Click here to download REDF's 2010 Social Impact Report

REDF’s newly issued 2010 Social Impact Report offers even more evidence about the power of a social enterprise job, and what to do to further strengthen the model in the future.

The Report summarizes data collected by BTW informing change from 1163 individuals employed in social enterprises between 1998 and 2008.  The headlines:

• Social enterprises employ people who face barriers who are willing and able to work; and

• Social enterprise employment helps people who face barriers enter the workforce and increase their income.

Findings revealed the power of a social enterprise job, and teach us what to concentrate on in improving the model in the future.

The following data has fueled REDF’s commitment to our five year strategy to expand social enterprise to multiple California communities, and develop a nationally replicable model:

• People who are employed at any job 6 months after hire in a social enterprise were nearly twice as likely to be employed 18-24 months after hire compared to those not working 6 months after hire, indicating that supporting employees through this early stage was critical to long-term employment.

• Over time, the proportion of REDF social enterprise hires moving on to other employment increased.

• 77% of those interviewed 18-24 months after hire had worked in the past 6 months.

• Both the hourly wage and hours worked per week increased dramatically over time among those working  — wages by 31%.  Among those working at 18-24 months after hire, monthly income from work increased by 90% – an increase of $454 per month.

And a new summary of data from a national survey of social enterprise offers a glimpse into the scope of this growing field.

It’s not only traditional ‘liberals’ that are calling for new ways to address costly problems like recidivism to prison.  The fiscal realities are such that even conservative Grover Norquist is calling for action.

Where we have this much common ground, and social enterprise can play a role in solving the problem – it’s time to make progress.

A few takeaways:

1. The most accomplished social entrepreneurs remain frustrated about the slow pace of change, and challenged by the scale required to have a real impact on big problems. While ‘disruptive innovations’ can demonstrate a new way to do business, to affect the majority of people will require us to engage government more directly and significantly increase private investment.
2. We are not remotely assertive enough about making the case for increased individual and corporate philanthropy directed to addressing poverty and conditions related to poverty.
3. When the success of our programs depends on superior execution (e.g. outstanding, uniquely qualified staff; especially strong nonprofit organizations, etc.) those programs will not achieve real impact at scale – because that kind of superior execution cannot be routinely achieved.  Aim for approaches where success can be achieved via ‘average’ implementation.

Perhaps as a counterpoint to our frustration about the slow pace of change — in their book “Switch”, the Heath brothers argued that while big long term goals can be inspiring, it’s the concrete, instrumental steps that make us feel that rush of accomplishment.

Dr. Atul Gawande has also offered an argument for the benefits of incremental change – while also suggesting a blueprint for the kind of ‘average’ replication that may be required.  He describes successful efforts decades ago in the US to transform agricultural production which was driving food prices to unaffordable levels, and putting a damper on economic growth.  Sounds like the health care debate.

Dr. Gawande noted that change happened not prescriptively, but a little bit at a time, as individual farmers in different locales were persuaded and supported to take a chance on new techniques that had positive results, impressing their neighbors to copy those practices.  As the government made selective investments in information and practical analysis, they communicated what they learned widely.  Sounds something like the Social Innovation Fund.

Showdowns over federal and state budgets heat up, and brave citizens protest repression around the world challenging traditional thinking and dogma.  Incremental change can be productive, and demonstrating new ways to do things on a relatively small scale can create momentum and change some peoples’ lives, but until we engage larger systems in government and business we are unlikely to make sweeping, enduring change.  And until and unless as citizens and consumers are willing to challenge orthodoxy, we are not going to get government and business leaders to change direction.

I hear frequent frustration – not just from those who oppose ‘big government’ but from those who are in the social sector — about how the requirements tied to government funds and the incentives they provide make it hard to do the things we know need to be done.  I heard from a member of Congress that when we advocate for funding of specific programs, we must step up to tell them what funding can be reduced.

I noticed a new study from the Harvard School of Education challenging the notion that all we need to do as a country is set young people on a path to a four year college degree in order to engage them in the workforce.  I also saw an article from William Schambraa challenging the value of social sector measurement of results – something we at REDF strongly value.

“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew”

- Abraham Lincoln

Meanwhile, front and center on our minds is how we can help to end joblessness among people with major barriers, while being bombarded by articles like those about the self-named “99’ers”. These are the 1 million or so Americans who will have exhausted 99 weeks of unemployment benefits by the end of 2010, and have few ‘barriers to work’ other than not having a job!

Why does REDF believe it’s so critical to create jobs for people with major barriers, when so many other people don’t have work?

An answer we’ve consistently offered over the years is that long-term unemployment clearly costs society, communities, families, and taxpayers as people depend on public benefits or experience cycles of homelessness or even incarceration when they have no way to earn a living.

But in the context of today’s sky high unemployment rates, our commitment to this effort has, perhaps paradoxically, gotten even stronger as we understand in our bones the impact of long-term unemployment. This was brought to life for me at the office last week. A candidate for a REDF job came to interview, and said, “This interview will be short, because I was offered two jobs today.”

She went on to tell us that she had still wanted to come in and meet us because she felt so strongly about our mission, especially after having experienced a significant period of unemployment herself. The painful effects of losing the social network, the feeling of pride and accomplishment and sense of purpose were fresh in her mind. And she told us that what was hardest to hold on to was a sense of hope. She had recently heard someone say that more than any other characteristic, what distinguished those who eventually got a job was maintaining hope.

Click the photo to read about how a job changed Jamall's life

When I first arrived at REDF three and a half years ago, I liked our tag line, “Investing in employment and hope”, but it’s taken on a whole new meaning through this recession. All people need the chance to work. REDF is about making sure some of those with the least opportunity have that chance.

One thing we know for sure is that government is not bailing us out of this mess anytime soon. Private citizens and the private sector have to step up. And with a hole blown in our economic resources, we have to make sure that public and private dollars are invested in initiatives that are not just cost effective, but really impact peoples’ lives.

And while the science of measuring social sector results is imperfect, REDF will do all we can to advance the SIF focus on improving what we do based on what we learn, and scaling the practices that have demonstrated real evidence of impact. Two articles that illuminate the ‘social measurement’ topic in all its thorny glory – worth reading: the New Yorker profile of Esther Duflo of MIT’s Poverty Lab describing the benefits of and controversies surrounding her random assignment studies of social programs ; and the piece by Geoff Mulgan director of the Young Foundation in Stanford Social Innovation Review arguing for sharper common frameworks among funders. There’s an insightful comment on that piece by Sara Olsen posted on that article.

Even if it’s not always what practitioners, policymakers and philanthropists are interested in, we are only going to be able to deliver results on the ground and get the political process and donors to invest in change ‘at scale’ when we are ready to offer hard facts and hard truths about what does and doesn’t work.

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REDF Leverages First Social Innovation Fund Grant

By Carla I. Javits, REDF President
Originally posted on the Stanford Social Innovation Review (SSIR) Opinion Blog

As we prepared our application for the federal Social Innovation Fund (SIF) there were times that I struggled with a hard-earned skepticism about the latest silver bullet solution to domestic social problems. I’ve spent 25 years trying to find ways to counter the destructive effects of chronic poverty. A $50 million federal program—a fraction of the resources needed—did not seem to merit the intense focus it attracted from the social sector.

But one remarkable thing about people is that hope springs eternal even in the most dire circumstances. Fanning that resilient and optimistic flame is at the center of the work of the social sector. And it’s at the heart of the success that sometimes comes to those we serve when they are offered half a chance.

Given the stakes, all of us at the Roberts Enterprise Development Fund (REDF) were elated to hear that we would be representing California as a member of the first group of federal Social Innovation Fund (SIF) grantees.

Here’s a brief look at what’s promising and fresh about the SIF—which hopes to accelerate widespread adoption of approaches that demonstrate greater impact than the status quo. To do so, it will test whether funding intermediaries and a focus on measurement of results together deliver better results.

While federal funding for “intermediaries” is controversial, my experience working in two of them over 18 years is that, done right, they can be powerful engines of positive change. These oddly-named entities put the pieces together and connect the dots. We support and aggregate the impact of multiple organizations to make a compelling case for change, and stick with it over time, helping build a healthy nonprofit sector that delivers results (for more on this topic see a great report here).

Funders are often reluctant to sustain intermediaries, viewing them as “overhead”—but the SIF, having the vision to see how intermediaries can expedite and facilitate change, has taken the risk to support us. Our challenge is to prove worthy by adding value.

At REDF, we know what a heavy lift we have ahead with our plans to help nonprofits create businesses to employ people with major barriers across the State of California, and create a model that can be even more widely replicated. But there are few examples of real progress in this area, and the evidence shows that we’re on to something that works. This is the big chance to demonstrate it, and prove it can be done cost effectively.

How will the SIF help? Federal support offers financial resources, greater credibility, and help facilitating policy change. SIF-funded groups will learn from one another.

Some critics also dismiss the SIF’s unprecedented focus on measurement and evaluation as “business as usual” and “not innovation” because subgrantees have to demonstrate a track record. I disagree because the focus on measurement (1) lays down a direct challenge to the kind of patronage that still influences expenditure of public resources; and (2) gives us a lever—objective data—that disruptive innovators can use to get a seat at the table with philanthropy, business, and government. For more on this topic see these blog posts.

With no public resources to spare now, and even less in the future, now is the time to make sure the public knows what results our investments achieve. What is success for REDF and the first “class” of SIF grantees?

• Results! (documented, quantified, well-described, powerful, positive) for people in communities—at a reasonable cost.

• New knowledge and clarity about what works.

• A greater willingness by public and private funders to throw down with those groups that adopt proven practices, measure results, and constantly improve based on what they learn.

Mindy Tarlow from CEO and I visit the podium before the First Lady speaks.

The room of about 100 people buzzed before Mrs. Obama arrived to announce the initial matching commitment of $50 million by philanthropy to the Social Innovation Fund (SIF) and a companion effort with Grantmakers for Effective Organizations on scaling social innovation.

Mrs. Obama acknowledged philanthropic leaders in attendance including John and Ann Doerr, the Omidyar Network, Skoll, Open Society Institute, and other foundations. Several intermediaries, CDFI’s and nonprofits were there from the Low Income Investment Fund, to Root Cause, Venture Philanthropy Partners, New Profit, NIFTE, and REDF partner Center for Employment Opportunities (CEO).

Government officials attending included Sonal Shah, who leads the White House Office of Social Innovation, Paul Carttar, who heads up the Social Innovation Fund at CNCS, and Marta Urquilla who is the hands-on administrator of the Fund, and Office of Management and Budget staff like Xavier de Souza Briggs.

Melody Barnes framed the Administration’s actions and leadership around not only the Social Innovation Fund, but other government-wide efforts to spur increased attention to results-based partnerships between government, nonprofits and philanthropy. Introducing Mrs. Obama, Patrick Corvington stated that innovation to improve lives is one of the defining characteristics of our country; and characterized nonprofits as leaders in ‘the solutions business’.

Mrs. Obama took the stage to highlight three innovations of different sizes and shapes: the Family Independence Initiative in the Bay Area which organizes low income families in mutual support; the Bell Program in Boston, a program developed by students at Harvard Law School which tutors low income youth, and provides after-school programs, and the Juice Project – a one stop shop for healthy eating and living in St. Louis. She pinpointed the results that had been achieved to illustrate a theme of the social innovation effort – measurement of results (which she added with a smile – foundations really like).

She reminisced about her days raising money for Public Allies with Vanessa Kirsch (who is now the ED of New Profit), and said how hard it was to keep the faith and approach funders who had – at the time — never heard of Michele Obama or Public Allies. In general her demeanor was understated and humble, leaving the impression that she identified closely with the nonprofits in the room, while savoring the foundation contributions that had been leveraged as a result of the Administration’s focus on social innovation.

Mrs. Obama told us that “finding new solutions will depend on all of you – people who feel that no problem is too big or complex to solve”. She said that thankfully solving our communities problems does not depend only on Washington, D.C., but that government does have a major role to play as a policy and funding partner so that we can “go beyond the status quo”In every corner of the country.

It was a good day in Washington, despite the 90 degree heat, that left me energized about the work ahead, and the potential for meaningful public-private partnership.

A video of the meeting is below.

• Tech-Careers — founded by an Ethiopian Israeli to prepare young Ethiopian Israelis (whose poverty rate hovers around 50%) for technology careers by providing them with intensive training program delivered through a residential program based on a Kibbutz near Tel Aviv;

• Muntada, the Arab Forum for Sexuality, Education and Health addresses counseling and education related to reproductive health and sexuality, matching their methods to the local culture and needs; and

• Elem, which provides outreach, drop in centers, support services to runaway, neglected, and homeless Israeli and Arab youth throughout the country.

Many of the challenges these groups face around measurement of results resonate with those of US-based nonprofits – defining the right questions, understanding how their efforts tie to the desired results, figuring out how to find the time, technology, and funding to gather the data, analyze it, and use it to improve. Some challenges are distinctively tied to the specific nature of life in Israel. As a small country with a population of about 7 million, there are relatively limited resources available for evaluation. The volatility of the region and changes in political leadership can lead to quick shifts in priorities for government, nonprofits and funders.

Despite all of this, we were impressed by the consistent desire of everyone we met to learn more about how to improve by measuring the results of their work.

At a final convening that included most of those we had met over the past week, Paul Brest used an airline metaphor for evaluation. We expect pilots to set a course more specifically than ‘somewhere in England’, and unlike some social sector funders, we also expect to pay not only for the ‘direct costs’ of the pilot’s salary and the gas, but also for the indirect costs like training and maintenance (e.g. pay for evaluation and other ‘overhead’). One of the attendees suggested that sometimes the social sector’s work is more like that of ancient Chinese sailors who set off to discover new lands without a real sense of where they were headed, and frequently failed. A good discussion about the need for innovation and exploration, as well as honing the delivery of more or less proven methods nonetheless concluded that in either case – there’s a useful role – albeit different in different cases — for measurement.

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

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• Our new audit insight tool can be of tremendous value to facilitate the analysis of a nonprofit organization’s audited agency-level financials, allowing the identification of areas of strength as well as areas of concern that could impact the organization’s financial stability.

• A presentation on performance dashboards that David Derryck and Samra Haider presented to a packed room at the recent Social Enterprise Summit in New Orleans. The presentation covered the impact a social enterprise-specific dashboard can have on the financial, operational, and social performance of an enterprise.

• Speaking of performance, REDF is delighted to announce that Anna Martin has recently joined our staff to focus on the measurement of results with our portfolio, and making a compelling social return on investment case to private and public investors.