Building Healthy Communities

The Home Depot Foundation partnered with the Georgia Center for Nonprofits this week to hold a conversation about social enterprises in Georgia.  The basis for the discussion among about 70 nonprofit leaders was a survey GCN conducted of charitable organizations that yielded responses from over 750 groups.  GCN also produced a white paper summarizing the results and highlighting several considerations we should think about as we move forward into this somewhat blurry mix of business and philanthropy.

But before we get into any of that, I want to back up to point out that the terms “social venture,” “social entrepreneurship,” “social enterprise,” (or whatever we call it) aren’t really self-explanatory.  According to the Social Enterprise Alliance:

A social enterprise is an organization or venture that achieves its primary social or environmental mission using business methods. The social needs addressed by social enterprises and the business models they use are as diverse as human ingenuity.  Social enterprises build a more just, sustainable world by applying market-based strategies to today’s social problems.

That’s a lot of words, but to me it simply means that we are talking about nonprofit organizations that start a business to support their cause.  That may mean 1) that they are in business to raise money to support their work or 2) that they are creating a business to fill a gap they have identified that makes it hard from them to accomplish their goals.  It’s pretty easy to come up with examples of the first kind of social enterprise: look no further than the little girl next store selling Girl Scout cookies or the Salvation Army or local church’s thrift store.   The second kind often involves starting a business to provide jobs for people who are hard to employ, such as former felons, people with mental or physical disabilities or young people who don’t yet have skills or work experience.  In the survey of Georgia nonprofits, organizations are doing everything from running restaurants and landscaping companies to managing warehouses and recycling centers to radio production.  There’s even a nonprofit beverage bottler!

In a time when government and private support is shrinking, I applaud all of these nonprofits for thinking about creative ways to do more.  There is a hitch with that, though, in that 32% of the groups surveyed said they were losing money through their efforts, and perhaps even more disturbing, fully 30% said that they weren’t sure if they were making money or not (in their defense, most of these had been up and running for less than a year).  Although we want to encourage groups to take risks and try new ways of doing things, we also hope that they do it in a fiscally responsible way, that they know when to cut their losses (particularly when their goal is fundraising).

Interestingly, for almost 15% of the groups turning a profit isn’t even a goal for their venture.  This made more sense to me after talking to the director of the Georgia Justice Project, which says on its homepage that it is “an unlikely mix of lawyers, social workers and a landscape company. We defend people accused of crimes and, win or lose, we stand with our clients while they rebuild their lives.”   So you may question whether a bunch of lawyers should be in the business of running a landscaping company, they only do it because it’s difficult to find employers who will hire ex-offenders, and without jobs, their clients can’t move their lives forward.  Accordingly, GJP’s mission always trumps profits when they are making business decisions.  Their primary goal for the venture is to help their clients acquire a marketable skill and establish that they are dependable, trustworthy employees, and so that dictates how they make decisions.  For example, when Georgia experienced a severe drought, their business fell off, but they kept all of their employees by raising grant dollars to cover their losses.

You would hope that that would always be the case - that a charitable organization would always look to its overarching purpose to guide its decision-making, not the dollars and cents calculation of the bottom line.  If that’s true, maybe the line between philanthropy and business isn’t so blurry.  Maybe there aren’t really any “nonprofit” organizations.  Maybe we just need to think differently about what we a group needs to achieve to say they’ve turned a “profit.”

I’m just back in the office from a two-day meeting the Foundation hosted with about 60 representatives from federal agencies and the leading sustainability organizations from across the country.  We were discussing how to implement two federal programs: the tri-party Sustainable Communities Initiative of HUD, DOT and EPA and the Recover through Retrofit program being led by the White House’s Council on Environmental Quality.  (CEQ is an administration office that I didn’t know about until our good friend Michelle Moore joined them from the USGBC.  Check them out when you have a minute and you’ll be proud of where these tax dollars are going.)

The goals of the programs  can be described fairly simply:  align the resources available through programs administered by HUD, DOT and EPA to create safe, livable, healthy communities; and help middle class Americans reduce their energy costs by improving their homes and expand job opportunities by training people to do the work.  At first blush, the programs themselves may even sound pretty straight forward.  But if you’ve ever dealt with any issues related to affordable housing, transportation, the environment or  health you know better though.

With all of these exceptionally smart and knowledgeable people in the room, we worked to address several questions that get to the heart of these programs.  I can’t discuss them all, but here are the kinds of things we discussed:

How do you define housing affordability?

Most people know the rule of thumb that you aren’t supposed to spend more than about 30% of your income on your rent or mortgage.  But how do you factor in the cost of getting to and from all the places you need to be?  For a working family, housing typically takes 30% and transportation takes 28% or their income - and if they fell victim to the “drive til you qualify” syndrome, transportation costs can exceed those for their home.  Think about that - if almost 60% of your paycheck is gone before you’ve cooked one meal, taken one shower or bought one jacket for your growing child, there’s not much “disposable income” left.  Putting aside monthly bills for energy and water, how should we calculate maintenance costs -was the house built with durable materials or are things going to need fixing sooner rather than later?   Even more complicated, we know that if you live in a well ventilated house that was build using non-toxic materials (no- or low-VOC paints and adhesives, for example), you’ll be healthier.   How do we factor in the reduction in asthma attacks, fewer trips to the emergency room and fewer days missed at school and work?  Then, if you are talking about retrofitting an existing home, it gets even more complicated in terms of getting a true cost/benefit analysis of the proposed work and an accurate idea of the payback period.

How can we quantify and establish the benefits of sustainable communities?

Granted, this question may not seem so simple, but before you can really even begin to think about answering it, you have to agree on a definition of what is required for a community to be “sustainable.”  That, my friend, is no easy task.  While the federal agencies have agreed on the principles that will guide their work, they have not created the minimum criteria that a community must meet to qualify as sustainable.  I fear it is a little like pornography, we all think we know it when we see it, but we may not all be looking for the same things.  This kind of baseline definition is essential.  If we are trying to assess and value the benefits of a “better” community, it has to be compared to a “regular” community.  Once we get beyond that high hurdle, we can direct our efforts to developing metrics, determining the necessary data, collecting the data in a consistent way and with enough participants to have statistical significance and analyzing it to calculate the benefits.

How do we pay for it?

It should all pay for itself - eventually.  The problem, unfortunately, is now.  Without the historical data to prove the long-term economic value of sustainable development, it’s hard to get the upfront funding.  This is a true anytime, but it’s particularly difficult given our current economic realities.  We all know the condition of our federal, state and local government budgets - and they don’t see any real light at the end of this fiscal tunnel (or if they do, it probably is a train).  Homeowners who might have used the equity in their homes to fund improvements may be unsure of their homes’ value or upside down in their mortgages, and banks don’t have any appetite for unquantified risk these days.  That’s why the Foundation is funding projects that demonstrate the benefits of sustainability and why we partner with our nonprofit partners to monitor what actually happens when people move into them.  It’s also why HUD, EPA and DOT - and hopefully other agencies - are working to align their resources to create these places and collect this data more quickly so that we can prove it out and everyone will agree on the economic benefit, as well as the environmental and social benefits.

All of this is a long-winded way of thanking the government for helping move the effort to create communities where families can live healthy, successful lives.  We appreciate that they are thinking about how to do this and willing to talk about how we can collaborate in the effort.  It wasn’t always the case that the agencies were focused in this way on addressing the issues that impact the everyday lives of the people they are supposed to be working for.   It is also a new idea that they are not only finally talking to each other, but talking to the people who use their programs as well.  To see this is refreshing, and even inspiring.  You probably haven’t heard it to often, but from all of us who participated in the conversation this week, “Thank you EPA! Thank you CEQ! Thank you DOT! Thank you HUD!”

I planned to write a post about joining the Board of Trustees of LISC, the Local Initiative Support Corporation, but my thoughts have been overwhelmed by the situation in Haiti.  As everyone has said - and as they said when the tsunami hit Asia and when Katrina devastated New Orleans - the damage and death is overwhelming.  I don’t think we are really able to comprehend the enormity of the loss, so I won’t even try to comment on it.

Two thoughts do continue to come to mind, though.  First, the willingness of people to respond to others with great compassion and generosity is truly amazing.  I believe that there is something in each of us, for no reason other than that we are human, that makes us rise to help others who are in need.  It doesn’t matter that we don’t know them, that we will never know them or that we aren’t completely sure what to do.  Our reaction is to do something, whether it’s stopping when we see a stranger with a flat tire on the side of the road or sending what we can to thousands impacted by a mass tragedy, as in Haiti.  (So as not to be too Pollyanna-ish, I do need to point out, that just as we need to be cautious about the stranger who offers to change our flat, we also need to be sure we aren’t being taken in by evil people who set up scams to fraudulently take our donations for their own profit.  Donor beware!)

I’m trying to understand how to balance this wonderful generosity of spirit that exists within us against how apathetic we can be about how other people live day in and day out.  Last week, 80% of Haitians lived under the poverty line and 54% lived in abject poverty, and we didn’t really care.  (Just as a reminder, living in poverty means that you don’t have enough money for the basic necessities of life: food and water, shelter, clothes and health care.)  In 2008, the World Bank estimated that 1.4 billion people live at or below the poverty line.  I’d bet that few of us knew that number, but I am positive that we all know that there are many people throughout the United States and the world who are in need every day.  I’m not quite sure, though, why we have so little enthusiasm for helping them.

I understand the difference between pictures of the emergencies that arise after a natural disaster and the image of chronically homeless people.  By definition, an emergency comes on quickly and will pass.  It’s a fire we can put out with quick action and a hefty splash of water. It’s something that could happen to anyone.

Chronic problems, of course, are long-term.  They are hard.  They didn’t appear overnight, and we can’t fix them in a day.  We need time, patience and perseverance.  And sometimes, it seems that the ones suffering have done something wrong - maybe it’s their own fault that they are where they are.

And, of course, we move on - the news cycle turns, the pictures fade and another emergency comes.

Like so many, we are responding as a Foundation and a Company to the horror that exists in Haiti, and my family is giving personally.  But, this week has also made me re-commit myself to doing more every day.

I had a conversation today with a consultant who works with organizations and executives on strategic planning and leadership, and it got some ideas swirling in my head.   We talked a bit about what my long term vision for the Foundation is, how we work with non-profits, how we keep the team’s morale up during the tough economy and what we want to leave behind when our time is done here.

That’s a lot to think about, let alone absorb and comment on in a meaningful way, during a brief conversation - or a blog post.  But the discussion circled back several times to the way an individual looks at their own position  - both with relation to other people and other organizations.  I hope I never start making the mistake of thinking people who work for nonprofits and whom I’ve never seen before are exceptionally nice to me because of me, rather than because the position I am lucky enough to hold.

If the people who work with me have a heart, it’s relatively easy to keep them motivated.  Sure, like everyone, we have our ups and downs, but it is very easy for us to remember the difference we make during the work day - every day.  We are helping people have homes to live, stay in their homes and have safer, more vibrant neighborhoods.  There is no doubt we actually change people’s lives - thousands of people every year.  In just 2009 alone, we gave $75 million in cash and products to over 3,500 nonprofit organizations.  Wow.  No one here is just stuffing a check into an overnight envelope - they are truly sending hope to another person.

And while I always want us to remember what we are accomplishing, I don’t want us to stop trying to do better.  As important as what we do is, what we don’t do and what we could have done are even more important.  I’m always watchful for the lost opportunity.  We have an awesome responsibility to invest our funds in our communities in the way that will provide the best outcomes for the most people.  We all need to be mindful that what we have done is great - amazing even - but that we can always do more.

It seems that at the end of the year, every year, budget issues start to come up more and more.  Families discuss their finances: How much should we spend on holiday gifts?  Should we buy the plane tickets to visit grandma? What about making charitable donations before December 31  - and getting a tax deduction?  While these discussions are going on across the kitchen table, corporations are undertaking the same exercise across conference room tables and asking the same kind of questions:  where are we against our plan for this year and how much budget will we have next year?   It seems that it’s the time of year when everyone tries to juggle all of the competing financial needs without dropping a ball that has to be caught.

As a foundation, we’re doing the same thing.  Our budget gets divided up a lot like everyone else’s: 1) the gotta dos, 2) the wanna dos and 3) the wish we could, but can’t dos.  We have multi-year commitments to fulfill and core partnerships that we know we will fund; these are the “gotta does,” much like a family has mortgage payments and utilities.  Of course, we make grants throughout the year as nonprofits request support, and we set a budget for how much we will distribute in each of the different areas we support.  It’s akin to treating each grant program we have like a child with an allowance to spend.  They can use it for whatever they want - that is, what ever they “wanna do”, but as I tell my real kids, “When it’s gone, it’s gone.”

And finally, there are the multitude of very worthwhile causes, organizations and people we would like to be able to support, but we just can’t.  This may be because a nonprofit is working in an area that is outside our focus on healthy, affordable homes and sustainable communities.  It may be because a request is related to our focus area, but we don’t think it will produce enough impact or it is too expensive for the outcomes the nonprofit is anticipating.  Our deciding not to fund a request may also be for a reason entirely unrelated to the nonprofit and the request - maybe we’ve already made a number of investments in that city or the timing doesn’t work.

At the end of each year, in fact throughout each day, we are all making choices, and that’s all the more true when it comes to money.  And as we think about charitable giving, the requests seem to grow as we near the end of the year - it is, after all, the season of giving.  So in thinking about what we’ve done this year, what we’ll be able to do during the remainder of it and what we’ll plan to do in 2010, I hope that we’ve made sound decisions.  We know that there are more organizations, more causes and more people who need - who deserve - grants than we would ever be able to support.  We can always wish for additional money, but knowing that our budget is unlikely to increase in the near term,  I hope that we’ve made the most of the funds we do have, that we’re correct in defining what we must do and chose well when we decide what we are able to do.

It’s an exciting day for us.  I know, it’s just Wednesday, it’s November 4th, election results are in, Halloween’s passed, Thanksgiving’s not here yet and it’s getting a little cold.  But in Atlanta, for The Home Depot Foundation, it’s our 4th annual “Building Community Day.”  It’s exciting for us because on this day each year, we select 20 nonprofits in the area who work outside of our focus on healthy, affordable housing, and we recognize and celebrate the outstanding work they do to impact our community and make Atlanta a better place.

As you’ll see below, they work in a diverse range of issues, but each makes a significant contribution.  The Foundation is typically very focused in our work, believing that we can only have a significant, tangible impact if we limit the investments we make to housing and sustainability.  In our hometown, however, we make exceptions to that, and we support a number of organizations that enhance Atlanta in different ways.  After all, we are all working to make this a better community, we just come at it from different vantages, whether that be from the perspective of bringing the arts to life, improving healthcare or educating young people.

Amazingly, even after four years, the participants don’t know that at the end of the day, they will each receive $20,000 to support their work however their Board chair directs.  We will have the recipients from prior years - all of whom seem to be good a keeping a “secret” -  there to celebrate with their colleagues.  Even in this day of $1 million gifts and of federal budgets in the billions and trillions, an unexpected gift like this will make a great difference for nonprofits working to help people through this trying economic time.  Stayed tuned and we’ll share their stories of what their grant allowed them to do.

Now, I’m trusting you to keep the secret, but here are the organizations that will share in the $400,000 of grants we are making today and a statement of their mission.  I hope you join me in congratulating them and support them or similar organizations in your community.

Arthritis Foundation, Georgia Chapter: To improve lives through leadership in the prevention, control and cure of arthritis and related diseases

Atlanta Legal Aid:  To provide referrals and legal representation to people who otherwise cannot obtain access to the court system

Boy Scouts of American, Atlanta Area Council:  To prepare young people to make ethical choices over their lifetimes by instilling in them the values of the Scout oath and law

Bremen Jewish Heritage Museum: To collect, preserve, interpret and teach about Jewish history, in particular the Holocaust and the experiences of Jews

Camp Twin Lakes: To offer year-round recreation, therapeutic and educational programs for children facing serious illnesses and other physical, emotional and life challenges

Center for Pan Asian Community Services: To create and deliver culturally competent and comprehensive social and healthy services to counteract problems faces by immigrants, refugees, and racial-ethnic minorities

Communities in Schools Georgia: To improve student and school success by providing needed support and services to students and schools

Ferst Foundation for Childhood Literacy:  To promote family involvement in achieving early school success for their children and to address adult illiteracy by motivating parents to read daily to their children

Foster Care Support Foundation:  To strengthen the ability of foster families to meet the needs of their foster children by providing a community based resource and education

Girl Scouts of Northwest Georgia:  To help hirls develop self-esteem, develop meaningful values for their lives and improve society through service

HeroBox:  To provide custom support to our solidiers deployed overseas, by providing items they need and want while they are away from home defending our freedom

Historic Oakland Foundation: To cultivate resources to assist the City of Atlanta in the preservation, restoration and beautification of historic Oakland Cemetery and to promote it as a local cultural resource and as a historic site of national importance

Junior Achievement of Georgia:  Using hands-on experiences, JA of Georgia brings the real world to over 100,000 students each year, opening their minds to their full potential by bridging the business and education communities

Komen for the Cure: To eradicate breast cancer as a life-threatening disease by advancing research, education, screening and treatments

Salvation Army:  To preach the gospel of Jesus Christ and meet human needs in Jesus’ name without discrimination

Special Olympics Georgia:  To provide year-round sports training and athletic competition for children and adults with intellectual disabilities

Tommy Nobis Center:  To develop and provide job training and employment for youth and adults with disabilities and other barriers to employment

Travelers Aid (Hope Atlanta):  Dedicated to the prevention of homelessness in our community and combating it whenever it arises

WPBA:  Public Broadcasting Atlanta educates, entertains and empowers by broadcasting perspectives, creating joy, expanding knowledge and connecting people to each other and the world

YWCA of Northwest Georgia:  To eliminate racism, empower women and promote peach, justice, freedom and dignity for all