NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

“If people don’t have a job, they don’t have hope. And if you don’t have hope, what do you really have?” (George Roberts of Kohlberg, Kravis Roberts & Co., the founder of REDF)

Recently Jocelyn Wyatt and I were fortunate to have Carla Javits, the President of REDF (originally named the Roberts Enterprise Development Fund), as a guest speaker in our class at Berekely’s Haas School of Business.? REDF is a nonprofit based in San Francisco that creates job opportunities and pathways to employment for people with significant barriers to work.??It was?also one of the first organizations to embrace the venture philanthropy approach, serving as both a model for others in this field, notably Acumen Fund, and a testing ground for Jed Emerson’s ideas on measuring social returns.For most people, even those who may be facing homelessness, having a job is one of life’s top priorities, and?creating opportunities for those who might otherwise be unemployable is the main focus of REDF’s efforts.? According to Javits, REDF’s approach falls squarely into the arena of venture philanthropy.? “We concentrate on achievement of an overall goal and deploy all the resources at our disposal to meet those goals.? We treat our activities as investments, and we expect to see a return on those investments measured by jobs, changed lives and reduced public costs.”? And, like a venture capitalist, REDF has a high engagement, hands-on approach.

REDF partners with a portfolio of social enterprises, both?businesses owned and operated by nonprofit organizations,?which provide products ranging from baked goods to bicycles and services; from messengers to maintenance engineers.? REDF raises money through charitable donations and uses these funds to support several nonprofits providing capital, business assistance, long-term capacity building and staffing. They typically work with organizations that are in the early stages of starting or running revenue-generating activities that?deliberatedly employ those most disconnected from the workforce.

The enterprises employ people who face barriers to employment, derived from various life circumstances such as homelessness, criminal history or coming from low-income communities that offer few opportunities.?On-site counselors also offer life-skills training and support for particular health or family issues.? Support leads to success and begins the cycle of self reinforcing behavior that can provide a path out of poverty.

Even though REDF and their partners are not serving the typical Base of the Pyramid?communities that NextBillion usually writes about, job creation and skills training are challenges in every economy of the world.? Though most people are eager to work, many find that entering and staying in the work force can be extremely difficult because of major challenges such as homelessness, limited education, drug or alcohol dependency, criminal record, physical and/or mental health issues.?

REDF is clearly having an impact and their model is replicable for similar enterprises.? Time series data collected from employees of the organizations supported by REDF since 1998 show that, on the two-year anniversary of an employee’s hire, over 75 percent have stayed employed and are earning increasingly higher wages.? In addition, a significant number have enrolled in academic or vocational training programs.?? Since 1997, REDF-supported social enterprises have employed over 3,300 working-age adults in the San Francisco area.

Like many venture philanthropy organizations, REDF is funded by philanthropic dollars.?? This leads us perhaps to a whole new set of questions as to how they might take a lesson from the organizations they help, and begin to figure out their own earned revenue stream.