How Social Enterprise Can Reduce Joblessness – Carla Javits in conversation with Robert Doar, American Enterprise Institute

On May 10th Carla Javits, CEO of REDF, spoke with Robert Doar, Poverty Studies Fellow at the American Enterprise Institute, a Washington, DC-based public policy think tank dedicated to defending human dignity and expanding human potential through the free enterprise system. Prior to joining the American Enterprise Institute, Doar served as the commissioner of New York City’s Human Resources Administration where he oversaw the transition of 500,000 welfare recipients back into the work force.

Their 60-minute conversation, which highlighted the important role social enterprises play in addressing some of society’s most pressing challenges, has been condensed below into a brief Q&A.

Robert Doar: What is a social enterprise?

Carla Javits: A social enterprise is a business just like a regular business. It sells quality goods and services to the market. What is unique about social enterprises is their social mission. They invest all the profits that they make in helping the individuals that they employ have a better life and have a long- lasting, successful future of work.

Essentially the way they do that is that they both provide a real, paid job to people who most employers might be reluctant to hire because they have a history of homelessness, they might’ve been incarcerated, they might be young people who have grown up in a tough neighborhood and don’t demonstrate all the attributes that an employer is looking for. These are companies that provide those individuals with a job, wage-paid employment, in a supportive setting where management is about investing in the success of those individuals, training them, and building their skills.

These are companies that provide those individuals with a job, wage-paid employment, in a supportive setting where management is about investing in the success of those individuals, training them, and building their skills.

Robert Doar: Give me the landscape of REDF.

Carla Javits: We call ourselves a venture philanthropy organization. Our primary role is to invest equity into these companies so that they can grow and so that they can have a greater impact. We provide deep business advisory services, whether it is looking at the market, or new lines of business, or the brand. If you looked at us in 2015, we were providing money and advice to about seven social enterprises in California. In 2016, we provided assistance to 65 social enterprises in 18 states. They do everything from ball park concessions to airplane manufacturing, from janitorial services to electronic waste recycling, and beautification projects. All of the organizations we invest in employ large numbers of people with relatively introductory skill sets.

If you looked at us in 2015, we were providing money and advice to about seven social enterprises in California. In 2016, we provided assistance to 65 social enterprises in 18 states. They do everything from ball park concessions to airplane manufacturing, from janitorial services to electronic waste recycling, and beautification projects. All of the organizations we invest in employ large numbers of people with relatively introductory skill sets.

Robert Doar: Tell us a little bit about what these enterprises or your program gets or has gotten in support from the government. What’s the status of that?

Carla Javits:  We deliberately wanted to begin to influence the government so that it would invest in something that worked. When we looked at the social return on investment of these companies we discovered the revenue that was earned by Social Enterprise companies offset the cost of government support. We found for every dollar a social enterprise spends, there’s $2.23 of benefit.

With that, we actually went into a big program Congress had authorized called the Social Innovation Fund that provides funding to venture philanthropies like ours with the intention of scaling up evidence-based best practices at the community level.

They invested in REDF and the great thing about that program was they required almost a three-to-one private sector cash match, which we made through raising other funds from the private sector as well as the revenue earned by these companies. The Social Innovation Fund has leveraged something like $650 million of private sector funds for all the things that they’ve done. They invested early in us. We did the data; we did the work in California. We expanded there.

They invested early in us. We did the data; we did the work in California. We expanded there. With that they were so pleased with it that they decided to reinvest. Under this recent round, they were intending to give us five years of funding, a total of $17.5 million. They gave us $7 million. With that, we’ve gone out nationally. We have this big portfolio. We put thousands of people to work. Unfortunately in this most recent budget deal the Congress made a decision not to fund the Social Innovation Fund. I think it’s one of their most short-sighted decisions. We’re trying to scale up

We’re trying to scale up social enterprise and make it a massive force that can really address the problem at scale. We know that we need a partnership. Government should be, can be, and must be an important partner if this is going to scale up.

Robert Doar: How do you make sure you’re serving those who are the most in need?

Carla Javits: If we have learned anything from the 20 years of work at REDF, it is that there are so many people who society writes off as not being capable of being integrated into the workforce who actually are fully capable of work. They don’t see any pathway in because they haven’t been exposed to the kind of basic skills they need in order to be successful.

One quarter had never had a job. 85 percent were living in unstable housing. 70 percent had been convicted of a crime before they got a job in a social enterprise.

Robert Doar: What’s success?

Carla Javits: People get employed and stay employed. That more of the income that they have is from work rather than from public assistance. That over time their incomes go up. We looked at the social enterprises in our portfolio in California.

We found that overall incomes went up 268%. Housing stability tripled. Compared to a group of people who got those traditional work force services, the people who got a job in social enterprise were 33% more likely to be working a full year later.

What we see over and over again is, once they do have a job, people reconnect and they become much more involved in their children’s lives. This is part of a two-generation strategy that allows them to be involved with their families, to help their spouse, and to really cultivate the lives of their children.

Robert Doar: Closing. Carla, it’s been very great to have you. You are clearly one of the great leaders in this field of helping people in need in the country. You have been for a long time. It’s not an accident. We haven’t mentioned your heritage, your legacy. Senator Javits is from New York as am I. We knew him back then. I wanted to show you something on the screen. This is a mural that appears in Bedford-Stuyvesant Plaza in Central Brooklyn at the restoration complex. The restoration complex was started by Robert Kennedy, the guy in the middle there. It is the first community development corporation started. The man on the far right is Senator Javits. Elsie Richardson is the woman between him and Senator Kennedy. The person to the left of Senator Kennedy is John Doar who I’m related to.

Carla Javits: Thank you so much. That was beautiful.

To view the full interview, click here. Listen to Carla Javits on the AEI podcast “Banter” below.