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Doubling Down on Social Innovation

Voters expressed anxiety during the 2016 presidential election about the “forgotten Americans” who have been left out of a thriving economy. Historically low labor force participation rates (63% as of May 17) reveal how widespread this challenge is.

And yet despite this clear mandate to meet the significant needs of these ”forgotten Americans,” the 2018 budget proposal and Congressional action on the 2017 federal budget defund a small but powerful program that delivers work and hope. Since 2009, the Social Innovation Fund has been accelerating the growth of a successful, sustainable, and proven business model that employs those who face some of the toughest obstacles to getting and keeping jobs.

How tough? Histories of homelessness, incarceration, substance abuse, mental health struggles, limited education, and unstable housing pretty much guarantee these men and women will be left on the outside looking in, and relying on government benefits in order to survive. The seemingly unstoppable opioid epidemic, which effects millions of people in the U.S., exacerbates the problem.

Unfortunately, by defunding the Social Innovation Fund (SIF), the government has dealt a blow to an evidence-based approach that scales up programs that have proven effective at the local level, measures their results, and holds them accountable. Because the SIF requires dollar-for-dollar matching from the organizations it supports, it makes spending for government programs go significantly further. As of March 2016, the SIF’s private-sector partners have leveraged match fund commitments valued at $627.5 million—more than double the original federal investment of $295 million.

One of the most promising initiatives that is impacted by the cut is the business model known as social enterprise. It helps striving men and women develop a work history, gain skills and confidence, get employed, stay employed, and build a better future.  Ten million dollars of the defunded SIF was dedicated to accelerating the growth and deepening the impact of these businesses over the next three years.

Rigorous research conducted by a third-party evaluator as part of the SIF program proves the effectiveness of social enterprise. Every dollar spent by social enterprise businesses generates a social return of $2.23 in benefits to society due to lower public assistance costs, more tax dollars paid by social enterprise employees, and the increased business revenue social enterprises reinvest in hiring and training more people.

While the numbers are impressive, what this comes down to is improving American lives and supporting families. Take Anthony Jackson, the young man highlighted in this short video. Anthony is beating steep odds thanks to a social enterprise that REDF supports. Like so many of the people who have worked in a social enterprise, for Anthony, a job is about so much more than a paycheck—it’s also about self-respect and making a contribution. It’s about a pathway to sustainable employment. And it’s about being a role model for his young son by showing him what can be achieved with dedication and perseverance.

While it is hard to understand the decision to defund a program like the SIF that delivers what the public seems to want—high-value results for those left out of the economy, while making taxpayer dollars go farther—there may be hope. And hope is part of REDF’s DNA.

Although the SIF was an effective initiative, it was a tiny part of the federal budget and was not integrated into larger government programs. Now, agencies ranging from the Department of Labor to the Department of Justice should consider how to integrate the private-sector leverage and results-oriented approach of the SIF into mainstream public funding.

While that may be more aspiration than action today, the silver lining is that even in the short time since the budget was adopted, many generous donors and philanthropies have started to step up. Their investments are adding up, and with this private backing, we have a shot at demonstrating even more definitively across the U.S. the powerful impact of a thriving social enterprise sector. We’re creating jobs that offer an entry into the workforce for those who, like Anthony, are eager to contribute their many talents to our communities and their families. Eventually, the government can partner to take this to an even greater scale.

Meanwhile, like Anthony, you can be the hero of this story. This is your chance to change lives by investing in some of the most exciting and beneficial businesses to come out of the past decades of social innovation.

Now it is not the time to turn away. Now is the time to double down.

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