THE BLOG

California's social enterprise movement should inspire candidates' 2016 job creation agendas

06/06/2016 03:24 pm ET | Updated Jun 06, 2016

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As the U.S. continues to climb out of a recession, the 2016 presidential candidates have promoted a wide range of solutions to address joblessness, from imposing steep tariffs on Chinese and Mexican imports to providing tax incentives for companies that share profits with employees.

In the lead-up to California's June 7 primary, they should add another idea that we have been championing as a member of the America Forward Coalition and as part of the Coalition's collective presidential platform to the list: social enterprise. It's a strategy that's putting thousands of people facing the greatest barriers back to work and on a path toward self-sufficiency in California and beyond.

This is particularly important given that income inequality is growing in the U.S. and elsewhere and that mobility is an ongoing challenge. Research shows that nearly half of children born poor are likely to remain so over their lifetime. And while poverty rates remain high, workforce participation rates for adults are at an historic low of 62.6%; unemployment is as high as 50 to 80 percent for high-barrier populations like those who have been incarcerated or people with disabilities. Racial inequities are also at play. For example, the African-American unemployment rate has been stuck at a rate about double that of whites for decades.

Social enterprise combines the bottom-line benefits of business with the power of philanthropy to employ those who are overcoming histories of homelessness, drug addiction, gang membership, incarceration and mental illness. Social enterprises provide wage-paid employment that combines on-the-job training with the necessary supports, coaching and mentorship to help men and women successfully transition into the mainstream workforce. Revenue generated through the sale of goods and services delivered by these enterprises is cycled back into supporting the programs, enabling them to amplify their impact, while making them more sustainable than other workforce programs that are supported solely with government or philanthropic support.

Because it can be a challenge to start up and operate this kind of social enterprise, for many years there were relatively few, and most were small, operating in a limited number of places. However, the field has been experiencing significant expansion, with many companies that have emerged to offer those battling formidable employment obstacles the opportunity to find meaningful work and thrive. In San Francisco, for example, Community Housing Partnership provides supportive housing and offers jobs and training in its lobby-services business, creating an opportunity for people to gain long-term economic security. This approach is worth candidates' notice because it works. Independent research by Mathematica Policy Research shows that social enterprise generates a 123% return to taxpayers and society. It also produces a 268% increase in income for those employed and reduces their reliance on government benefits.

REDF, the nation's only venture philanthropy focused solely on employment-based social enterprise, has seen these results in action. REDF has invested in more than 60 social enterprises in California, and the payoff has been huge. Our grantees have generated more than $163 million in revenue and employed some 11,000 people, and we have expanded our reach nationally to maximize impact in more communities--with the goal of employing 50,000 people by 2020.

What's more, at a time of heightened social and political divide, social enterprise represents a widely embraced solution. Across the political spectrum, Americans agree that job growth and increased workforce participation are essential elements of a strong society. Work provides people the satisfaction of earning and builds hope, a sense of belonging, and opportunities for economic and social mobility. And when people work, we leverage all the talent available to our country.

Government can play a powerful role in leveraging social enterprise as a tool for change. In California, for example, a bill pending before the legislature would grant social enterprises the status needed to secure procurement preferences as a state vendor, thereby generating additional business--and revenue for the enterprises to change lives.

At the federal level, the Social Innovation Fund of the Corporation for National and Community Service, created in 2009, has fueled the growth of the most effective social enterprises while leveraging an almost 3:1 match of private dollars, and it has the potential to do much more. The response to REDF's recent national competition for funding social enterprises through Social Innovation Fund dollars, for instance, showed the possibilities. If additional growth capital were available, it would result in another 100,000 people employed.

The next President and Congress have the opportunity to scale a proven, evidence-based, transformative model. By making a greater upfront investment in a model that generates a sustainable funding base of earned revenue, the Federal Government can create a lasting solution that addresses the problem of persistently high unemployment among at-risk populations. In the meantime, let's hope the candidates embrace social enterprise. It's a way to create jobs, while offering people who might otherwise be living in our parks or jails the chance to contribute to growing our economy and improving the lives of their families and communities. In doing so, they will help further the impact of this transformative approach.

Carla Javits is the president and CEO of REDF, an organization that is leading a pioneering effort to create jobs and employment opportunities for people facing the greatest barriers to work.

REDF is a member of the America Forward Coalition, a network of over 70 innovative, impact-oriented organizations, working in every state and serving more than 14,000 communities nationwide, dedicated to driving systemic change in education, early childhood, workforce development and healthy communities.

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