REDF is one of 11 organizations selected in 2010 as a recipient of the Social Innovation Fund Federal grant. Through an open and competitive process, including an online Request for Qualifications (RFQ) during fall 2010, REDF selected six organizations for our portfolio, announced February 2011.

For the second round RFQ, we are looking for strong organizations committed to building social enterprise to employ low-income California residents facing barriers to employment. For additional information such as eligibility requirements, evaluation criteria, selection process, and documents required to complete the application, please visit our website.

Please help REDF spread the word by forwarding this email to your networks, sharing the news about REDF’s RFQ on Facebook and Twitter, and telling any interested organizations to visit:

www.redf.org/rfq

Evaluation of social programs might as well be alchemy or brain surgery for the mystery and complexity surrounding it.  The simple reality though is it’s worth doing when it leads to better results for the people we serve; and when the funders who pay the bills know they are maximizing the ‘social return’ on the dollars they invest. 

On the better results front – there are two outstanding publications worth reading.

Public/Private Ventures (P/PV) Priorities for a New Decade proposes a new way to evaluate nonprofits that engages practitioners as partners, and suggests how to use evaluation to improve program performance.  

And if you missed it, the Kania/Kramer piece in the Stanford Social Innovation Review (SSIR) makes a powerful argument – and offers practical approaches for assessing the collective impact of multiple entities, in dramatic contrast to the idea that one nonprofit by itself changes the world.

Worth reading:  on the human factor

I love everything Mario Marino – founder of Venture Philanthropy Partners — writes.  His two recent posts on how a leader sets organizational culture are stand-outs.  They match up nicely with a post from Dan Palotta on ‘the human factor’.

Worth reading:  on the ‘new hybrids’ – organizational structure

Several recent articles are about a subject near and dear to REDF’s heart – whether to structure an organization as a nonprofit or for profit – and the burgeoning alternatives that offer flexibility. 

REDF’s own paper outlining how to decide to be a nonprofit or for profit, “If the Shoe Fits” has always been one of our most popular publications.  A new piece by Alan Bromberger lays out an alternative ‘hybrid’ model.  And leading social entrepreneur Jim Fruchterman’s “For Love or Luchre” offers practical tips for social enterprise leaders trying to decide whether to be nonprofit or for profit.

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

Today we make public the names of six of the organizations that will join our portfolio.  REDF will work with these groups and others selected later this year to expand their businesses so that at least 2,500 more Californians starting working by 2015. REDF’s new portfolio includes two groups in the SF Bay Area, two groups in Los Angeles, and two groups that will operate in multiple California geographies. Together they will employ people who had sky-high rates of unemployment before the current economic downturn – people who need these jobs urgently. We’ll be ramping up businesses that deliver property management services in affordable and supportive housing; enterprises that provide fresh, local produce and recycling; and all kinds of other valued services to our communities.

As we work with the new portfolio to create jobs as pathways into the workforce, we will also pursue our second objective to reach an even larger scale so that every community in the US understands how to accomplish this cost-effectively and with real impact.

With REDF’s portfolio, alumni portfolio, and other social enterprise leaders around the country, we intend to develop even stronger evidence and business models, and promote and expand the road-tested approach that combines sustainable businesses with evidence-based employee supports.

Most employers are reluctant to hire people caught up in the criminal justice system, or those facing homelessness, or struggling with addiction or mental illness.   And many of them are without the work experience to compete; although we know from 15 years of experience that they want to work and are able to.  Once they get some experience, employers are more likely to hire them.  They just need a chance.

With so many out of work, why create jobs for these particular people?

First and foremost, these are not strangers, but our uncles, aunts, cousins and neighbors.  They are young people who grew up in the neighborhood. They are veterans who came home traumatized, and became homeless or entered the criminal justice system.  They are among the six percent of our family members and friends with a serious mental illness. We shop at the same stores, attend church or temple together, and have sent our kids to school with them.

And it’s not only that they are part of our community.  If we do not do something now that reduces their incredibly high rates of unemployment, instead of working and contributing to our communities and our democracy, they will burden the economy and taxpayers with the myriad costs that accompany long-term unemployment.  Costs that too many Americans are now learning about first-hand.

The Social Innovation Fund (SIF), a federal program supported by the President and the Congress is fueling this effort with seed funding, fully matched by REDF and our private donors.  The point is to make good on a promise that Americans are rightfully skeptical about – that we can make progress on the critical issues of our time by maximizing private support, using the efficiencies of business methods, and delivering complementary support services that are proven to work.  This is our chance.  We’re at the starting gate.  Check out the competitors on the field, and what you can do to help us reach the finish line!

The other week, during the State of the Union speech, the President focused on how to create jobs in the US context, suggesting direct investments in business development, research and infrastructure.  This was followed with a White House event to announce “StartUp America” – an effort led by Steve Case and the Kauffman Foundation to spur innovation and business creation.  Fortune’s business blogger Dan Primack in a January 31 post responded with what he called “cynical optimism”.  But when I heard that the Social Enterprise Alliance (SEA) had been invited to attend, and had a chance to suggest that these investments also be made in social enterprises that create jobs for the most disadvantaged – I tilted from cynic to optimist.

While there’s plenty of debate about how much government can do to stimulate job creation, a  recent paper from the Harvard Business School and Pacific Community Ventures goes so far as to state that, “There is no market from which government is completely absent…”.  Think  government investments that created the worldwide web, and the nation’s web of highways for just two examples.

I heard an earful about these issues myself this last week traveling to Los Angeles and Sacramento where I met with business, government, and nonprofits about REDF’s effort  to create jobs for young people not in school or at work, and people exiting homelessness or incarceration; and a model that can be sustained and scale.   It’s the government’s Social Innovation Fund, along with private philanthropy that support our work – and it’s this kind of combination that does seem to work best.

In the Southland I was greeted warmly by the Board of the Los Angeles Economic Development Corporation – leaders of both business and government  when I had the chance to let them know about REDF’s plans to expand in California.  I met with self-described conservatives who run businesses and advocate for them who fully embraced our ideas about helping nonprofits create jobs for people otherwise shut out of the workforce – and eagerly sought to help.  I met people in government who wanted to connect the dots between community colleges and the people REDF’s enterprises employ; and between procurement and job creation.

My take after working in all 3 sectors over the past 3 decades is that practical people in business and government who care about their communities knows that it takes all sectors to create value for our families, neighbors, and colleagues.

It’s disappointing when public agencies mostly talk about how much they’re spending rather than about results; or offer little analysis of expenditures as compared to benefits.  It’s disappointing when government spends too little time talking to business and philanthropy to find out how to use public investment and regulation to create the most public good.

And it is disappointing that businesses often ignore the social conditions they may exacerbate.  Too often neither their balance sheets nor their lobbying efforts take into account the costs that communities may bear for the decisions they make.  Their private philanthropy may help the community, but they might be able to do more through their core business if motivated to do so.

So when we have huge budget debates, there is little reliable data or information to go on in figuring out what’s worth cutting and what’s not; what tax incentives or regulations should be preserved and which ones eliminated.

Some businesses and some government agencies are starting to show signs of progress.  The whole point of the Social Innovation Fund is to create more evidence about what works, and facilitate replication and scale when warranted..

As the public continues to debate the roles of business and government in job creation, REDF will work with SEA and others to demonstrate that nonprofits also play a vital role in innovation and job creation, while generating data on costs and results that informs, and we hope influences business and government action.

Stay tuned right here – February 15 we’ll announce our new portfolio and the partnerships they have forged between business and government to create jobs!

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”.

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.

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.

• Housing developments creates jobs.  Facilitate the dozens of major development projects now in the pipeline but stalled. Work in partnership with savvy local redevelopment and housing agencies.

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.

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?

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?