This blog post is written in response to a May 12, 2014 group blogging event, co-hosted by Meeting of the Minds & Living Cities, which asks, “How could cities better connect all their residents to economic opportunity?”
It is widely accepted that good jobs are the building blocks for increased economic activity, safer neighborhoods, improved health, and better education. People with good jobs have more dignity, more mobility, and are able to provide a better life for their families. So, in terms of how we need to think about connecting people to opportunity, it is no surprise that there is a growing national conversation about what it takes to create good jobs. And, in a time of rising inequality, folks are also asking how we can ensure that good jobs exist for those who need them the most.
Fund Good Jobs was founded as an innovative non-profit investment fund to answer these questions. Defining ‘good jobs’ as those that pay more than the local living wage; provide medical, dental, and retirement benefits; and create opportunities for professional development and wealth building for those with the greatest need; we make ‘bets’ on good job creators. What does this look like? Here’s what we do in a nutshell:
1. Support high need, high growth small businesses. Small businesses are uniquely equipped to create good jobs. They have greater flexibility to hire the hard-to-employ and provide them with opportunities for advancement. As active members of the community, they tend to hire locally and are less likely to ship jobs overseas. But, these companies are often too large for micro-loans, and not yet big enough to attract large investments from banks and venture capital firms. So, the capital required to help them grow and thrive is not readily accessible. We fill that gap by tailoring investments in the range of $100k to $2m. Through these investments, we’re able to maximize growth and the creation of good jobs.
And, each investment is made in partnership with Inner City Advisors' (ICA)suite of business support services and resources. Through this approach, we are proving out an important hypothesis: That when we bet on small businesses, they in turn bet on people in their community. For example, when ICA helped Premier Organics grow, they hired Mauricio from East Oakland. He started out working on the line, and quickly advanced to Operations Manager. Now, the company is one of the fastest growing inner- city businesses in the country, and Mauricio has hired and manages dozens of people from his community. It is not difficult to imagine how, with increased investment in similarly positioned companies, collectively, thousands of small businesses across the country have the capacity to generate millions of good jobs.
2. Innovate with capital. Our unique model offers entrepreneurs a one-stop shop for their capital and growth needs. We are high-touch investors with robust reach and expertise in a broad range of financing disciplines. And, we are using this knowledge to tailor creative capital strategies from identifying businesses’ funding needs to structuring funding packages. Financial products include equity, senior debt, subordinated debt, and convertible debt with creative structures and collaboration with capital providers.
We are able to make these types of investments in part because we are structured as a non-profit with a for-profit engine. We leverage philanthropic capital in the form of major donations, major grants, recoverable grants, and Program Related Investments (“PRIs”) to provide expansion capital to growing enterprises poised to create good jobs.
Because of the flexibility that this focus and structure provides, we can properly structure financing that reflects the uses of the funds, and eventually ‘graduate’ companies to relationships with more traditional financial institutions. This process is strengthened by the fact that, alongside each investment, ICA provides hands-on support that minimizes overhead and directly impacts the bottom line.
And, we believe that our financial success will both further our impact goals over the long term and validate an innovative approach for the philanthropic community to double down on its giving and investing. Despite the energy around the emerging domestic impact investing field, much work remains to be done to establish the rigor and discipline that investors expect when it comes to measuring impact. We measure impact in terms of good jobs created AND in terms of financial return. With mission-focused investing today, the mission is often challenged by the norms in our sector. As Penelope Douglas, Chair of the Board of SOCAP and one of the pioneers in this space once said to me: “You have to be brutally disciplined in your desired outcomes to manage this tension for the benefit of your stakeholders. And, the more specific and disciplined you are, the more effective you will be in pushing others to think differently.” That is what we are committed to doing—challenging the status quo and driving the field to look beyond what exists to imagine what is possible for growing opportunity and building connections so that the people who need it most can access it.
3. Build on and accelerate innovation. With a learning orientation, listening is an inherent part of our DNA. We convene and connect a diverse group of public, private, and philanthropic partners; as well as ensuring that community voice is heard. So, our new innovative model is the culmination of the coming together of a multitude of perspectives. Our ‘customers’ are the entrepreneurs we work with and our ‘consumers’ are people in need of good jobs. Other partners and advisors include leading thinkers and innovators in the areas of impact investing, workforce development, job creation, finance, and philanthropy, among other fields.
And, while we have a regional scope—focusing our initial efforts on the nine-county San Francisco Bay Area—we are also focused on sharing lessons and best practices from our work in order to accelerate innovation nationally, and to learning from others. We have already started to hear from other communities interested in understanding our approach so that they can adapt it for their local contexts.
The time to change the conversation about jobs is now, and that conversation must be about how to create jobs and how to ensure that there is equitable access. We all know too well the challenges that we face as communities and as a nation. We do not have the solution, but we are committed to holding ourselves accountable for a piece of the puzzle. What we are seeing through our work and through the work of others is that the solutions, if we all work together, are well within reach.
Sean Daniel Murphy is President and Managing Director of Fund Good Jobs