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!

Fewer obsess about the men and women that REDF meets who have gotten their lives together and started working after hard times and years of unemployment.

With unemployment for everyone so high, people want to be distracted.  We want to hear answers; not how complicated it is to solve problems.

But America’s second wealthiest individual, Warren Buffet, reminds us that in contrast to making money,

“If you’re succeeding all the time in philanthropy, your projects are too easy. Look for the things that are more important and where you may fail.”

This is music to our ears, because trying something hard is the entire purpose of REDF and our partners.   What we’re doing is a good risk, but it’s not a sure bet.

And its not so complex we can’t identify with it. But we know that these are our parents, siblings, and cousins.   Many of us will see them at holiday time and wonder what to do.  Someone close to you has certainly lost a job. But go deeper. Think about your own family – there is probably someone who has gotten in trouble with the law, struggled with addiction or mental illness, or even become homeless.

While so many people are having a hard time getting a job now, it’s even tougher for people who face challenges like these.

The good news is that we are beginning to find solutions.  And those solutions require business not as usual.

The enterprises we work with are part of it — creating jobs that have helped thousands step into the workforce.  These enterprises are a cost effective piece of a larger transitional jobs movement that is generating evidence of results, and gaining momentum nationally.

It’s not, as they say, about giving people a fish, it’s about teaching people to fish for themselves.  It’s about a second chance – something that’s scarce when you are lower down the economic ladder.  But that second chance is essential.

We have met men and women who are transformed completely by that opportunity – going from despair to productivity.  Knowing about that makes all the difference.  It brings hope to us, to them, to their families and children, and to our communities.

In 2011 and beyond, we’ll be working with partners all over California to create more of the right kinds of jobs and supports so thousands more people don’t go back behind bars or to the streets, but go to work and see their wages and spirits rise.

We’ll focus on sustainability — generating earnings from the businesses to cover as much of the costs as possible, and delivering superior results for the price.

Over time we want to impact even more people.  To start, we’ll be pulling together leading practitioners nationally, and consulting people who have made it back into the workforce to define a model that can be implemented all over the country.

Check out this amazing piece from Australia on “social procurement” to see some of what we have in mind!

And if you prefer inspiration, check out Cooked, Jeff Henderson’s story of his transition from cocaine dealer to prison to top chef.

Thank you for sticking with us.  Rest up.  Enjoy friends and family over the holiday.  If you run into Warren Buffet, let him know what we’re up to.

Tune in here early next year to find out about REDF’s new portfolio – in the Bay Area and, for the first time, beyond!!

Join us in this New Year’s resolution: take some risks to create lasting change.

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.

I thought about how the economy sputters along, and no one seems to know where the ‘next big thing’ is coming from.  The newspapers today told us that we can’t count on the technology sector for big job growth, and President Obama’s Labor Day suggestion of a new infrastructure ‘bank’ and $50 billion of funding to create jobs repairing roads and bridges hardly registered for most people who are either pedaling as fast as they can to hang on to the jobs they have, or holding their breath as they try to make it through yet another week of unemployment.

Meanwhile, John Tammy of Forbes tells us,

“But while it’s exciting to contemplate the giving nature of Gates and Buffett, if their true desire is to help their fellow man, they should hoard every penny of their significant wealth…

Some will no doubt benefit in the near term, but the removal of limited capital from the productive parts of the economy will ultimately reduce our standard of living, drive up unemployment and make individuals more — as opposed to less — needful of charity”.

Interesting.

Sean Stannard-Stockton’s Tactical Philanthropy blog offered up some choice comments on Tammy’s suggestion, noting that the nonprofit sector is a huge part of our economy, with millions of jobs and active investments in the building blocks of our economy – education, scientific experimentation, etc.

From REDF’s perspective, the irony is perhaps even more pronounced.  We are using a mix of philanthropy and government funding (through the Social Innovation Fund) to invest in the creation of businesses that in turn provide jobs to people who would otherwise be economically unproductive, and would require public subsidies to meet basic needs, while cycling through costly systems such as prisons and homeless shelters.

Quite the reverse of Tammy’s notion, the philanthropy flowing into these ‘social enterprises’ provides capital that drives down unemployment, and makes people less — as opposed to more — needful of charity.

We invite Mr. Tammy to come visit organizations like New Door Ventures, Community Housing Partnership, and Buckelew Programs.  See what philanthropic capital can do when deployed productively.  There’s more than one way to stimulate the economy.  And given the paucity of solutions flowing from for profit private sector businesses, or our nation’s capital for that matter, maybe it’s time to look for ‘the next big thing’ elsewhere.

What do you think?  Where is the job growth of the future going to come from?  How can it include more people who have traditionally been excluded from the workforce, while also employing millions of people who were working, but now have been frozen out of an economy that is anemic when it comes to job creation?  What is the ‘next big thing’ to stimulate job growth?

Evaluation issues seem familiar: concern about the cost and value of measurement; uncertainty about what to measure and how. Still there is burgeoning interest in it especially from larger foundations, some in the business community; and most especially from the nonprofits themselves who are eager to understand how to use measurement to improve their work, and maximize their impact.

One notable difference is that some elements of the US government – notably the Department of Education, and the White House Office of Social Innovation (and the Social Innovation Fund) are taking more of an interest in supporting evidence-based practices and evaluation. So far, fewer clear signs of that interest from the government here.

Met a big group of environmental organizations – impressive coordination and advocacy work that culminated a few years ago in a government mandate to include environmentalists on local planning bodies and a clean air law, among other changes.

There are several initiatives – including some social enterprise — to bring people with high rates of unemployment into the workforce. As in the US, not much capital available here for nonprofits trying to start social enterprise, but growing interest in learning and trying to do more.

In light of the news, two stops on my road trip last week seemed especially relevant. Public-private partnership was a theme of the Grantmakers for Effective Organizations (GEO) conference in Pittsburgh and the Clinton Global Initiative University gathering in Miami.

GEO offered a feast of practical ideas for foundations trying to help strengthen the ‘business’ of nonprofits so that they thrive and deliver results even in times of economic turmoil. Focusing on government partnerships, featured plenary speaker Paul Carttar, the newly appointed Director of the Social Innovation Fund (SIF), forcefully argued for the SIF’s potential to nourish transformative practices emerging from philanthropic-nonprofit partnerships.

While REDF has our fingers crossed about our own application for SIF, as it would enable us to increase funding for social enterprise, we join a lot of the GEO attendees who hope the powers that be make decisions for this first round that build support from the public and Congress so that the Fund thrives and grows in the coming years.

At the third Clinton Global Initiative University gathering in Miami, 1,200 college students and 100 university presidents made commitments to specific projects that alleviate poverty, improve health, and contribute to peace. While their pledges are more about time than money, they reinforce and are modeled on those made by major philanthropists at the annual Clinton Global Initiative meeting in NYC.

The place buzzed with creative, committed students from the US and all over the world. Those I talked to were all about business, nonprofit, government partnerships to create social value. One example — a student-led initiative to fund a poultry farm in Haiti to produce local eggs, cut dependence on imports, reduce costs, and increase the supply.

Both gatherings pointed toward some of the practical roads out of the current mess. The public’s trust in government and business is built through visible results on the ground in local communities. The positive spirit and practical efforts of the GEO and CGI-U attendees was infectious.

What’s your mood? Optimism? Pessimism? Something else? What will it take to move public trust that we can solve our problems together?

Click here to read more about them and the eight other ultimate game-changers.

As the economy continues to stumble, federal spending ramps up, and California government melts down, the buzz in the air is about the respective roles and effectiveness of the public and private sectors in solving social problems. Some are concerned that we might take a step backwards from the current emphasis on private-public partnership – the ‘teach a man (or woman) to fish’ approach – to an emphasis on government programs and entitlements, as in the 1960’s. Most of us view with uncertainty the future of institutions and approaches we have relied on in the past – given the pressure on government budgets, the daunting problems of our credit system, and the downturn in the economic fortunes of for-profit and nonprofit businesses, as well as philanthropy. Many of the groups in our portfolio – which are creating jobs for those with high barriers – face a challenging marketplace for purchase of their goods and services, and decreased funding from strapped California government.

Meanwhile, from REDF’s perspective, we will make progress on social problems by finding new ways to align the interests and the activities of business, government, nonprofits and philanthropy. Not easy, but necessary.

Examples of intriguing public/private opportunities and debates abound.

On green jobs, the Department of Labor just issued guidance on $500 million it plans to allocate for green jobs training. The trick will be to line up the training with real job opportunities, and with the people who need jobs the most who won’t get them without the training. In REDF’s Spring, 2009 eNewsletter I wrote a piece about growing unemployment and how energy innovation – and public investments in it – can lead not only to economic growth but to job opportunities for the people REDF serves. To read the full piece, click here. I welcome your opinions, ideas, etc.

On the topic of whether the private or public sector can best solve social problems – the Tactical Philanthropy post positing government as a ‘take out’ for social investment stirred some good comments; and more recently Tony Wang of Blueprint Research and Design generated a lively debate with a blog entry called “Charity vs. Business” in which he argues that for-profit businesses are better at creating social impact than aid and nonprofits/NGOs. Tony promises another post (sounds like it will be skeptical) about the role and value of nonprofits that earn income — social enterprises. Stay tuned – we’ll probably weigh in when that one comes out.

For the poorest people in the US – those who are literally homeless – government has played a central role in providing aid. And REDF was originally founded by George and Leanne Roberts to bring business approaches to bear in creating job opportunities for those same populations. We are fortunate to work with several groups that focus on creating social enterprise pathways to long-term employment and opportunity for homeless people. Last week, President Obama signed S. 896, the Helping Families Save Their Homes Act. This legislation, a reauthorization of McKinney-Vento Homeless Assistance programs, complements philanthropic and market-based approaches by providing communities new resources and tools to prevent and end homelessness. The new legislation, a result of the advocacy of thousands of people over many years, will strengthen the efforts of our partners, and our nation to end homelessness.

Meanwhile, the America Forward Coalition (REDF is a member) is ramping up its effort to make sure that the Congress authorizes the $50 million proposed in President Obama’s FY 2010 budget for the new Social Innovation Fund established by the Edward M. Kennedy Serve America Act – signed by the President a few weeks ago. This will require matching funds from private donors, and is aimed at scaling creative local efforts to address poverty, education, and other burning social issues.

More to come as we all try to sort out how to align our interests, and make progress in a changing world.

Sean Stannard-Stockton’s recent blog post suggests government as the ‘take out’ for social innovations pioneered through philanthropic investment. This is a new way of looking at the relationship between philanthropy and government, which has been evolving and changing for decades.

While it is intriguing to consider a rational system of philanthropic investment which tests innovation and is followed by government backing, I would respectfully disagree with the notion that this is likely to occur except in rare cases.

In the 1960’s, many of the largest US foundations worked with government–in fact they often supported programs initiated by government, and pioneered programs that government later adopted in others. For example, anti-poverty programs funded by the Johnson Administration’s “Great Society” in the 1960’s had been initiated by philanthropy and community-based groups. In other cases, such as the early experiments that eventually turned into community development corporations, government initiated the concept and philanthropy experimented with it. Eventually, community development corporations became a backbone of inner city investment — with ongoing support from government, but also from philanthropy, banks and other corporations.

This history is instructive but it is important to note also that times have changed. First, compared to philanthropy, government is more transparent and accountable to a broad public, and would be hard-pressed to be dominated by initiatives developed by less democratic bodies. In the 60’s, government agencies and commissions often came up with the initiatives that philanthropy then came in to support. The seeds of the current foundation reluctance to support government –initiated programs is rooted to some extent in what followed – as the government of the 1970’s began to disinvest in many of these programs, looking to philanthropy to pick up the costs.

Second, there is much more pressure on governments now than in the 1960’s to moderate taxation and spending. At the same time, government is increasingly required to respond to the interests of a polity with a broad array of divergent interests. Thus most innovations that address a particular set of needs – of specific groups of disenfranchised or disadvantaged people for example – are unlikely to obtain all of the support required from government alone.

That said, the opportunities for more collaboration between government, philanthropy, nonprofits and the private sector are greater now than they have been in many years, as symbolized by President Obama’s recent announcement of the appointment of the San Francisco Bay Area’s Sonal Shah to lead the new Office of Social Innovation – charged with forging public-private partnerships to address and solve some of the nation’s most daunting problems. Lessons from history can be informative in building these partnerships effectively. Philanthropy is averse to the unvarnished, rough and tumble advocacy that is central to public process; and government is a blunt instrument for testing out sensitive and subtle differences in practical approaches which can make the difference between success and failure. The interests, stakeholders, incentives, and tools of each sector vary. Some things can be done in concert, some are best done separately. Mutual respect can be cultivated, even in the context of interests that are not always aligned.

The best solutions are likely to require multiple actors participating over long periods of time. Government may indeed be able to act as a ‘take out’ – but only in some cases (the health care example Sean offers is instructive), or for some elements of social innovation. But the likely scenario for long-term success is the difficult dance that engages all of the sectors over time. Sonal Shah has her work cut out.

I recently participated in a lunch plenary at the Center for Effective Philanthropy’s (CEP) “Aligning for Impact” conference. My fellow speakers included Matthew Bishop, whose recent book “Philanthrocapitalism” was a largely positive review of business influence on philanthropy, Michael Edwards, who wrote a piece critical of “philanthrocapitalism”, and Gara LaMarche, President of Atlantic Philanthropies.

Sean Stannard-Stockton from Tactical Philanthropy put up a shortened version of my speech from the plenary in his post, Carla Javits on Philanthrocapitalism.

It was months ago when Phil Buchanan, the leader of the CEP invited me to his conference to debate with Michael and Matthew about their opposing views of the value of “philanthrocapitalism” – the phrase Michael coined. While I consulted with colleagues about what to say during the run up to the conference, capitalism of the distinctly non-philanthro kind imploded.

In the aftermath, at this – their first face to face meeting – the putative pugilists were somewhat subdued in battle. Matthew did draw a bright line between his view that business practices could be usefully adapted to philanthropy, and Michael’s opposing and unvarnished critique of that notion. Michael believes it is not only benign, but harmful to the social sector by shifting resources away from creative, long-term advocacy and programs. Gara highlighted the importance of continuing to support social justice movements, while encouraging them to greater effectiveness and achievement. The question was raised – do social capital markets reduce support for the grassroots if they drive investments to the ‘best’ (e.g. proven) organizations.

My basic points? There’s not one ‘silver bullet’ – business or philanthropic methods; capitalists or civil society. Progress requires contributions of business, government, philanthropy, nonprofits, labor, academics, advocates, citizens. No sector is immune to dysfunction. The benefits of working together across sectors include transparency, accountability, challenges to orthodoxy; and the value of the social sector’s insistent focus on the common good and the public interest.

I suggested fewer gatherings of philanthropy or nonprofits only, more with business and government. It really struck me that at this gathering of philanthropic leaders we had so little discussion of philanthropy’s role in leveraging the billions of dollars in the stimulus package, and the new Office of Social Innovation in the White House. I suggested we become ‘multilingual’, tolerate and understand sometimes clashing motives, and be prepared to walk away without burning bridges. I ended with a story from a colleague. As one of the people who had created a local marketplace in Africa said – after the market was destroyed in the wake of local rioting and the people had requested loans and aid to rebuild but were instead receiving a trickle of traditional emergency and food aid – “Just don’t let me be a beggar.” We need to do better.

On day 2, my colleague Jason Trimiew and I had early morning coffee with some of our peers who wanted to talk about leveraging the stimulus package. A lively discussion about the opportunities for scale, and the day to day challenges of working with government ensued with participants from Craigslist Foundation, the James Irvine Foundation, the Case Foundation, and REDF’s board member Julia Lopez who also runs the College Access Foundation.

Then Jim Collins spoke, and reminded us of the premises of his monograph “Good to Great and the Social Sectors.” He restated his view that the social sector should not be more like business, but that it should aspire to greatness. The key ingredients – focus and discipline. He suggested that we make not only a ‘to do’ list, but also a ‘not to do’ list. He told a story about a military officer who had been imprisoned and tortured in Vietnam, and survived by having faith that he would eventually return home – knowing that that moment of peril would be the seminal time of growth and strength in his life, while also acknowledging the bitter truth and reality that he would not escape quickly. A sobering but inspiring lesson for today. Jim ended by urging us, as he had been admonished by his mentor Peter Drucker, to go out and do something useful. And out the door we went to follow this good advice.