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Successful Youth Employment through Social Enterprise: A Case Example Shawna Smith Executive Director/CEO Taller San Jose Samra Haider Portfolio Director.

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Presentation on theme: "Successful Youth Employment through Social Enterprise: A Case Example Shawna Smith Executive Director/CEO Taller San Jose Samra Haider Portfolio Director."— Presentation transcript:

1 Successful Youth Employment through Social Enterprise: A Case Example Shawna Smith Executive Director/CEO Taller San Jose Samra Haider Portfolio Director REDF January 16, 2013

2 © REDF 2013 – PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Agenda a)Overview of Taller San Jose and REDF b)Social Enterprise within Workforce Development c)The Social Enterprise: Hope Builders d)Key Considerations for Employment Social Enterprises e)Q&A

3 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF What is Taller San Jose? 3 PAGE 3 Overview Taller San Jose (TSJ) assists marginalized youth (ages 18-28) in Orange County through job training and support services that help them find and keep employment TSJ offers paid, hands-on training programs for: 1) Office Careers, 2) Medical Careers, and 3) Construction Recognized with one of three Changemakers Awards in 2008, an international honor sponsored by Ashoka Results To Date Served more than 4,500 youth since 1995 220 youth enrolled annually in industry related programs 175 job placements in 2011 72% of students remain employed one year after graduation 92% with a criminal record do not reoffend

4 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF What is REDF? Overview REDF is a California-based nonprofit grantmaker that helps nonprofits build social enterprises employing people facing barriers to employment Approach is similar to a venture capital firm, but seeking social rather than financial returns Pioneer in measuring social impact that is committed to sharing its lessons learned Results To Date Direct financial support of $19 million as well as $17 million in business and capacity-building assistance since 1997 Supported 49 social enterprises that have employed over 6800 people and earned over $127 million in revenues 77% of those interviewed still employed two years later After employment in social enterprise, participants report 31% average wage increase

5 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Partnership between TSJ and REDF Overview To significantly grow Hope Builders, a general contracting social enterprise that employs its graduates, Taller San Jose joined REDFs portfolio in 2011 REDF offers grant funding as well as technical assistance aimed at increasing enterprise revenue, exploring transitional employment, and expanding access to support services Hands-on partnership also allows TSJ to participate in REDFs social outcome measurement efforts and networking /field-building activities Specific Initiatives Restructuring Hope Builders staffing model to integrate transitional employment and serve greater number of youth Funded and recruited Farber Intern to assess Hope Builders market opportunities and forecast financial results Assisting with the identification and pursuit of funding opportunities to help finance Hope Builders growth and mission-related activities

6 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Agenda a)Overview of Taller San Jose and REDF b)Social Enterprise within Workforce Development c)The Social Enterprise: Hope Builders d)Key Considerations for Employment Social Enterprises e)Q&A

7 © REDF 2013 – PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Social Enterprise: The Sweet Spot 7 PAGE 7 Nonprofit- For Benefit For Profit- Business Mission driven Invests surpluses to meet a social objective rather than to serve shareholders Services offered and/or production process of the enterprise can also serve social objective in themselves Social Enterprise Market driven

8 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Social Enterprise vs. Earned-Income Activities 8 PAGE 8 Earned-Income Activities Social Enterprise Revenue generated through some commercial endeavor Has a long-term vision and is managed for the indefinite future Growth and revenue targets are set in a business or operational plan Separate and distinct staff manage and oversee the activity What distinguishes a social enterprise from other earned-income activities?

9 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF What is an Employment Social Enterprise? 9 PAGE 9 Supportive employment Experiential learning/on- the-job training Wages, stability Developmental opportunity Builds identity as a worker Often coupled with support services Revenue generation Product or service Customers Suppliers A vital part of the local economy Usually founded by nonprofit organizations Created for the explicit purpose of employing people who face significant barriers Histories of homelessness and/or incarceration Mental illness Young people at-risk Employment Social Enterprise (ESE) Social Mission Business

10 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF ESE as a Vehicle for the Hard To Employ Employment Help people move into employment and out of poverty Social Enterprise TSJ invests in launch of a social enterprise to further its mission impact REDF offers capital, experience, and networks to support social enterprise Social enterprise jobs are a first step and pathway into the regular work-force for the target population The enterprises and their employees earn income, offsetting taxpayer costs A social enterprise job leads to a rise in hours worked, health status and income; and reduces homelessness and incarceration Social enterprise is an innovation that would benefit every community Individuals facing one of the following barriers to employment: Mental illness History of Incarceration Youth at-risk History of homelessness

11 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Social Enterprise is a Sub-strategy of Workforce Development 11 PAGE 11 Career advancement Skill development Career counseling/ coaching Job search/ development Workforce development strategies External employer site Employment social enterprise Strategies by which jobseekers and workers are equipped to secure or advance in employment Employment strategy to transition people with labor market barriers into work using wage-paid, short-term employment that combines real work and supportive services Job slots external to the agency providing supportive services Job slots in-house at the agency providing supportive services Placement of individuals with greatest barriers into job slots within a social enterprise Supportive services provided by enterprise itself, affiliated nonprofit, and/or through partnerships with service providers Work experience Transitional job In-house Note: Other types of work experience beyond transitional jobs are not detailed here (e.g., on-the-job training, internships, etc.).

12 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Focus on Individuals with Greatest Barriers to Employment 12 PAGE 12 Workforce funding and services have traditionally focused on jobseekers who are the most work-ready and skilled As currently structured, public workforce funding rewards rapid placement into employment and into high- paying jobs Resulting tendency to cream and focus on people with fewer barriers Employment social enterprise can be leveraged to focus on those individuals who are the hardest to employ Individuals with greatest barriers to employment who are likely to take longer and require more support in achieving competitive employment (e.g. young adults disconnected from work and school, formerly homeless, ex-offenders) Nature, structure and duration of employment and the mix of support services offered must vary to meet different target population needs (e.g. the focus for many young adults on securing a high school diploma)

13 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF How are Employee Supports Different from Client Services? 13 PAGE 13 The social enterprise context (already having a job) is very different from the workforce development context (trying to get a job) and creates unique opportunities and challenges for support services Context of a paycheck makes real previously theoretical discussions (e.g., financial literacy, taxes, work/life balance) Experiential/contextualized learning Earned income increases likelihood of eligibility for tax credits Reinforcement of employee support personnels messages by supervisors Opportunities Sustainability is dependent upon product/service getting produced Subject to employment laws (e.g., compensating for mandatory activities, risk of lawsuits, information sharing policies) More demands on employees time (need to balance empowering employees with streamlining access) Challenges

14 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Agenda a)Overview of Taller San Jose and REDF b)Social Enterprise within Workforce Development c)The Social Enterprise: Hope Builders d)Key Considerations for Employment Social Enterprises e)Q&A

15 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF The Social Enterprise: Hope Builders Hope Builders is a licensed full-service general contracting company providing new construction, renovation, and rehabilitation services. Additionally, the social enterprise employs graduates of Taller San Joses construction training program. In 2011, Taller San Jose made a significant strategic investment in Hope Builders with two goals in mind: 1)Expand employment for some of its most at-risk youth; and, 2)Increase its mission impact through business-generated revenue. Hope Builders joined the REDF portfolio in 2011, and REDF is assisting TSJ to significantly grow Hope Builders revenue and capacity, optimize its mix of transitional and permanent employment opportunities, and connect youth participants to more support services 15 PAGE 15

16 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Hope Builders Success To Date Launched new business model in March 2011, securing over $1,000,000 in sales through December 2012 Completed 53 rehab or single trade projects Generated $374,000 in business, plus $82,500 for parent TSJ through partnership with private equity firm (Citivest) 18 youth employed in last two years $75,000 in board pledges Social Innovation Fund grant recipient through REDF portfolio, securing $450,000 in grants as well as extensive technical assistance over a two year period 16 PAGE 16

17 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Hope Builders Services 17 PAGE 17 Hope Builders offers services in three areas of expertise: New Construction Drywall Electrical Energy efficiency/green building Flooring Framing Hardware Home safety HVAC Insulation Interior/exterior work Landscaping Lighting fixtures Painting Plumbing Room additions Stucco 1Rehabilitation Appliances Cabinets Countertops Door/window replacement Drywall Electrical Flooring HVAC Insulation Interior/exterior work Landscaping Lead and asbestos abatement and manifest of disposal Lighting fixtures Painting Plumbing Roof repair Stucco Water-damage repair 2Remodeling Appliances Cabinets Countertops Door/window replacement Drywall Plumbing Electrical Flooring Full bath and kitchen renovations Hardware Interior/exterior work Lighting fixtures Painting Room additions Stucco 3

18 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Current Customer Base Includes a mix of private investors, community based organizations, and individual business/homeowners Over $65,000 in average monthly sales in 1st quarter of FY2013; all are repeat customers 18 PAGE 18 "By partnering with Taller San Jose and Hope Builders on our Logan Homes project, Santa Ana accomplished three important goals: First, we built high quality homes which were sold at affordable prices to first time buyers. Secondly, we offered the construction as an economic development opportunity for Hope Builders and the youth served by their program. Finally, we supported the existing residents of the Logan Neighborhood. This resulted in commercial property being converted to residential uses, which further serves to reweave the fabric of our community. Mayor Miguel Pulido City of Santa Ana

19 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Hope Builders Competitive Edge 19 PAGE 19 Bank Program Bank sells REO properties to non- profit at discount (10-37%) JP Morgan Chase to sell another 500 REOs in next two years Same opportunity with Wells Fargo Taller San Jose (Non-profit) Taller San Jose (Non-profit) Provides its non- profit status; Receives 1% of purchase price and 2/3 of proceeds after the sale Under agreement TSJ controls general contractor choice Private Equity (Investor) Private Equity (Investor) Provides the capital, analytics, marketing and sales services Leverage affordable housing and first-time homebuyer credits meeting bank program requirements Hope Builders (General Contractor) Hope Builders (General Contractor) General contractor of choice for rehab work Average contract $22,000 Averaging 4 homes per month 40+ acquisitions by TSJ since October 2011 Highly experienced management/field leadership with reputation in local market for quality workmanship Tested operational systems which support field efficiency Bank programs give preference to non-profits for acquisition of foreclosed properties; committed investor

20 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Youth Employment Pathway 20 PAGE 20 TSJ Tech Grad Apprentice Other Construction Apprentice Personal Exit Other Trade Career Other Construction Personal Exit Other Trade Career 1. Pursue SE Employment? Yes No Yes 2. Stay with SE? Employee Decision Preferred exits are positions within the construction/ building industry MANAGERIAL DECISION 3. RETAIN? YES NO Youth Apprentices at Hope Builders are graduates of Taller San Joses construction training program

21 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Workforce Skill Development 21 PAGE 21 Tech GradApprenticeForeman Hard Skills: Measuring Tape Hammers and Tools Squares Ladders and Scaffolds Extension cords and pigtails Saws Drill/Impact/Skill Gun Nail Guns Tool Recognition Powder actuated Tools Abrasive Cutting Saw Forklift & Work Area Platforms Soft Skills: Critical Listening Skills Hard Skills: Painting Plumbing Drywall installation Window Installation Tile installation Laminate Flooring Electrical Fixture Installation Finished Carpentry Lathe & Plaster Appliance Installation Rough Carpentry Repair Soft Skills: Completes projects satisfactorily under timeline Demonstrate Excellent Work Ethic Arrives on-time and prepared Foreman have demonstrated mastery of all skills in each category. Hard Skills: Granite installation Carpet installation Soft Skills: Read Project Scopes Adhere to budgets Commitment to on-time delivery schedules Able to critique employee performance and handle disciplinary issues Accountable Responsible Hope Builders employs 3-5 Youth Apprentices and 4-5 Foremen, experienced professionals who are responsible for production as well as training Apprentices

22 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Hope Builders 5-Year Plan 22 PAGE 22 Hope Builders plans to triple its sales revenue over 5 years This would result in field employment equivalent to 40 jobs for its target population Hope Builders Forecasted Growth

23 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Agenda a)Overview of Taller San Jose and REDF b)Social Enterprise within Workforce Development c)The Social Enterprise: Hope Builders d)Key Considerations for Employment Social Enterprises e)Q&A

24 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Key Considerations While there are many nuances to employing youth through social enterprise, we wish to highlight the following: 24 PAGE 24 1 Transitional vs. Permanent Employment 2 Youth-Oriented Systems and Policies 3 Consistency in On-the-Job Training 4 Separating Business and Social Costs

25 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF 1) Transitional vs. Permanent Employment 25 PAGE 25 Transitional Employment Offers shorter employment opportunities (typically 3 – 12 months) for more people More individuals are able to be served through the social enterprise as people transition to outside employment There are challenges with structuring the transitional element of employment in the enterprise. Are people timed out or can they leave when ready? How can the SE ensure individuals will be ready? Number of people employed Duration of employment Permanent Employment Offers longer employment opportunities (typically over 1 year) for fewer people Employment social enterprise could potentially provide long-term employment ESEs that work with individuals with developmental or physical disabilities often provide permanent employment However, unless the enterprise is continually expanding, permanent employment significantly limits the number of people who can be employed

26 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF 2) Youth-Oriented Systems and Policies 26 PAGE 26 Hire experienced talent that can support youth Hope Builders is careful to hire foremen who have years of industry experience, but who can also coach youth apprentices effectively Emphasize soft skills with training and expectations Youth apprentices are evaluated on attitude, appearance, and accountability among other items Staff strive to instill a sense of pride in work among youth apprentices Frequent evaluations and feedback Hope Builders provides formal evaluations to youth apprentices every 2 weeks during their first 6 weeks on the job Evaluations also help staff determine where to deploy youth Integrate formal training into workplace In addition to dedicated training on specific construction skills, staff devote much time to on-the- job coaching Training is important given the complexity of jobs and short tenure of youth apprentices From talent recruitment to staff feedback, many practices and policies in the workplace are oriented towards supporting the development of youth participants

27 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF 3) Consistency in On-the-Job Training 27 PAGE 27 Skill Frequency Completed OTJ Degree of Difficulty (skill) ImplementationCost Window Installation OftenModerateEasyLow Plumbing AlwaysDifficultModerate/DifficultLow/Moderate Tile Flooring OftenModerate Low Laminate Flooring SometimesDifficultModerate Drywall Installation AlwaysModerate/DifficultModerateLow Painting SometimesModerate Electrical Fixture Installation AlwaysModerateEasyLow Finished Carpentry (doors, base & trim) AlwaysModerate Lathe & Plaster SometimesModerateEasyLow Rough Carpentry Repair SometimesModerate/DifficultModerateLow/Moderate With project-based businesses, it is difficult to standardize on-the-job training because some services will be demanded more than others. Social enterprises must balance the need for workforce skill development with business demand

28 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF 4) Separate Business and Social Costs 28 PAGE 28 Revenue or Sales Cost of goods sold (COGS) Business expenses Net profit For-profit businesses generally run like this… Gross profit …but social enterprises are a bit more complex Business-related revenue or cost Mission-related revenue or cost -=- = Business revenue Business COGS Business expenses Net profit without social $ Gross profit = Subsidies Mission- related COGS Mission- related expenses Net profit with social $ e.g., less efficient direct labor e.g., grants e.g., case- workers Social benefit + - = - Because of its social mission, social enterprises will incur greater costs than regular businesses. To obtain a true representation of their performance, social enterprises should separate costs associated with the social mission from regular business costs

29 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Agenda a)Overview of Taller San Jose and REDF b)Social Enterprise within Workforce Development c)The Social Enterprise: Hope Builders d)Key Considerations for Employment Social Enterprises e)Q&A

30 © REDF 2013 - PLEASE DO NOT DISTRIBUTE WITHOUT PRIOR PERMISSION FROM REDF Questions? 30 PAGE 30 www.redf.org Samra Haider shaider@redf.org www.tallersanjose.org Shawna Smith ssmith@tallersanjose.org


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