The Distinguished Social Ventures Foundation (DSVF) commits to creating 1,000 living wage jobs for ex-offenders by the end of 2020 by providing $5 million of low-cost loans, $1 million of which DSVF will fund, to small- and medium-sized businesses that are poised to grow and that have embedded in their growth plans the kinds of jobs ex-offenders can be easily trained to do. The interest rates charged on these loans will vary inversely with the success these businesses achieve in hiring and retaining ex-offenders for the jobs they create as they grow. The key challenges are: 1) finding and vetting 10-30 companies that will each create 33-100 living wage jobs that meet DSVFs criteria; 2) raising the additional funds; 3) creating the necessary resources to find, investigate, document, staff, and monitor this number of investments; and 4) determining the metrics of success.
Since DSVFs target companies typically do not yet qualify for conventional bank debt, DSVF will pursue existing angel investor networks and community development funds to raise the additional $4 million. DSVF will also target banks that might find DSVF a more politically acceptable alternative to simply turning down these loans. Lastly, DSVF will also approach large foundations with an interest in job creation for the lowest economic rung of society. To encourage investment from these organizations, DSVF will leverage its previous success with businesses of this size, its own significant financial commitment to the fund, and its willingness to absorb the first $1 million of loss.
DSVF will also seek to work with college business programs to provide students credit-bearing work through which they help build the necessary infrastructure, such as a website; identify pro bono legal help; build a database of available government subsidies and how to access them easily; and source lead-generating networks like angel investors, community development funds, banks and, ultimately, individual investments.
DSVF will partner with organizations that specialize in identifying, training, and providing support services to the formerly incarcerated employees hired by its investees. It will additionally look to partner with local community colleges to provide enhanced skill training that will enable these individuals to move up the job ladder once they are employed. Finally, DSVF will partner with academics to help develop the right metrics to judge success, including the cost savings to the state for the lack of recidivism.
7/1/15-12/31/15 Finalize template for the loans; figure out the criteria to identify the businesses that will create the most jobs per $100,000 of loan; raise $4,000,000 in addition to our financial commitment; make a deal with a business program to provide two students each semester to source and vet deals and do due diligence for course credit; identify staffing partners in NYC; find pro bono legal help to document the deals
1/1/16 -3/31/16 establish a website; figure out the metrics to judge success; identify potential sources of deals (angel investing clubs, banks, etc.) and begin looking for deals
4/1/16 -12/31/16 close three deals; identify community college partners to help train staff and keep them employed
1/1/17 -6/30/17 close three deals
7/1/17-12/31/17 close three deals
1/1/18 -12/31/18 - close six deals
1/1/19 12/31/19 close six deals
1/1/20 -12/31/20 close six deals
The U.S. has 5 percent of the worlds population and 25 percent of its imprisoned population. With 300,000 people returning from prison each year, re-integrating them into society is a significant challenge given the fears and biases about people who have spent time in prison. Keys to solving this challenge are the provision of affordable housing, the re-establishment and/or strengthening of family ties, and the creation of living wage jobs.
At the same time, small- to medium-sized companies that could hire ex-offenders may not yet qualify for the conventional bank debt they need to grow, providing an opportunity for investment funds that target social enterprises willing to hire, train, and retain high-barrier populations, such as ex-offenders. Additionally, large foundations that focus on the hiring of ex-offenders often do not have the expertise or infrastructure to look at and manage multiple small-to-medium-sized enterprise investments, preventing them from tapping the large job market that these businesses represent. These challenges create a gap in the job creation and placement ecosystem that, if closed, could provide a mutually beneficial outcome for all stakeholders involved.
DSVF is seeking $4,000,000 of additional financial resources to leverage its own commitment of $1,000,000 and skill sets to help implement the commitment, such as due diligence, legal, accounting, public relations, experience with government subsidies, program management, and the creation of metrics.
DSVF is offering three initial loans, additional financial resources, and experience in sourcing, vetting, and managing a portfolio of job-creating small to medium-sized companies.