By Social Enterprise Alliance Executive Director Jim Schorr
Originally published on REDF
With REDF’s newly-released Mathematica Jobs Study, we finally have some solid data to prove what hundreds of social enterprises in the United States and thousands around the world have long known to be true: the social enterprise model for workforce development really works! Transformative social outcomes and a 123% return on invested capital should leave us all clamoring for more.
Over the past 40 years, and with a growing prevalence in the last 20, enterprising nonprofits have been launching and growing businesses in order to provide employment opportunities for those on the margins of society – the homeless, ex-offenders, at-risk youth, and others – employment that these individuals struggle to find in a competitive labor market. In these social enterprises, participants develop skills, self-confidence, and a track record that facilitates their eventual transition to mainstream work.
From a social impact perspective, the idea underlying this approach is that real work in real jobs is likely to provide a more effective intervention than traditional job readiness programs. Because these enterprises generate revenue that cover employee wages and other expenses, they are less reliant on ongoing philanthropy and government support and comparatively efficient as well.
A social enterprise I led from 2002-07, Juma Ventures, provides a case study of what’s possible: Founded in 1993, Juma has since employed more than 5,000 low-income teens, who have earned more than $5 million in wages and saved more than $2 million for college. In 2014, Juma’s social enterprises generated $2.4 million in revenue and employed 568 youth, 99% of whom will successfully transition to college.
REDF’s new study provides compelling evidence that this model works, and reinforces the conclusions of earlier efforts, including REDF’s groundbreaking effort to capture the Social Return on Investment (SROI) of its grantee portfolio 15 years ago. Meanwhile, millions of Americans who would benefit from a job in a social enterprise remain unemployed, and our government spends billions every year on workforce development programs that too often never translate into real jobs.
Propelled by the growth of these social enterprises in the US and UK, and by the success of microcredit globally, a new field has emerged that is merging the social aims of traditional nonprofits with the financial advantages of traditional businesses. This movement’s growth is being driven by shifting perspectives about the notion and nature of investment (eg, “venture philanthropy”, “impact investing”), a growing consumer responsiveness to aligning spending with products and services that create value for society, the rise of a millennial generation that sees the separation between making a living and making a difference as a false choice, and fundamental shifts in the nonprofit and business sectors toward new models that integrate social and financial goals. Today, social enterprises are providing sustainable, market-based solutions to unmet needs in nearly every domain imaginable – including health care, education, financial services, international development, and employment – and in virtually every corner of the globe.
The concept has been sufficiently proven and the megatrends suggest that the opportunity for social enterprise solutions is increasingly ripe. So, as REDF co-founder Jed Emerson implored a decade ago: where is the serious investment capital? REDF’s efforts have again made a compelling case for social enterprise’s effectiveness and efficiency, and Social Enterprise Alliance’s 1100 members and 17 regional chapters stand ready to scale this work. Join the movement!
– Jim Schorr is President and CEO of Social Enterprise Alliance. Previously, Schorr was Executive Director of Juma Ventures, one of the U.S.’s most successful and admired social enterprises, and taught coursework on social enterprise as an Adjunct Professor at Vanderbilt University and as a Senior Fellow at UC Berkeley’s Haas School of Business. As an MBA student at Northwestern University in 1993, Schorr helped launch Net Impact, and subsequently served as a board member and chair during Net Impact’s growth and global expansion in the 2000s. He currently serves on the steering committee of the Social Enterprise World Forum, and as Chair Emeritus at Net Impact and Social Enterprise Alliance, where he was a board member for 7 years before his appointment as CEO.