define. … Then there’s the question of who gets chosen for the program in the first place. Some select job seekers with relatively high skills levels, while others concentrate on harder-to-place applicants, including former inmates or high-school dropouts. Guess which programs have the highest placement rates?  We are left with no clear picture, however, of what approaches are most likely to help people secure and keep jobs with the wages and benefits that would support a family.

P/PV’s report takes a run at how to make the metrics more coherent.  The Alliance for Effective Social Investing – a big tent alliance of others in the social sector concerned about the same issue – continues to push for the same end.  The Social Innovation Fund (which REDF is part of) and the groups that are part of the social entrepreneurship movement that America Forward represents are all focused on this objective too.  More clarity about results, financial support to help community groups achieve those results, and accountability for reaching them.

These are bipartisan efforts – results-oriented, and interested in adapting useful business principles that can help the social sector deliver.  Not the whole answer to our problems, but a critical part of implementation, and building public trust.

With 25 million people in the US unemployed or underemployed, and five workers available for every job, the urgency of delivering results and building confidence that we can solve problems could not be greater.  A recent NPR report reinforces a lesson that REDF and the chronically jobless people we help have known for a long time – many employers are reluctant to hire people who don’t have a job.  While we spend billions on “workforce” programs, we need to course correct and absorb this simple lesson about objectives – if people have a job it is easier to get a job.  Simply put, job creation has to be a central strategy to reduce joblessness.

Now is the time to invest in innovation

While a flurry of different interpretations of last week’s election results clog the airwaves, one thing seems pretty clear from coast to coast – voters are in no mood to spend more taxpayer dollars.  And it’s hard to see anything but shrinkage in the size of government as a result.

From my point of view that means the time is ripe right now for innovation.  Maybe I’ve been breathing the Bay Area’s air for too long, but living in a business climate whose investments in innovation have resulted in some of most far-reaching and positive impacts on job creation and economic growth of the past several decades, I have witnessed first-hand the value that can be generated by old-fashioned risk-taking and investment combined with innovative ideas and entrepreneurial people.

For decades I’ve had the privilege of working with hundreds of people at the community level who have invented and expanded win-win approaches that maximize independence and self-reliance, use public resources efficiently, have proven results, and adapt private sector operating principles and financial tools to achieve beneficial social outcomes.

Innovation in both the social and business sectors happens at the local level – motivated, engaged people who are not daunted by current circumstances or constraints, and see the possibilities over the horizon.

The most optimistic and realistic (I hope) piece I’ve seen on the economy was Gretchen Morgenson’s in Sunday’s New York Times noting that the economist Ian Shepherdson (who accurately forecast the mortgage meltdown)  sees significant job growth at the end of 2011 because there are positive signs of increased lending to small business – the engine of job growth.

On the ‘social’ side of the small business equation, the local nonprofit-run innovative social enterprise run by Community Housing Partnership (CHP) just received a $439,000 investment to grow.  The funds came from a very small and virtually unknown federal program (as seems to be the case with many of the more impactful things the government does) administered by the Office of Community Services.  The funds will leverage private sector support to expand CHP’s businesses and create jobs for many formerly homeless people in San Francisco.  CHP has been part of REDF’s portfolio, and we were fortunate to be able to provide assistance to them in securing this welcome job-creating investment.  Los Angeles-based Coalition for Responsible Community Development and five other California nonprofits also were funded, hopefully fueling job creation around the state for chronically unemployed populations.

For the US to thrive, clearly the next few years must be all about job creation.  Finding the most efficient ways to use increasingly scarce public resources and private financing to grow businesses and expand jobs for everyone in our community is the key.  There is one thing people should be able to agree on across the political spectrum despite the obvious risks during a time of uncertainty characterized by volatile politics and an anemic economy.

Smart investments in entrepreneurial people, ideas, and businesses (for profit and non profit) will create the basis for a better future.

Election Day 2010: An open letter to the incoming Governor of the State of California

Dear Governor-Elect:

Congratulations, and please get some rest.  We’ll need all the energy you have for the next four years.

When Governor Schwarzenegger was first sworn in as Governor in November 2003, Californians faced an unemployment rate of 6.6% — 5.4% when he was reelected in January 2007.

You take the oath of office with an official unemployment rate hovering above 12% — about 2.5 MILLION people officially unemployed, while the State budget runs a stubbornly huge deficit year after year.  Simple version as you well know: state spending exceeds revenues by a long shot.

Respectfully, lead with a positive vision.  Nothing motivates like hope for the future.

And one of the most hopeful signs from a brutal election season was the recent poll indicating overwhelming support for compromise from everyone on the political spectrum in order to achieve results.

Set priorities + garner the necessary support to act on the priorities + follow through aggressively + measure results + adjust accordingly = a shot at a decent first two years for your incoming Administration.

As far as priorities go – put job creation at the top of the list.

What can the government do?

Bright spots. Identify what’s working now at the local level to create jobs, and deliver incentives to create more.  Who is creating jobs?  What incentives do they need to do more?  To incorporate better wages and more positive environmental impact?  How can government help connect the dots?  How can we use already appropriated funds more efficiently?  How can government get out of the way?

When things move – help them move.  When things stall, find out why.  When things don’t work, stop funding them.  Shine a spotlight on those creating jobs.  Shine a spotlight on those standing in the way (regardless of party or ideology).   Fight cronyism with facts.

Some examples:

  • Initiatives by local government in Los Angeles, from all ends of the political spectrum —  from the community benefits agreements pioneered by LAANE, to emerging leadership appointed by L.A.’s Mayor.
  • Creative economic development efforts in Fresno – which has among the nation’s highest unemployment rates – ranging from the new Mayor’s focus on downtown revitalization to neighborhood efforts that support children so parents can work.

Innovate. Everybody is looking for the ‘next big thing’ to get the economy going.  California’s unusual combination of higher education, venture capital, philanthropy, thinking/acting outside of the box, technology, land, and our big, diverse population positions us to lead the country.  Use the tools government has to encourage innovation in the economy and in the social sector.

  • Do business with double bottom line companies. Government procurement amounts to billions of dollars.  Channel some of it to fuel ‘double-bottom line social enterprises’ that create jobs for those who otherwise depend on taxpayer support (people with disabilities, people on parole, young people disconnected from school and work –‘graduates’ of the foster care system).  A low cost way to reduce public expenditures.
  • Private-public partnership. Engage with California philanthropy.  The center of private wealth and philanthropy has moved rapidly from New York to California.  The most creative social capital investing is happening right here.  Foundations and philanthropists have their own priorities, but are more eager than ever to achieve real impact and scale.  Private-public partnership can add fuel to economic growth.   Mobilize and incentivize to channel resources toward job creation – especially for poor and disadvantaged communities where philanthropic support has lagged over the years (as documented by current Facebook COO Sheryl Sandberg in a piece for the Wall Street Journal authored a few years back when she was at Google).

Signing off, with respect for your willingness to take on the hard work – we offer a hand to help as we can, and hope that you will get the job done.

Building the Ecosystem – Connecting the Dots

Heroes and gurus of social entrepreneurship gathered at the Mozilla Foundation headquarters in Mountain View last week to illuminate what it takes to ‘scale social impact’.  Duke University convened the session which offered the intellectual firepower of Professors Dees, Bloom, Robinson, and Clark and the practical experience of social sector leaders Jordan Kassalow (VisionSpring ); Paul Rice (Fair Trade USA); Premal Shah (Kiva); and Mark Surman (Mozilla Foundation).

Icing the cake were the lunchtime remarks of Bay Area philanthropic and business leader William H. Draper III whose new book, The Startup Game, will illuminate lessons from a lifetime of work in the financial and social sectors.

Take-aways from the day:

  • While there is plenty of talk about a new social capital market (SOCAP 2010; Social Investment Exchange; the Office of Social Innovation; Nonprofit Finance Fund), market realities lag behind. VisionSpring, Fair Trade, and Kiva (and of course I was also thinking about REDF’s ambitious 5 year strategy) could accomplish transformative work at significant scale with multi-year capital infusions of $10-$50 million.  The track record is there.  Growth opportunities are tantalizing but unrealized.  All agreed that loans and PRI investments are useful, but grants (equity) are needed to generate outsized social returns.  The market estimated the value of Facebook long before it made any money; but Kiva? Fair Trade? VisionSpring?  Not yet.
  • Broader “ecosystems” are required to impact social problems at scale.  Professor Dees’ 2008 SSIR article detailed this idea.  But curiously, though all participants actively engage multiple actors including the private sector, their stories clearly showed that in the absence of their prodding and intermediation, mainstream business is not highly motivated to do business or address basic needs in the huge marketplace that represents low income and poor communities.  It seems counterintuitive – e.g. if there’s a dollar to made someone will be there making it.  But it’s still not the case.

All of this left me thinking differently about the cover story on mental illness in last Thursday’s San Francisco Chronicle.  The article itself was a rare bird.  A substantive piece that reinforced another surprise; a compelling television commercial I recently saw dispelling stereotypes about mental illness created by bring change 2 mind, an initiative of Glenn Close and Fountain House.  Media attention to this subject — still surrounded by stigma — generally only comes from pharmaceutical companies advertising new medicines.

We don’t like to think about it or talk about it, although it touches almost every family.  Despite the fact that an estimated 6% of the population struggles with severe mental illness; and that people with mental illness still face high rates of unemployment — with less than 40% having worked last year, less than half the rate of all other workers.

REDF and its portfolio know that many want to and are fully capable of working.  The financial value to society and taxpayers of putting more people to work is obvious.  Other, more personal elements of the value proposition are hidden but perhaps even more significant.

Last week Marin County’s Buckelew Programs held a community forum showcasing social enterprise and supportive housing, and new service approaches that bring people with mental illness into the workforce and into the mainstream.

Bringing it full circle, for society to value social innovation sufficiently — galvanizing the investment required to scale the most promising solutions; we are going to have to paint bright lines that connect the ‘ecosystem’ dots between local efforts like those Buckelew and REDF promote, the welcome media attention of bringchange2mind, and broader public and private sector economic recovery efforts.  Not easy – but the path is getting clearer.  What do you think?  Possible?

Leveraging change where the market has failed

No matter what your position on crime, whether law and order or reform and rehabilitation – just about everyone knows that if we don’t get people to work after they serve their sentences, we are unlikely to change the unfortunate and costly reality that the US has 5 % of the world’s population and 24% of the world’s prisoners.

We want people to pay the price for crime.  We want to feel safe.  We also enjoy stories of redemption and transformation.  But for very practical reasons businesses offer few opportunities for people who have been in prison to get jobs, which we know from evidence is the greatest way to firmly break the cycle of crime and incarceration.

Two recent articles showcase the two sides of the coin. – “Imprisoned, Rehabilitated and Unemployed”, a distressing tale of a man imprisoned years ago who has worked for decades since then to prepare to be a firefighter with no luck due to that mark on his record.  Meanwhile, “Why I Hire Convicts and Former Gang Members” spotlights Electronic Recyclers International (ERI) founder and CEO John Shegarian who affirms the benefits of giving people a second chance.   Knowing about ERI’s overall commitment to employment of people with barriers, a few months back REDF helped broker a new business relationship between St. Vincent de Paul of Alameda County and ERI.

Ultimately, REDF’s work will have its most powerful impact when private sector businesses begin to incorporate the lessons of the social enterprises we work with into the management and hiring of their front line workforce.  Namely: people with tough histories are fully able to turn their lives around and become excellent employees given the chance to work, and management practices that foster their success.  Hiring these individuals and successfully managing them will reduce the high costs businesses pay now for all the churning at the front lines of their workforce.

That’s why we were heartened to note that REDF was featured in the San Francisco Business Times Annual Bay Area Giving Guide read by business leaders throughout the SF Bay Area.  We hope that many of them consider new partnerships with REDF and with job-creating social enterprise — incorporating them into their supply chain, while also supporting and investing in social enterprise growth.

Last note – a provocative piece in Friday’s Wall Street Journal, about Carlos Slim and his assertion that private sector job creation is the best anti-poverty strategy, asks if wealthy individuals accomplish more by investing in new businesses rather than funding philanthropy.

I would say philanthropy has leveraged powerful change where the market has failed.  As an example, REDF and others have demonstrated definitively that young people and adults who have been homeless, or in prison, or have a mental illness can work and want to work.  However millions of them are unemployed even in the best of times because the private sector does not provide them a way to enter the workforce.  This results in taxpayer, family, and personal costs that are avoidable.

Private philanthropy is the fuel that creates the nonprofit-run social enterprises that in turn create jobs and are willing to take the initial risk to hire these individuals and get them ready for private sector employment.  Thousands of people are in the workforce as a result – more every day.  What do you think?  Where and how is philanthropy most effective in solving problems?

SOCAP 2010 – moving from the clouds to the ground

With more than a thousand attending, SOCAP 2010 came into its own this year.  After creating the concept three years ago, Kevin Jones, his wife Rosa Lee, and their ever-expanding group of creative networkers put the conference on the ground two years ago and have kept it growing and changing.  Someone said it reminded them of technology conferences when the boom first began – a bit ragtag at inception, but more powerful and better defined each year.

This year felt more tangible – less about people with fairly limited funds searching for investments that didn’t quite exist yet.  More about those with significant resources considering how to invest in a different way at a larger scale.  More participation from real and growing businesses.

Especially impressive….. The food track highlighted an emerging industry devoted to growing and distributing food so as to improve rather than degrade the environment and peoples’ health.  An emblematic session featured Jose Corona of Inner City Advisors who talked about the investments ICA is making in new food businesses that are creating jobs, Cheryl Dahle of the Future of Fish who showed some spectacularly simple slides she had drawn that told the story of ‘greener’ fish – as it turns out ‘fresh’ is not necessarily best, and Debra Tropp of the US Department of Agriculture illuminating useful information on major new federal investments in healthier food.

Tactical Philanthropy’s Sean Stannard Stockton also organized a provocative series on the philanthropy of the future.  Which reminds me – SOCAP came up with the good idea to ask knowledgeable people to ‘curate’ tracks on specific topics – which led to solid, informative panels.

With full bias in play, I especially liked hearing Lee Zimmerman talk about how he started the thriving Evergreen Lodge in Yosemite.  This beautiful resort also trains young people from tough backgrounds for jobs in hospitality.  Melinda Tuan (my predecessor at REDF who helped fund Evergreen) hosted.  She probed Lee and Stuart Davidson (who is on the REDF board) about the project financing, and why and how Stuart invested.  Fielding multiple questions from the audience, Lee informed us that investments did not come from venture capital or angel sources, because his venture structure was too novel, and not in a sector well-known by those investors.  Critical infusions came from foundations, traditional financing (including the initial infusion from friends/family, and later a small business administration loan), and individuals, like Stuart, willing to take risks.  The result –  Evergreen, and its social mission, are thriving now.

Final notes.  Several sessions spotlighted the Cleveland Foundation’s projects leveraging the buying power of anchor institutions to fuel the development of local, cooperatively-owned businesses.  The session I participated in on ‘green’ investing featured Robin Hacke of Living Cities and Margot Brandenburg of The Rockefeller Foundation.  Both are continuing to invest in green jobs, and modifying strategy to reflect what they’ve learned from places like the City of Portland which is creating local jobs through its energy efficiency initiative.

While high tech moves into the ‘cloud’, SOCAP is moving out of the clouds and onto the ground.  I left energized, anticipating the applications for REDF’s RFQ (which closes October 15), eager to get started helping those enterprises create jobs!

Sneak Preview – REDF Goes to Work for Thousands of Californians

When I got my first job as a teenager in New York City, I applied for my work permit at a huge, old administration building way downtown. While I stood on line, I had time to think about my grandparents who had lived nearby after immigrating to the US. My grandfather worked as a tenement janitor, and my grandmother — as family lore has it — sold crockery from a pushcart on the Lower East Side. They worked hard.

I’m thinking about them again today as we provide a sneak preview of REDF’s new 2011-2015 Strategy which we’ll announce at our Benefit on September 30, at which we are honoring our committed partners Mitchell Kapor and Freada Kapor Klein and Matthew Cate, Secretary of the California Department of Corrections and Rehabilitation.

With the support of our Board of Directors and our Advisory Council, REDF has created an ambitious five year plan to create jobs for thousands of young people and adults who would otherwise be unlikely to work due to histories of chronic poverty, homelessness, incarceration, addiction, or mental illness.

We also aim to develop a social enterprise business model that will employ many more people in a sustained way across the country for years to come. Enlarging the circle of opportunity so that many more people can work is critical to our families and communities, and also to our economic future. It’s something that should appeal to people on all sides of the political spectrum.

Think about your own work history – that of your family and friends. On a personal level, I know I am motivated by respect I have for the risk-taking and hard work of my grandparents.

Their son – my father — eventually brought my family to the other end of the job market, giving us a wholly different life. He became an attorney, and an elected official (who first honed his oratory next to that pushcart). But one thing never changed – the significance of work as a centerpiece of our lives. It meant we could earn a living, do things, and help those we loved. And it was also about more than that. Work was about relationships, contribution, opportunity and hope.

I remember the powerful stories my father heard at work on the weekends when we’d miss him because he’d be at his office. A woman came to him in tears because her son had become addicted to drugs and stolen everything she had in her home. A man in a wheelchair was devastated because he could not get a job. Creating opportunities to help people solve these practical problems motivated his work as a legislator.

I learned that transformative change — for people and communities — is possible. I learned what opportunity means in a world where the playing field is not always level.

Over the next five years, REDF will work with partners across the state to create social enterprise jobs for thousands of Californians who have been shut out of the workforce. We will learn from our work on the ground how to develop a widely-replicable social enterprise model that creates job opportunities and pathways that bring people into the economic mainstream throughout the country.

To do this, REDF is seeking eligible organizations to become part of our portfolio. We will work with organizations running social enterprises that are selected through our open and competitive process, including an online Request for Qualifications.

With your engagement, help, and support we will succeed. Join us. Spread the word. Learn more about how you can help create jobs, opportunity, and hope.

Request for Qualifications now open – apply to join REDF’s Portfolio

Today REDF takes the first step toward achieving the goals of our new 2011-2015 Strategy, which will be formally announced at our September 30 Benefit.   Over the coming years we will work together to build a transformative, widely-replicable model of social enterprise that employs low income people with barriers to employment.

Today we also publicly initiate the first phase of our federal Social Innovation Fund (SIF) grant.  The posting of our inaugural Request for Qualifications (RFQ) starts an open, competitive process for nonprofits and their partners to apply to become part of REDF’s portfolio and a SIF subgrantee.

It is with great pleasure that REDF announces the launch of our RFQ.  Completed applications must be submitted by 5:00 PM Pacific Standard Time (PST) on October 15, 2010, although submissions prior to the deadline are encouraged and accepted.

The administering federal agency for the SIF notes that the SIF is “a new way of doing business for the federal government that stands to yield greater impact on urgent national challenges” and that the SIF, “sets a higher standard for evidence, empowers communities to identify and drive solutions, and creates an incentive for grant making organizations to more effectively target funding to solutions that generate real impact.”

In this spirit, REDF developed the RFQ.  For more details about eligibility requirements, evaluation criteria, selection process, and documents required to complete the application, please download and review this PDF document.

It is unacceptable that so many Californians have had little or no access to the workforce,  especially when we understand the high price they, their families, and the members of our whole community pay when people who can and want to work cannot find a way to do so.  It is even more unacceptable when we know how to create pathways for them to succeed.  It’s time to change that picture.

Please join us by helping REDF spread the word by forwarding this post to your networks, sharing about REDF’s RFQ on Facebook and Twitter, and telling any interested organizations to visit: www.redf.org/rfq.

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