Social entrepreneurs focus of Forward Ventures

By Todd Cohen

CHARLOTTE, N.C. — Second Helping is a new for-profit company that operates a food and coffee cart and employs women trying to get their feet on the ground after getting out of prison.

The company was the idea of Melissa Mummert, a program coordinator at Changed Choices, a Charlotte nonprofit that works with women who have been incarcerated.

In developing her idea, which had the support of her nonprofit’s board, Mummert turned to Queen City Forward, a community-development organization that supports nonprofit and for-profit social entrepreneurs dedicated to achieving a social good.

Queen City Forward reviewed her plans and referred her to Social Venture Partners Charlotte.

Second Helping now is a semi-finalist in a funding competition sponsored by Social Venture Partners Charlotte.

Opening shop last October, Queen City Forward grew out of Bull City Forward, a similar effort formed in Durham in 2010.

Akin to a chamber of commerce for social entrepreneurs, Bull City Forward was created in response to efforts by Durham leaders to help foster nonprofit and for-profit social enterprise, and help it grow, says Christopher Gergen, the Durham group’s executive director and co-founder.

“We believe the social-enterprise sector is where our global economy is going,” he says. “Increasing numbers of organizations want to be doing well financially and doing good in terms of positive social impact in the world. And that’s where talent wants to work, where customers want to buy, and where ultimately investors want to invest.”

Bull City Forward now has roughly 160 members representing just over 80 nonprofits and businesses.

After San Francisco-based PlayWorks received a grant from the Robert Wood Johnson Foundation to expand to nine new communities its program that places a full-time coach in elementary schools to work with kids on issues like team-building and problem-solving, for example, Bull City Forward worked in partnership with the Durham Public Schools to court it.

PlayWorks now operates in nine Durham elementary schools and occupies an office in Bull City Forward’s incubator space for social entrepreneurs in the Kress Building downtown.

Like the Durham group, Queen City Forward provides resources and connections designed to help its members grow, Gergen says.

Queen City Forward has raised a total of $90,000 in start-up capital from Foundation for the Carolinas, Duke Energy, Fifth Third Bank, and from individual donors.

It has assembled an interim board of civic and community leaders chaired by Mayor Anthony Foxx, and signed up its first three member organizations, including one that will occupy an office in incubator space the organization has leased in Packard Place, a 90,000-square-foot hub for entrepreneurs.

“We hope to build a community of social entrepreneurs who are focused on solving some of our most challenging community issues in a way that is self-sustaining for individual entrepreneurs and their businesses, whether for-profit or nonprofit,” says Charles Thomas, executive director of Queen City Forward former director of education for The Light Factory Contemporary Museum of Photography and Film.

Gergen says Forward Ventures, the umbrella organization that operates the Durham and Charlotte groups, hopes to expand to other cities like Greensboro and Raleigh over the next two to three years.

Forward Ventures also is part of the Fourth Sector Cluster Initiative, a statewide network that has worked to spur other efforts such as an interagency task force created by Gov. Beverly Purdue.

“North Carolina has the opportunity to be a national leader,” Gergen says, “as a state that fully understands and embraces and supports what is being called the Fourth Sector.”

New financing emerges for social innovation

“Social impact bonds,” which raise private investment capital to fund prevention and early-intervention social programs, with government repaying investors only if the work improves social outcomes, represent a “promising new product” that could become a multi-billion-dollar source of growth capital to fund effective social programs, a new white paper says.

“Social impact bonds offer an innovative way to scale what works,” says the white paper, prepared by Social Finance Inc. and supported by the Rockefeller Foundation.

“If they work as hoped, proven innovations will no longer languish for years as service providers struggle to access the capital needed to complement the limited funds currently available from government and philanthropy,” says the white paper, A New Tool for Scaling Impact: How Social Impact Bonds Can Mobilize Private Capital to Advance Social Good.

The world’s first social impact bond was launched in September 2010 in Britain by Social Finance Ltd., sister organization of Social Finance Inc., and targeted at reducing prison recidivism, the white paper says.

In May 2011, it says, Massachusetts became the first state to take formal steps to create a program to use social impact bonds, targeting the expansion of support for chronically homeless adults and youth existing the juvenile-justice system.

While the U.S. is home to nearly one million charities that “provide vital services to vulnerable individuals and communities” and use innovation to address “intractable social problems,” the white paper says, those groups “collectively serve on a small fraction of those in need.”

Limited funding, it says, particularly the lack of long-term funding, “constrains nonprofits’ growth and contributes to a high degree of fragmentation within the social sector.”

Even nonprofits with the “strongest track records,” it says, cannot “significantly expand their services and benefit a wider portion of the population.”

While they may not provide a solution, the paper says, social impact bonds “might provide a unique way to make effective interventions available to far more people in need than the number that can be reached through traditional state contracts and philanthropy.”

The best candidates for the bonds, it says, are nonprofits with “strong track records of improving outcomes for a well-defined population.”

Programs that would be funded would be “evidence-based,” with evidence showing that their prevention and intervention strategies work.

Those results “translate into government savings that can be achieved within a relatively short time-frame and are large enough to cover the program’s cost and a reasonable return to investors.”

The paper says “dedicated intermediaries” will be critical to the success of social impact bonds.

Their role would be to originate deals, secure government contracts, structure the bond instruments, and issue the bonds.

And throughout the five-to-10-year life of the bonds, intermediaries would play a key role in managing complex projects, mitigating risks, and helping service providers achieve target outcomes.

If the bonds work and the market grows, the paper says, the bonds could “influence larger shifts within the nonprofit, government and investing communities.

The new source of capital, based on “demonstrated results,” would encourage nonprofits to “develop robust data-collection methods, create performance metrics, and measure social outcomes,” the paper says.

With “greater market discipline and transparency within the social sector,” it says, governments would have access to “better data that enable rigorous assessment of various program alternatives and inform responsible public investment.”

Government also might begin to “measure success using outcomes rather than outputs, driving greater accountability within the public sector.”

The bonds also will “promote the transition from siloed government programs to broader thinking” about how interventions on issues such as housing affect outcomes on other issues such as health care.

“Cross-agency collaboration will encourage better use of public resources and possibly advance new solutions to some of society’s most pervasive and intractable problems,” the paper says.

The bonds also might influence the creation of other “impact investing products and similarly monetize social outcomes to calculate investor repayment and returns,” it says.