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Executive Overview

One of the most transformative stories of the last 25 years in America is the growth of the social entrepreneurship movement. Like the tech industry, but with less fanfare, entrepreneurial problem solvers have developed powerful ideas, tools, organizations, and movements that have unlocked opportunity for millions and pointed the way towards solving some of our biggest systemic social problems in the next quarter century. Yet, achieving impact at scale bedevils changemakers. Because there is no dynamic, efficient capital market -- public or private -- for social innovation, too many approaches that could create systemic change remain sub-scale. Drawing on 20 years of experience working with more than 50 social entrepreneur-led organizations and initiatives, New Profit has developed a perspective on what it will take to create this market. It involves upending some of the conventions that have prevailed in philanthropy for decades.

Shrimp Meal and the Question of Scale 

In 1996, while I (Vanessa) was traveling around the world interviewing social entrepreneurs, I stopped in a rural village in Vietnam. We were there to meet a mother who had developed a powerful way to drive down infant mortality by supplementing a baby’s diet with ground shrimp. 

Our interview and the experience were moving, because the positive effects on the village were so dramatic. What happened shortly after we left changed the course of my life. Several miles down the road, we stopped at another village where, similarly to so many other places we’d visited, including the village we had just come from, we saw Coca-Cola’s iconic logo calling out to us from walls and tiny storefronts. But, we soon found out, the shrimp meal solution was missing and babies were dying at a rate alarmingly higher than just a few miles away. 

The question that I almost screamed to myself at the time was, “Why don’t the best social innovations scale like companies and commercial innovations do?” 

One key element of the answer is that social impact has no dynamic capital market behind it to incentivize competition and innovation, respond to demand for great solutions, and lift-up those that maximize impact. 

Barriers to Spreading Social Innovation

In the late 90’s, when we founded New Profit, philanthropy was operating more or less the same way it had been for one hundred years (and often still does). A few longstanding organizations had achieved national scale, while the vast majority of nonprofits never came close to crossing the $1 million revenue threshold. Funders were not focused enough on directing resources to the approaches that could get the greatest results, or on systems change approaches, where the true possibility of impact at scale lays. Grantmaking was almost entirely focused on programs and services (“buy” resources), rather than sustainable capacity building (“build” resources). Innovation was lagging. Taken together, these dynamics left a big gap between funders’ enormous ambitions and the results they were able to achieve. 

We dove into those gaps with a venture philanthropy model that prioritized providing social entrepreneurs developing promising models with unrestricted capacity building capital and strategic support to help them grow their organizations and take aim at larger systems within which they operated. Over 20 years of close-in, collaborative work with more than 50 social entrepreneur-led organizations – like Teach For America, KIPP, BELL, Year Up, Health Leads, First Place for Youth, Girl Trek, and others – we have learned a lot and built on that model, arriving at a vision for creating the dynamic, efficient market needed to unleash social innovation.  

New Profit Guarantees

The Dynamic, Efficient Market Vision

At its most elemental, a functioning market would direct resources to the highest value (read: highest impact) approaches. While we have seen some progress in this direction in philanthropy over the last couple of decades, a gap still exists. For example, we see many funders taking a “fund what works” principle too narrowly as a way to focus resources on point solutions or individual organizations. This runs the risk of reinforcing the more perverse conventions of philanthropy we mentioned above that are holding back scaled impact, such as over-capitalizing programs while starving organizations for capacity building dollars. A more recent learning reveals two other risks: paying insufficient attention to the demand side of the equation, which may not reflect the views of the people or communities the innovations are in theory to serve; and assuming solutions at scale will come from organizations at scale, rather than from a portfolio of approaches that compete with, learn from, and build off each other. 

To bring about dynamic, efficient markets for social impact, we have a four-part plan of action. 

 

Action Areas

Make More ‘Build’ Capital Available

Organizations seeking to scale their impact -- whether through direct growth or systems-change levers -- need appropriately staged growth, or “build,” capital to establish and grow their capabilities (strategy, talent, skills, infrastructure, improved performance), not just revenue to fund their program(s). But the vast majority of funders still exclusively provide restricted dollars for the latter. Without an adequate supply of build capital, even the most promising approaches can’t get to scaled impact, or even invest in the capabilities to ensure they are delivering the most value to their stakeholders.

We seek to increase the proportion of build capital that funders provide, while significantly shifting funders’ awareness of the difference between the two types of capital, the structure and duration of these types of grants, the implications for measurement and evaluation, and the potential for outcome of this approach to philanthropy. 

Vanessa experienced the distinction first hand when she had the opportunity to dramatically grow Public Allies, the national service nonprofit she founded before New Profit. She had public resources to expand the program to enable many more young leaders to serve, but she couldn’t find funders to provide the resources to develop the infrastructure and capabilities to run the organization at a larger scale. Philanthropic funders just wanted to provide her with more program dollars, rather than complementing government funding with growth capital to build new management systems or expand her team. As as a result, she couldn’t grow Public Allies as large or as quickly -- and her funding partners -- aspired. 

Compete Based on Outcomes, Incentivize Innovation

Funding in the social sector currently relies primarily on inputs and outputs rather than on outcomes, which means that demonstrated, research-based effectiveness and efficiency is rarely the driver of decision making that it must be for sustainable change to happen. 

If organizations competed for resources on the basis of outcomes, a deeper, more transparent conversation about critical questions would occur: Which outcomes matter, and to whom? What are the standards of performance (and, again, set by whom)? Ultimately these questions would themselves open up the possibility of more efficient, effective use of resources, thereby motivating innovation and ongoing adaptation. It’s worth noting that these questions would also open up a conversation about equity and inclusion in the sector itself (explained below). 

As a further consequence of competing for resources on the basis of outcomes, investments in research and evaluation would become more commonplace and more responsive to the information needs of the marketplace One of our core areas of work is helping organizations build stronger measurement and evaluation approaches and communicate them to their networks, including funders. 

Our portfolio organizations are achieving progress building their evaluation rigor and evidence base. Out of 43 current and alumni organizations, 19 organizations (44 percent) have high-rigor evidence, 13 organizations (30 percent) have moderate-rigor evidence, and 11 organizations (26 percent) have low-rigor basic evidence. Since 2013, New Profit has provided measurement and evaluation support to over two-thirds of the portfolio. 

Capitalize Diverse Leaders and Organizations

The social sector needs to invest more of all forms of capital (financial, intellectual, social, and political) in diverse leaders and their organizations, which are often closest to the problems we confront and the communities that have the biggest stake in solving them. Making change sustainable demands devolving agency closer to the ground, but too often, the notion that there is a lack of diverse talent within the social impact sector becomes a barrier to action. We reject that premise. A greater diversity of leaders -- especially those emerging from the communities they serve -- will contribute a broader array of solutions, potentially more responsive to the needs of communities. As well, new solutions that are locally owned may be taken up more quickly and be more sustainable over time.

We were reminded recently in a funder-partner meeting that, for all the interest in diversity, equity, and inclusion in philanthropy, social entrepreneurs of color have an incredibly hard time raising money and connecting to funding networks. In launching New Profit’s three-part Accelerator program for women social entrepreneurs, social entrepreneurs of color, and social entrepreneurs deeply affected by the criminal justice system, we address this challenge head-on by going outside of our network to find new leaders to support. We found more than one hundred great, emerging organizations and proved to ourselves that a lack of talent is definitely not what’s holding back progress. 

Advance System Entrepreneurs

Scaling up individual programs or organizations can’t, by itself, ensure that results get delivered sustainably and at large scale. These kinds of approaches sit inside systems that are not reshaped by virtue of improvements in pockets. That's why advances in individual components will never, by themselves, deliver sustained, large-scale change. A new class of leader, known as a system entrepreneurs, are driving solutions that address a problem for an entire population by re-arranging how a system (e.g. a school district, a healthcare delivery network) operates.   

Today’s frequent focus on organization-level metrics alone often plays out in ways that conspire against approaches that can create systemic change. The most powerful market for solutions would be one that includes systems approaches alongside programs and organizations and would reward the creation of partnerships, platforms, and policies that define what systems produce. 

A vignette from our longtime partner Rebecca Onie, co-founder and CEO of Health Leads, puts some of this thinking into perspective:

[Systems thinking] is about being relentlessly honest with ourselves about how close we are or are not to actually solving the challenges that we talk about in the room. Our work began as a direct service model [with help desks in health clinics]. When we first started with New Profit, from 2010 to 2014, we more than doubled the number of patients that we served while more than quadrupling the number of successful resource connections we made. But we started to hear from the health care system “we do not want more Health Leads desks.” We literally tore our plan up…and created a new approach that was about about getting to a tipping point in which the Centers for Medicare and Medicaid Services, the largest purchaser of health care in the world, [starts paying] for the health care system to address patients’ social needs. That involves a methodical approach bringing together policy and regulatory work, partnerships, public awareness outreach, community engagement, and our on-the-ground programs. 

Making the Market Work

These approaches largely represent the opposite of convention in philanthropy, which we’ve been working for 20 years to upend in many ways. We are under no illusions about the challenges involved in executing against them, but what leaves us optimistic about their potential, both alone and together, is the fact that a relatively simple change in mindset among funders especially could lead to real breakthrough change. 

It is no surprise that in 2017, Forbes Magazine named Boston as the top U.S. city for social entrepreneurs.1 As attorneys at Mintz Levin,2 a mainstay of the Boston community for more than 80 years, we have had the honor to engage with a thriving regional ecosystem of public and private sector actors supporting companies making a positive impact. 

We also have learned – through serving our clients and our own entrepreneurial experiences – that starting and scaling, or successfully investing in, a profitable mission-driven business is a challenging endeavor. Social entrepreneurs and impact investors must navigate a gauntlet of business, legal, and cultural hurdles while also attempting to simultaneously generate positive financial, social, and environmental returns.3 In the context of this exciting, multifaceted sector, attorneys are uniquely positioned to serve as invaluable advocates, translators, protectors, and connectors.

Social Enterprises

From Mintz Levin’s founding commitment to community service and social justice4 to the launch of our pioneering Energy & Sustainability Practice in 20045 to the present day, the firm has served hundreds of high-growth ventures using market-driven, business-minded principles and tactics to stimulate social impact. We have helped these clients manage risk, overcome cultural and socioeconomic divides, broker catalytic financial and strategic partnerships, and prepare for and deliver long-term impact and impressive financial returns. Two strategies anchor our approach: 

First, we draw on the firm’s deep experience and success in counseling founders, companies, and venture capitalists and other investors through all growth stages – from formation to early- or seed-stage investments through subsequent multi-investor and late-stage financings, acquisitions, and IPOs.6

Second, we take a collaborative, empathetic approach, which includes (a) spending time in the target community and/or with the company’s customers and partners to understand their motivations and viewpoints; (b) spending time with a company’s leaders to understand how they plan to balance social and financial objectives; (c) leaning into the firm’s nimble, entrepreneurial culture to develop tailored, straight-forward strategies and solutions; and (4) simply being inspired by the grit, determination, and impact of our remarkable clients. For example: 

  • Ayzh develops low-cost birthing kits for under-resourced clinics in India, the Middle East, and East Africa, supporting the health of mothers and newborns.7  
  • Seventh Generation develops and distributes sustainable products and is a leading advocate for the conservation of natural resources.8 In 2016, Seventh Generation was acquired by Unilever in a groundbreaking transaction.9,10  
  • Cambrian Innovation solves critical water, wastewater, and energy management challenges for industrial producers.11  
  • Sanergy builds hygienic and affordable toilet operators in informal urban settlements in Kenya and processes the resulting human waste into useful end-products such as organic fertilizer, insect-based animal feed, and renewable energy.12 
  • Intarcia Therapeutics partnered with the Bill & Melinda Gates Foundation to develop the first once- or twice-yearly anti-HIV prophylactic therapy to prevent the spread of HIV in Sub-Saharan Africa and other countries.13  
  • Skillist connects America’s workforce with the millions of high-paying positions that require more than a high school diploma but less than a four-year degree.14 

Impact Investing

Mission-driven organizations, like more traditional high-growth private sector companies, often require investment capital to survive and scale, and we partner with a variety of impact investors strategically investing to generate financial, social, and environmental returns.15 Along the way, they are positively influencing the investment world.16  By the start of 2016, for instance, nearly $9 trillion – or approximately one out of every five dollars under professional management in the United States – had been invested in sustainable and impact investments.17 Enthusiasm around the notion of combining profits and purpose is at unpreceded levels,18 powered in part by the tremendous influence of millennials and women.19  

The financial giants of the world have taken notice.20 For example, Goldman Sachs acquired the first impact investment firm, Imprint Capital,21 while BlackRock, the world’s biggest asset manager, launched an Impact division.22  These firms are sending the world a vital message about impact investing’s potential: this is not just about feeling good, it is also about generating significant, long-term profits for companies and investors.23 

Not surprisingly, Boston is home to many impact investing leaders.24 In 2016, Bain Capital launched Bain Capital Double Impact, a firm client.25  Led by former Massachusetts Governor Deval Patrick, Double Impact made its first two investments in July 2017: Living Earth, one of the largest commercial recyclers of organic landscaping materials in the United States, and Impact Fitness, a Planet Fitness franchisee promoting healthy lifestyles in underserved communities.26   

The greater Boston area is packed with hundreds of other investment firms, financial institutions and wealth advisors innovating in the impact investing space, including Pathstone Federal Street Advisors,27 Spring Lane Capital,28 Brown Advisory,29 Athena Capital Advisors,30 Blue Haven Initiative,31 Trillium Asset Management,32 Baldwin Brothers,33 Brekinridge Capital Advisors,34 Zevin Asset Management,35 Stance Capital,36 Boston Common Asset Management,37 and more.

Utilizing its same anchoring strategies for social enterprises, Mintz Levin helps impact investors align values and objectives, set performance expectations, connect with the right companies and develop unique, workable, profitable investment structures and products. 

Contributing to the Social Innovation Ecosystem

While social innovation is thriving, it will succeed in the long run only through widespread collaboration and transparency. That is why Mintz Levin spends considerable time and resources supporting the ecosystem.

For example, we serve as the exclusive legal mentor for the Hult Prize, which challenges university students from more than one hundred countries to develop bold, market-based approaches to significant issues faced by billions of people.38 In 2017, BuuPass, a centralized digital marketplace in Kenya, won the entire competition.39 Now a firm client, BuuPass enables travelers to book and pay for their intercity bus tickets cash-free via SMS and online, and is aiming to democratize Africa’s public transportation network through increased transparency and accessibility.40 

We also proactively share our experiences and insights at a wide variety of schools, conferences, and incubators – including Harvard’s Innovation Lab,41 MassChallenge,42 Harvard College’s Impact Investing Group,43 the New England Impact Investing Initiative,44 and the Impact Capitalism Summit45 – and serve as judges and mentors at Harvard Business School’s New Venture Competition,46 Boston College’s Venture Competition,47 Cleantech Open Northeast,48 and the MIT Clean Energy Prize.49 We are also members of The Global Impact Investing Network, an organization dedicated to increasing the scale and effectiveness of impact investing.50 And we regularly publish our insights through the firm’s digital channels,51 including Mintz Edge52 and our Energy & Sustainability Newsletter.53

Perhaps most importantly, we are committed to galvanizing a community of legal practitioners – particularly the next generation of lawyers – to use their skills and enthusiasm to make a positive impact in the world. We guest lecture at law schools and regularly mentor law students and young lawyers, and we are members of the rapidly-growing Impact Investing Legal Working Group, a national group of lawyers representing a diverse array of impact investors, social enterprises, law firms, nonprofit organizations, foundations, and academic institutions.54  

Standing alongside every great social entrepreneur and impact investor is a lawyer identifying and solving problems and providing experienced guidance and unrelenting support. Together, we can grow social innovation to new heights in Boston and beyond.  

Author Bios

Kristin Gerber

Kristin is a corporate attorney at Mintz Levin in Boston, where she focuses on corporate finance matters including mergers and acquisitions, venture capital, private equity, and technology transfers. She counsels social enterprise companies, impact investors, and nonprofit companies with respect to complex corporate structures, governance and sustainability, impact metrics, financings and grant development, strategic alliances, and commercial contracts. Kristin is heavily involved in the start-up community in Boston and regularly advises and mentors young companies and entrepreneurs regarding the legal and business issues that they face. She received a BSBA in Finance, Economics from Creighton University and a J.D. from Boston College. Kristin is recognized as a “Rising Star” for Corporate/Business by Massachusetts Super Lawyers.

Benjamin Stone

Ben is a corporate attorney at Mintz Levin in Boston, where he counsels early-stage and emerging companies across a range of industries in a variety of transactions and corporate matters. Ben previously served as Managing Director & General Counsel of MCE Social Capital, an impact investment firm that finances businesses concentrating on clean energy, sustainable agriculture, and financial inclusion in more than 35 countries. Prior to MCE Social Capital, Ben served as Director of Start-Up Development at American Express and started Indego Africa, a lifestyle brand and social enterprise that provides more than 1,500 female entrepreneurs in Rwanda and Ghana with access to global markets and business education. Ben launched his career as a litigation attorney at an international law firm in NYC. Ben received a B.A. in English Literature from Washington University in St. Louis, a J.D. from New York University School of Law, and completed the Stanford Graduate School of Business Executive Program in Social Entrepreneurship. Ben is a regular public speaker on law, entrepreneurship, and innovation; serves as a Term Member at the Council on Foreign Relations; and in 2016 was recognized by the Association of Corporate Counsel as a “Top Ten 30-Something.”

Footnotes

1/ Elizabeth MacBride, “Boston Leads The Top 21 Cities For Social Entrepreneurs,” Forbes Magazine, August 24, 2017, Link

2/ “Mintz Levin Cohn Ferris Glovsky and Popeo PC,” accessed October 2017, Link

3/ Benjamin D. Stone, “Navigating Tensions in Social Enterprise,” Council of Foreign Relations Development Channel, February 27, 2014, Link

4/ “Pro Bono,” Mintz.com, accessed October 2017, Link and “Community Service,” Mintz.com, accessed October 2017, Link

5/ “Energy & Sustainability,” Mintz.com, accessed October 2017, Link

6/ “Venture Capital & Emerging Companies,” Mintz.com, accessed October 2017, Link

7/ “Ayzh,” accessed October 2017, Link

8/ “Seventh Generation,” accessed October 2017, Link

9/ Jay Coen Gilbert, “How to Sell Without Selling Out,” September 20, 2016, Link

10/ John Battelle, “What Everyone Missed in the Unilever/Seventh Generation Deal,” September 20, 2016, Link

11/ “Cambrian Innovation,” accessed October 2017, Link

12/ “Sanergy,” accessed October 2017, Link

13/ “A New Collaboration for HIV Prevention,” accessed October 2017, Link

14/ “Skillist,” accessed October 2017, Link

15/ “What You Need to Know about Impact Investing,” The GIIN, accessed October 2017. Link

16/ “Impact Investing Inches from Niche to Mainstream,” The Economist, January 5, 2017, hLink

17/ Amy Bennet, “Impact Investing: Five Trends Advisors Need To Know,” Wealth Management, October 5, 2017, Link  

18/ “Profit & Purpose,” accessed October 2017, Link

19/ Clouse, Carol J., “Impact Investing Grows, Led By Women And Millennials,” Financial Advisor, June 13, 2017, Link

20/ Avisheh Avini, “Impact Investing: Doing Well by Doing Good,” accessed October 2017, Link

21/ “Goldman Sachs Asset Management: Environmental Market Opportunities,” Goldman Sachs, accessed October 20, 2017, Link

22/ “Sustainable Investing,” accessed October 2017, Link

23/ “Impact Investing Inches from Niche to Mainstream,” The Economist, Jan. 5, 2017, Link

24/ Thomas Kostigen, “Boston: Impact Investing’s New Hub?” Financial Advisor, April 27, 2017, Link

25/ “Bain Capital Double Impact,” accessed October 2017, Link

26/ “Bain Capital Double Impact Announces First Two Investments,” Bain Capital, July 18, 2017, Link

27/ “Sustainable & Impact Investing,” accessed October 2017, Link  

28/ “Spring Lane Capital,” accessed October 2017, Link

29/ “Sustainable Investing,” accessed October 2017, Link

30/ “Impact Investing,” accessed October 2017, Link

31/ “Blue Haven Initiative,” accessed October 2017, Link

32/ “Trillium Asset Management,” accessed October 2017, Link

33/ “Sustainable Investment Management,” accessed October 2017, Link

34/ “Sustainable Strategies,” accessed October 2017, Link

35/ “What Socially Responsible Investing Means To Us,” accessed October 2017, Link

36/ “Stance Capital,” accessed October 2017, Link

37/ “Integrated ESG Investing,” accessed October 2017, Link

38/ “Mintz Levin to Serve as Hult Prize Legal Mentor,” June 23, 2017, Link

39/ “BuuPass,” accessed October 2017, Link

40/ Takahashi, S., “Access to Transport as an Equity Issue: Introducing BuuPass,” Medium, September 18, 2017, Link

41/ “Harvard Innovation Lab,” accessed October 2017, Link

42/ “MassChallenge Boston,” accessed October 2017, Link

43/ “Harvard College Impact Investing Group,” accessed October 2017, Link

44/ “New England Impact Investing Initiative,” accessed October 2017, Link 

45/ “Impact Capitalism Summit,” accessed October 2017, Link

46/ “New Venture Competition Social Enterprise Track,” accessed October 2017, Link

47/ “Venture Competitions,” accessed October 2017, Link

48/ “CleanTeach Open,” accessed October 2017, Link

49/ “MIT Clean Energy Prize 2017,” accessed October 2017, Link

50/ “Global Impact Investing Network,” accessed October 2017, Link

51/ “Social Media,” Mintz.com, accessed October 2017, Link

52/ “MintzEdge,” accessed October 2017, LInk

53/ “Energy & Sustainability: Legal Insights,” accessed October 2017, Link

54/ “Legal Issues in Impact Investing: U.S. and Abroad,” accessed October 2017, Link

Imagine being a job seeker and being able to meet a recruiter face to face early in the process. In 2017, when almost all initial steps in the job search process are done online, it’s hard to imagine, is it not? 

In this hyper-technological world, where smart phones and the internet have made job seeking largely impersonal, Morgan Memorial Goodwill Industries and Boston Career Link, the one-stop career center it operates, have found a way to bring employers and job seekers face-to-face. 

As a provider of labor exchange services in a society that is increasingly technology-based, Goodwill’s most important innovation has been orchestrating a strategy that leverages technology while creating a welcoming environment where individuals who face barriers to employment can meet with employers directly and early in the process. 

As the role of technology increased in the job search process, Boston Career Link responded by offering job seekers the tools they needed to apply online, from access to computers to training. The career center offers workshops on crafting and improving resumes as well as searching and applying for jobs online. It also offers a workshop on creating a LinkedIn profile so job seekers have a professional online presence. Yet, many jobseekers submitted hundreds of resumes online and were rejected without a chance to speak with a human being. It was discouraging.

In response, Boston Career Link figured out how to offer job seekers something that isn’t always as accessible as it once was: the opportunity to meet directly with employers who are hiring, to shake hands, and to put a face to an otherwise anonymous name. 

Why is this important or particularly innovative? Because people with barriers to employment often need a chance to tell their story in order be considered. In a state with one of the lowest unemployment rates in the country, it is critical that career services are offered in a way that engages the hardest to employ and connects them with openings. 

How does Goodwill do this? Simple. Goodwill puts people -- and social interaction -- at a premium. 

Boston Career Link engages hundreds of employers with available entry-level jobs to come on-site at Goodwill’s Roxbury headquarters in order to connect with candidates face to face. The employers are from a broad range of industries and include companies and organizations like Brigham and Women’s Hospital, Delta Air Lines, Eataly Boston, Mass Audiology, and Tufts University. 

As part of this process that values direct, social interaction, Boston Career Link offers job fairs, mass hiring events, and more than 215 employer-specific recruitment events annually. These events are key to Goodwill’s social approach to job search. They offer the best opportunity for job seekers who might have gaps in their work histories to meet directly with employer representatives. It is this model that has made Goodwill and Boston Career Link leaders in employer engagement and on-site recruitment among career centers across the Commonwealth of Massachusetts. 

Boston Career Link has always deployed job fairs, mass hiring events, and on-site recruitment events as a way to connect job seekers and employers. But in 2011, with unemployment decreasing steadily, Goodwill and the career center began to put greater emphasis on on-site recruitment events as the most effective way to connect the job seeker and the employer. 

The on-site recruitment events also served another purpose: they became an effective means for the career center to expand and enhance its base. As the model succeeded, the career center reached out to more and more employers and job seekers. This helped solidify Boston Career Link’s role as the career center that can best support employers in finding diverse candidates for entry-level jobs while helping individuals who are underserved find great opportunities.

Since its founding in 1895, Goodwill has been a leader in social innovation. It has always found a way to help those who need help the most. As an organization, it has held steadfast to the idea that people come first and direct, social interaction is the best way to create opportunity. Put another way: sometimes the most disruptive solution is the most basic one. In this case, it is a solution that balances technology with human relationships, engagement, and interactions. 

 

We were thrilled to host Federal Reserve Governor Brainard and her team for a tour of CommonWealth Kitchen last week and discussion of our work to build a just, equitable, regional food economy. 

Photo Credit: CWK Federal Reserve Board Governor Brainard!

Social innovators are working to address some of the most pressing challenges facing society --economic mobility, environmental resilience, community health, food insecurity, intergenerational poverty, and racial, social, and economic inequality. Rather than looking at each of these challenges in isolation, could a single innovative concept create a cascade of impact improving conditions across a multitude of vexing societal issues? That is what CommonWealth Kitchen (“CWK”) is working to figure out. Their platform? Food. Their innovation? A food business incubator and pioneering small-batch food manufacturing enterprise, working to build a just, equitable, resilient regional food economy. And their work is having impressive early results.

Enabling Innovation

CommonWealth Kitchen describes its core mission as working to close Greater Boston’s growing wealth divide by breaking down the barriers for low-income women, immigrants, and people of color to build viable food companies and create jobs with few barriers to entry as a means to generate assets and wealth, and break the cycle of poverty. To accomplish this work, CWK operates Greater Boston’s only food business incubator and food manufacturing social venture.

More than just a shared kitchen, CWK takes a deep, systems-based approach to comprehensive business and human capital development. CWK works closely with aspiring entrepreneurs from the very beginning to help them navigate the complex process of starting a food company --  assisting on topics like recipe development, permits, licenses, packaging, and market strategy. As the business gets going, CWK provides support in identifying and building a customer base, sourcing ingredients, ensuring safe food handling, finding employees, and accessing early stage capital. As companies add sales channels and distribution, CWK provides small-batch manufacturing services, so that the business owner can outsource production and focus on sales and brand building. As businesses become established, CWK connects them with a mix of retail, wholesale, and institutional markets, distributors, event planners, funders, and investors.

This comprehensive approach takes its cues from private equity firms who not only invest in portfolio companies, but also serve as mentors, advisors, and connectors. Similarly, CWK provides an extensive set of technical services, educational programs, coaching, and strategic partnerships to help its primarily women, immigrant, and minority-owned companies gain business and personal skills and secure the peer and industry networks necessary to build a viable business. 

Today, CWK provides kitchen facilities plus business and technical support to more than 50 wholesale and retail member companies -- 75 percent of which are owned by women and/or people of color, employing more than 140 people. CWK also orchestrates a supply network spanning more than  35 additional wholesalers, retailers, and farms through its manufacturing operation, and is engaged with more than 30 other aspiring businesses hoping to launch within three to six months. Since its 2009 inception, CWK has graduated more than 45 companies who are still in business, collectively creating nearly 500 jobs. Combined, CWK’s member companies and graduates generate more than $40 million/year in revenue. To support this work, the organization itself has grown by more than 450 percent in the last three years, with nearly 50 percent of its $2 million annual budget generated from kitchen operations. In 2015, CWK was named Boston’s Best Incubator by Boston Magazine and a “Game-Changer” by The Boston Globe. 

CWK’s innovative, systems-based approach to inclusive entrepreneurship and small business development has enormous potential for replication and scaling. The emergent model challenges notions of the education and background needed to launch and run a viable business;  the scale and timeline needed for success; the access required to leverage industry networks to achieve success; and the scope of services and infrastructure that should be included in building a high impact innovation within a complex ecosystem. As defined by the work of Purdue University’s Innovation and Leadership Studies Program, CWK’s model has the potential to be described as an enabling innovation.

Enabling innovations are technical or conceptual advances that drive change in a paradigm, and form the basis for a cascade of progressive activities that serve a broad array of purposes in multiple contexts, collectively driving tremendous cumulative impact (Sinfield and Solis, 2016). Effectively, enabling innovations form the foundation upon which multiple new innovations can happen.  

Building equity and opportunity in a complex ecosystem

Building an equitable, resilient business network within a complex ecosystem like food relies on creating a responsive chain of interconnected and interdependent activities, in which any weak link can break the system. Analysis of CWK’s work by the Purdue Innovation and Leadership Studies Program indicates there are at least 140 distinct links within the CWK system. They include all of the elements that must be true to identify and recruit promising business owners and help them home and develop their business concepts; to break down the myriad barriers faced by racially, socially, or economically disenfranchised populations; to support these aspiring business owners in developing the confidence, communication skills, business acumen, technical knowledge, and entrepreneurial mindset required for success; to effectively engage with key players and decision-makers all along the supply chain; to secure investment from traditional debt and equity players in an industry known for high failure rates and narrow margins; and to forge strategic partnerships with suppliers, distributors, purchasers, funders, regulators, government agencies, and community advocates in a closely aligned network.  

By weaving together all of these core elements, CWK’s work is creating a powerful multiplier effect of impact that reaches far beyond the individual incubator member companies and their employees. CWK’s work is beginning to increase food access in neighborhoods across the city. It is strengthening the regional food economy and diverting food surplus by expanding sales channels for farms. It is changing how large retail and institutional buyers are handling their purchasing, and how distributors think about onboarding and selling new companies and products. It is even creating a strong sense of place, community pride, and reinvestment in one of the lowest income neighborhoods of Boston. 

Building a Pathway to Equity, Access, and Opportunity

In pinpointing how and why CWK’s work has had such widespread early impact, it is instructive to understand the three interrelated systems managed by CWK: one that shapes and supports cultivation of the business and the entrepreneur; one that strengthens the infrastructure needed to start and scale successful food companies; and one that forges partnerships and builds peer and industry networks in which the fledgling business will operate. 

1. Shaping and Cultivating a Food Business

In working with its incubator member companies, CWK has learned that a critical element to sustained success is investing not only in developing a strong business concept but also investing in the human capital that drives it. No matter how great an idea might be, if the business owner does not have strong business fundamentals and technical knowledge, realizing sustained success is nearly impossible. Therefore, CWK works with aspiring companies on technical support such as recipe development, food costs, permits, packaging, shelf-life testing, safe food handling, and food flow plans. In parallel, CWK offers business and personal development workshops on topics including sales and marketing, negotiation strategies, HR, bookkeeping, debt and equity financing, and is expanding its coaching and mentoring program.

To complement the workshops, CWK also offers formal classroom training. For entrepreneurs who are brand new to the field, there is a 12-week food business start-up class offered in partnership with the Lawyers Committee for Civil Rights and Economic Justice. This fall, CWK is helping to launch a new “Cultivate Small Business” program, a new signature initiative from Santander Bank, in partnership with the Initiative for a Competitive Inner City and Babson College. The eight-month program is focused on working with existing food businesses to improve business fundamentals and provide access to industry advisors to build strong business fundamentals.

This intentional focus on industry-specific technical skills, traditional business skills, and personal development provide members with the transferable leadership skills, entrepreneurial thinking, and resilient problem-solving needed for sustained success. 

2. Building the Regional Food Manufacturing Infrastructure

A 2014 report by the Natural Resources Defense Council noted that U.S. food production accounts for 50 percent of land use, 10 percent of energy consumption, and 80 percent of fresh water use. Despite this enormous resource investment, the USDA estimates that more than  40 percent of all food produced in the U.S. is thrown out, including nearly 30 percent of all fruits and vegetables. This equates to more than $165 billion of food waste each year, and accounts for more than  16 percent of US methane emissions. 

A major factor contributing to this inefficiency and waste of natural resources is that the current consolidated food system relies on immense, centralized networks for aggregation, processing, and distribution of consistent, uniform products. The supply chain is not set up to be nimble, work with smaller volumes or unpredictable crops, manage inconsistent processing runs, or quickly respond to fluctuations for drought, surplus, consumer demand, or seasonality. This inefficiency leads to enormous waste, and leaves many farms, food producers, and low-income consumers struggling for access.  

CWK’s food manufacturing social venture is playing an increasingly pivotal role in filling this gap. Initially launched to help incubator companies efficiently scale production, CWK’s manufacturing operation has quickly become an integral part of CWK’s network-building model. The service fills a critical gap for farms with perishable ingredients in search of markets; restaurants struggling to find labor to keep up with back-of-the-house production; producers looking for low cost ways to do rapid market testing, and institutional buyers looking to increase local sourcing. In any given week, CWK’s production staff produces everything from salsa, veggie burgers and cookies, to sauces and juices for member businesses; value-added products for regional farms; custom products for restaurants and institutional buyers; and product development for a wide range of food companies, including several focused on addressing the enormous food waste challenge. 

In order to keep up with this demand, CWK’s business model requires flexibility and dexterity in scheduling, enormous attention to detail in production and packaging, partial automation, and a team trained in food safety. The initiative allows CWK to meet its mission goal of building viable food businesses, while forging deep connections all along the supply chain. The result is a rapidly growing cascade of impacts across the regional food ecosystem. 

3. Creating an Inclusive Business Network 

A final critical element in the success of CWK’s work is its ability to build collaborative networks and forge strategic partnerships all along the supply chain. With more than 50 diverse member companies, integrated with its own rapidly growing manufacturing services, CWK has been able to attract interest from a range of retail and wholesale buyers and distributors, including Whole Foods, Harvard University, Partners Healthcare, Eataly, and Sysco, all looking to meet consumer demand for authentic, ethnically diverse, minimally-processed food options. As CWK builds these market opportunities for its members, it is seeing growing interest from a range of mission-based lenders and impact investors interested in collaborating in order to build their pipeline, as well as small business training providers looking to connect. 

Similarly, through a range of value-added processing services, CWK is building strong collaborations with regional farms, aggregators, and food rescue organizations, which has led to an increased advocacy role with city and state government around food policy planning and regulatory matters. This broad spectrum of collaborations and strategic partnerships is providing CWK with an enormously powerful platform on which to deepen its efforts to build an inclusive, equitable, resilient, regional food economy that works for everyone. 

Looking Ahead

Through its complex systems approach to food business development, CWK is quickly building a powerful road map for comprehensive social innovation that is showing signs of the “cascade of impact” that stems from true enabling innovations. As CWK continues to iterate and formalize this exciting new model, the multiplier effect is enormous: helping create viable minority and women-owned companies; generating assets and wealth in low-income communities; creating middle-skill urban manufacturing jobs; improving small farm viability; increasing access to minimally processed healthy food; diverting food waste; improving healthy food access; building a vibrant food business ecosystem; generating a reliable stream of earned income to ensure CWK’s long-term viability; creating a replicable, scalable model for urban food manufacturing; and building a road map for a just, equitable, inclusive regional food economy that works for everyone. 

Photo Credit: © chombosan / fotolia

Communities throughout the United States are facing unprecedented infrastructure challenges including compromised energy, water, and transportation systems. Unless addressed, decades of neglect and lack of investment will result in loss of business sales, reduced jobs and wages, and negative impacts to the country’s GDP.1 Federal, state, and local governments face a $1.4 trillion public funding gap to address infrastructure challenges -- and by 2040, this funding gap will be more than $5 trillion.2 Unlocking Private Capital to Finance Sustainable Infrastructure, a new report produced by Meister Consultants Group, Inc. for Environmental Defense Fund (EDF), presents a first-of-its kind Investment Design Framework that will help state and local governments catalyze private investment in sustainable infrastructure and fill these critical funding gaps.

The term “sustainable infrastructure” describes infrastructure that is built and managed to meet economic, environmental, and social goals.3 It can be applied to a wide variety of infrastructure sub-sectors including energy, transportation, waste, water, and stormwater management. Green infrastructure and natural infrastructure are types of sustainable infrastructure that use vegetation or other natural elements to provide critical services and meet infrastructure needs while providing a myriad of environmental and social co-benefits. These co-benefits have real monetary value, help create more cost-effective infrastructure solutions and enable governments to achieve multiple goals with limited resources. 

The measurement and monetization of environmental and social co-benefits bolsters the economic rationale for investments in sustainable infrastructure, attracts a wider pool of potential investors, and underpins the four elements of the Investment Design Framework:


Environmental impact bonds (EIB) address the core components of the Investment Design Framework and have emerged as an innovative financing mechanism that can increase the flow of private capital to sustainable infrastructure projects. Like the social impact bonds (SIBs) that preceded them, EIBs apply pay-for-success (PFS) financing to measure, monetize, and deliver positive environmental and social outcomes. EIBs can be used to pilot a new approach whose performance is viewed as uncertain or to scale-up a solution that has been tested on a small scale. Private investors participating in a PFS model provide the upfront capital needed for deploying these innovative solutions. Following deployment and program evaluation, the “payor,” the public agency or private institution that benefits from these solutions, makes payments to investors contingent on the achievement of agreed-upon outcomes of the program.

EIBs can be issued as true municipal bonds, either as general obligation or as revenue bonds, under the bonding authority of the issuing body. They can also be structured as a performance contract or loan that would not count against the debt capacity of the issuing body. EIBs can also be backed or “guaranteed” by a philanthropic organization that agrees to make part of the repayment to investors in the event that an intervention does not achieve its intended results. The involvement of such a philanthropic “backstop” can help provide assurance to investors in projects or interventions whose outcomes are viewed as riskier. By distributing risk across a suite of capital providers, EIBs can be effective tools for leveraging public and philanthropic capital to mobilize private investment.

The DC Water and Sewer Authority (DC Water) pioneered the environmental impact bond approach in 2016 with a $25 million issuance to finance deployment of green infrastructure projects (e.g., permeable pavement and bioretention) on 20 acres of parkland in Washington, D.C. Because the performance of green infrastructure was viewed as uncertain, DC Water chose this approach to observe the outcomes of the projects before deploying their broader 360+ acre green infrastructure investment strategy. The EIB was issued as a private placement bond with Goldman Sachs and Calvert Foundation as the investors. The EIB includes performance tiers that tie outcomes to the payments that these investors receive: if the green infrastructure significantly underperforms, the investors will receive an interest rate close to zero, and if the green infrastructure performs significantly above expectations, they receive a higher interest rate.Other communities are beginning to look at EIBs and PFS as a model for financing a variety of sustainable infrastructure projects. Eight states, Washington D.C., and several local governments have already enacted enabling legislation, while many more jurisdictions are considering similar policies.5  

In June 2017, Louisiana passed legislation that authorizes the Coastal Protection and Restoration Authority (CPRA) to use PFS. With support from NatureVest’s new Conservation Investment Accelerator Program, the conservation investing unit of The Nature Conservancy, EDF is working with CPRA and Quantified Ventures to develop the nation’s first coastal resiliency-focused EIB. The Louisiana Coastal Wetland Restoration and Resilience Environmental Impact Bond aims to bring public, private, and non-profit resources together to accelerate Louisiana’s coastal restoration and resiliency plans.

Massachusetts is well positioned to explore the use of EIBs and PFS to support innovative sustainable infrastructure solutions. The state was a pioneer of PFS and social impact bonds, having passed the first PFS-enabling legislation in 2012. The law’s broad scope does not specify specific sectors or structures, allowing PFS to be used for a wide range of activities.6

EIBs can be a valuable tool to support Climate Ready Boston, the city’s ongoing initiative to help Boston plan for the future impacts of climate change.7 The city’s new report, Coastal Resilience Solutions for East Boston and Charlestown, identifies a wide variety of open space strategies that will help mitigate the risks of coastal flooding and sea level rise. Strategies like the development of elevated waterfront parks and plazas, or the creation of nature-based features like marshes, living shorelines, wetland terraces, etc., could be piloted with environmental impact bonds, allowing the city to evaluate the strategies’ efficacy before making commitments at a larger scale.

Unlocking the scale of private capital needed to satisfy current and future infrastructure demands requires active partnership and collaboration between the public and private sectors, as well as support from non-profits and the philanthropic community. Sustainable infrastructure can help to right-size demand by providing economic, environmental, and social benefits in a comprehensive, cost-effective manner. Environmental impact bonds represent a multi-sectoral financing mechanism to support innovative infrastructure solutions. Sustainable infrastructure that grows the economy, supports local jobs, supports social equity, reduces pollution, and protects communities from the impacts of climate change is critical to the continued vitality of the United States. With the public and private sector working together and investing in critical sustainable infrastructure, the U.S. can once again become a leader in infrastructure and create a more livable future for all.

Author Bios 

Namrita Kapur

Namrita Kapur, Managing Director - EDF+Business, leads EDF’s Sustainable Finance Team. With expertise in developing corporate partnerships that accelerate corporate innovation, she works on clearing barriers so as to attract private capital to support ecosystem resiliency, as well as sustainably managed fisheries, endangered species habitat, zero deforestation, and energy efficiency. Namrita has designed and executed initiatives for leveraging capital markets in the United States and abroad. Prior to joining EDF, Namrita played an integral role in establishing the strategy and developing the infrastructure of Root Capital, a social investment fund pioneering finance in rural communities in the developing world. Namrita has an M.B.A. from the Yale School of Management, an M.A. in Environmental Management, Yale School of Forestry and Environmental Studies, and currently serves on the Finance Committee for the Board of the Environmental League of Massachusetts and on the Advisory Board of the Sustainability Accounting Standards Board.

Dakota Gangi

Dakota develops and integrates sustainable finance strategies across EDF’s core program areas (Climate & Energy, Oceans, Ecosystems, and Health). Drawing from his background in environmental, social, and governance (ESG) performance analysis, sustainability management, and stakeholder engagement, he has designed tools for investors to improve their capacity to engage with companies on environmental performance. He works directly with EDF project managers to identify opportunities for leveraging the private capital markets to accelerate progress against EDF’s Blueprint 2020 goals. Prior to joining EDF, and as a member of CDP’s Investor Initiative team (formerly the Carbon Disclosure Project), Dakota worked with North American investors to improve their capacity to integrate ESG data into the investment decision-making process. Dakota has a MSc. in Sustainability Management from Columbia University and a B.A. in Environmental Studies from Binghamton University (SUNY). He is also a 2018 Level III candidate in the CFA program and a Fundamentals of Sustainable Accounting (FSA) Credential Level II candidate.

Footnotes

1 American Society of Civil Engineers (ASCE), Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future, 4, Link.

2 ASCE, Failure to Act, 14.

3 New Climate Economy, The Sustainable Infrastructure Imperative: Financing for Better Growth and Development, Link.

4 “Environmental Impact Bond,” DC Water, Quantified Ventures, accessed October 25, 2017, Link

5 Perry Teicher, John Grossman, and Marcia Chong, Authorizing Pay for Success Projects: A Legislative Review and Model Pay for Success Legislation, (San Francisco: Third Sector Capital Partners, 2016), 5, Link.

6 Ibid.

7 "Climate Ready Boston," Boston.gov, Link.

September 2016 -- Boston Ujima Project members gather in Roxbury to celebrate and launch Ujima’s community-controlled economic ecosystem. 
Photo Credit: by Sarah Jacqz

How do we revitalize working class neighborhoods without allowing development to displace the communities who call those neighborhoods home? In the context of Boston’s development boom, this question invites no easy solutions.

One local group believes an answer lies with Boston’s working class communities themselves and is building a local pilot to prove it. Alongside Boston’s influx of new residents and private developers, Boston Ujima Project is charting a unique approach to economic development. By amplifying the voices of historically under-recognized communities, leveraging their knowledge of their own neighborhoods, and organizing the resources they need to grow community ownership and wealth, Ujima is helping to build a more inclusive future for Boston.

Ujima’s approach to neighborhood economic development builds on decades of grassroots efforts to stabilize, support, and grow the power of Boston’s working class communities of color. Designed by a team of grassroots leaders, Ujima’s cooperative economics infrastructure melds community organizing with three stages of economic growth: raising capital, neighborhood planning, and community investing for economic development.

The pilot is part of Ujima’s larger vision for how to create an inclusive economy for all. By fostering a democratic culture and building new democratic infrastructure, Ujima plans to model a local economy that is, by design, more accountable to working class communities of color than to the wealthy investors and developers that drive our economy today.

In the sections below, we explore three of the innovations underlying Boston Ujima Project’s cooperative economics infrastructure.

Part I: Raising Capital

Ujima’s Fund for Community Investors

In addition to providing necessary capital, investors can often influence agendas and decision-making, both directly and indirectly. In recognition of the many roles that capital providers can play, Ujima is part of a larger movement to expand access to investing to everyone. By lowering the barriers to invest, we can diversify ownership and stakeholdership in companies and in the neighborhoods where those companies operate. In 2018, Ujima will launch a Community Capital Fund that allows local community members, including youth, to invest as little as $50 in the Fund and to help decide where in Boston the crowdfunded dollars should go.

Crowdfunding for grant and debt financing was popularized by websites like Kiva and Kickstarter, but it wasn’t until May 2016 that crowdfunded equity investing was made accessible by the passage of the Jumpstart Our Business Startups Act (JOBS Act) and Regulation Crowdfunding rules. The JOBS Act is intended to encourage funding for small businesses across the U.S. Its passage has enabled the rise of hundreds of online equity fundraising platforms such as Wefunder, which supports start-up businesses with a minimum investment amount of $100; Republic.co, which provides mission-oriented investor groups and allows for equity investments as low as $10 in a limited set of pre-vetted businesses; and Fundrise, which enables investments of $500 or more in private real estate projects.

While some crowdfunding websites highlight the civic benefits and social impacts of opening up debt and equity markets to the untapped world of small investors (one such platform is Neighborly, which has created an online debt market for Municipal Bonds, with a minimum of $5,000 investment), the equity investment crowdfunding sites more often advertise their impact as opening the doors of investing and empowering regular people to “shape social change and drive economic value” as angel investors, like Republic.co says on their website. Previous to the JOBS Act, only investors with a net worth of at least $1 million or $200,000 in annual income could gain the accreditation necessary to invest. Crowdfunding is indeed a new frontier in raising capital, deserving of the title, given by Goldman Sachs, of being “potentially the most disruptive” new model in finance today (The Future of Finance, Part III, March 2015. pg. 10).

Crowdfunding platforms enable a new generation of unaccredited investors to drive small business development, yet they preserve the fundamental relationship between the influence of the investor and the amount of capital they can afford to invest. If crowdfunding enables us to think of regular people’s investment choices as a vote for one start-up business over another -- and for the type of businesses they want to see in their neighborhood -- then, within the world of crowdfunding today, a single “vote” from an investor with $5,000 speaks as loudly as one hundred “votes” from individuals with only $50 to invest. Put simply, your voice is only as loud as your pocketbook allows.

Crowdfunding platforms suggest that the ability to invest can be as powerful as the right to vote, and Ujima seeks to take this democratic ideal one step further. Rather than adopting the finance paradigm, Ujima suggests that we draw our model of stakeholdership from our political system instead. Ujima’s Fund decouples the degree of each investor’s influence from the amount they have invested in the fund. Instead, every Boston resident who joins Ujima has an equal vote in where the Fund allocates its dollars, regardless of the amount of money they have invested. Non-Boston residents are also welcome to invest, but their investments do not come with decision-making power. Rather, their investments amplify the collective allocation decisions made by Boston voters.

Underlying Ujima’s model is the idea that, when it comes to the economic development of a neighborhood, the collective decisions made by local residents with stakes as both investors and neighbors can be more meaningful and better informed than an aggregation of individual decisions by outside investors. Those collective decisions should be informed not only by financial and investment expertise but also by an intimate knowledge of the local business landscape, competition and consumer market.

The question of what such a collective process could look like is explored next. 

Part II: Neighborhood Planning

Ujima’s Grassroots Assemblies and RFP Process

Ujima is working with the members and leaders of City Life/Vida Urbana, a Boston-based housing justice organization, and other local grassroots partners advocating for economic justice, including Black Economic Justice Institute and Matahari Women Workers’ Center. Together with these grassroots partners, Ujima is organizing assemblies in different neighborhoods to facilitate discussions and decisions about the type of economic development needed in each community.

The assemblies begin with a neighborhood planning process, informed by local planning regulations and economic data. Residents identify existing good businesses they would like Ujima to support, as well as businesses with harmful or extractive practices. Applying the intimate knowledge they have of their community, of their neighborhood’s geography and land use patterns, and of the needs and wishes of their family, friends, and neighbors, residents brainstorm the types of retail businesses, community infrastructure, and real estate projects they would like to help seed and succeed in their neighborhoods.

Ujima collects and analyzes the ideas generated in the neighborhood assemblies. In coordination with a group of local value-aligned entrepreneurs and small business owners, Ujima then issues Requests for Proposals (RFPs) to local entrepreneurs to address the business and development goals of each neighborhood. Applications are evaluated by an investment committee comprised of local mission-aligned investment professionals, and finalists are invited to present at a city-wide general assembly. Local business owners that are part of the Ujima Good Business Alliance can also apply for funding to strengthen their supply chains.

At the general assembly, residents from across the city gather to discuss the needs and interests of the different neighborhoods and to vote on the proposals that best address those needs and align with Good Business Standards developed by the Ujima membership. In addition to allocating capital, members also vote to award a variety of business support resources, including technical assistance, office space, and consumer organizing initiatives. This neighborhood investment process is refined and repeated, with adjustments, a few times a year.

The design of Ujima’s process draws lessons from models of participatory budgeting, also known as PB. PB is a civic innovation that originated in Porto Alegre, Brazil as an experiment in direct democracy at the municipal-scale. From the early 1990s to the mid-2000s, Porto Alegre’s annual city budget was debated and decided upon in an annual PB process involving open facilitated assemblies attended by thousands of residents. A smaller number of residents elected from each district of the city would analyze and systematize the information gathered in the assemblies in order to determine the allocation of city funds towards capital and cultural projects, from sewage and water infrastructure to public school facilities and public marketplaces. More than $160 million dollars were allocated via Porto Alegre’s PB process, accounting for up to 20 percent of the city’s annual budget each year. 

With time, Porto Alegre’s facilitated budgeting process and mass participation resulted in unprecedented health and quality-of-life outcomes, widespread civic engagement, transparent and accountable decision-making, and an equitable redistribution of municipal funds to the poorest districts of the city. Participatory budgeting has since been promoted by the World Bank and the United Nations Development Program as a global model for good city governance. More recently, it has been adopted, albeit at a much smaller scale and with inconsistent equity outcomes, by cities in the U.S. including Chicago, New York, and Boston.

Ujima draws on the experiences of these PB processes while centering a vision for an equitable and inclusive local economy. In Ujima’s participatory investment process, community members from Boston’s working class neighborhoods decide together how and when to invest collective capital and resources towards the health and wealth of their communities. The effectiveness of Ujima’s cooperative economics infrastructure builds on the participants’ specific knowledge and long relationship with their neighborhoods, resulting in investments that extend beyond financial interest into people’s love of community and place.

Ujima’s model of place-based investing for economic justice and social good is being built in partnership with a Boston-based impact investing firm. This partnership is explored in the final section.

Part III: Community Investing for an Inclusive Economy

Local impact investing fund Boston Impact Initiative (BII) is a co-founder of Ujima and itself on the leading edge of the social capital movement. BII is helping to shift the field of impact investing, or investing for social good, beyond traditional categories of Socially Responsible Investing/ESG, which take into consideration how environmental, social, and corporate governance influence the financial performance of an investment. While SRI/ESG are most prominent in the public equities space, Boston Impact Initiative has demonstrated a place-based investment thesis that moves capital from Wall Street to Main Street. 

With their initial $5 million pilot fund launched in 2013, BII has helped clarify the importance of local relational investors with the ability to offer a diversity of capital instruments that include planning grants, traditional debt, private equity, and convertible notes. Their integrated approach tailors capital to meet the needs of diverse enterprises at different stages of growth. 

As a place-based impact investor, BII has developed an inspiring portfolio of local companies that reflect BII’s investment criteria: ownership and governance structure (local, minority and employee-owned firms), environmental sustainability (cooperative relationships to ecology and community), and enterprise health.

Ujima’s growing portfolio overlaps with BII’s on a few local businesses that are modeling what community-driven accountable economic development can look like.

One example is the catering business Fresh Food Generation, which uses ingredients from local companies and farms in Boston and New England to bring fresh and nutritious Caribbean cuisine to neighborhoods with limited healthy food options. Co-founded by two food justice advocates who grew up locally in Roxbury and Somerville, FFG is committed to providing delicious meals that are both affordable and environmentally sustainable.

Taking another approach to expanding food access, the Dorchester Food Co-op is building a worker- and community-owned grocery store in the Dorchester neighborhood. The Co-op is funded and supported by more than 620 owner-members in addition to Ujima, BII and other non-voting investors. Dorchester Food Co-op plans to open their brick and mortar store in 2019. In the meantime, they host educational and cultural events, sell produce at farmers’ markets, and expand the community of supporters invested in their vision for healthy food access and quality job opportunities in Dorchester.

Ujima believes that it is local initiatives and leadership, like these examples above, that will help create a local economy that recirculates value, reinvests in community, and rebuilds wealth in Boston’s working class communities of color.  

Ujima’s cooperative economic infrastructure organizes the collective power of residents, businesses and investors to create the inclusive economy we need. To learn more about the Boston Ujima Project, visit www.ujimaboston.com.

Author Bio

Libbie Cohn

Libbie Cohn works as a researcher, filmmaker, and urban planner at the intersection of ecology and economy, with a focus on cooperative economics and democratic processes that advance racial and gender equity. She is a co-founder of Boston Ujima Project and holds a Master’s in City Planning from MIT.

Executive Summary

Solving the world's toughest social challenges requires everyone to be at the table. In this article, we present a case study from the City of Boston in which three partners, from the non-profit sector, the private sector, and the public sector, collaborated to design a smart city solution for helping the visually impaired to find and navigate bus stops within the public transportation system. The solution is an accessible smart phone micro-navigation application based on crowdsourced bus stop navigation clues and an IoT-enabled bus stop location and positioning system. The cross-sector partners included in the project are the Perkins School for the Blind, the Massachusetts Bay Transportation Authority (MBTA), and Raizlabs. The article outlines the critical success factors which were important for the success of this cross-sector collaboration.   

The Challenge

Imagine missing your bus, despite the fact that you were standing just 30 feet away from the bus stop -- all because you couldn’t see it. This is a real challenge faced by visually impaired Massachusetts Bay Transportation Authority (MBTA) commuters whenever they try to use the approximately 8,000 bus stops in the Boston metro area. A quote offered by a visually impaired MBTA commuter reflects the problem, “I try to use my cane to find bus stops but then usually ask people to double-check. Sometimes I miss my bus.” Dubbed the “last 30 feet of frustration”, the problem exists because current GPS navigation technology is only able to guide users to within a 30-foot radius of a precise destination. While this limitation does not pose a problem for the sighted commuter, for blind and visually impaired commuters these micro-navigation capabilities are critical. In response to this challenge, a cross-sector team from the Massachusetts Bay Transportation Authority (MBTA), Perkins School for the Blind, and Raizlabs envisioned and designed BlindWays, a micro-navigation solution which closes the GPS navigation gap, to bring commuters within a cane’s length of their precise destination

BlindWays Commuter 

The Solution -- Smart, Connected, Inclusive Cities

In Phase 1 of the BlindWays project, the team developed an accessible micro-navigation app and crowdsourcing platform that collects navigation clues, which are contributed via the app by both sighted and visually impaired citizens. Citizens can enter information about the location of any physical landmarks, such as trees, driveways, fire hydrants, or benches, which are situated close to the bus stop. The landmarks offer tangible, physical clues which help the blind commuter to navigate more precisely to the bus stop. The navigation clues enable the commuter to form a mental map of the landmarks that they may encounter as they travel toward or away from the stop. Through the BlindWays crowdsourcing platform, citizens have contributed physical landmark clues for approximately 5,300 of Boston’s 8,000 bus stops. In conjunction with the crowdsourced clues, the BlindWays app also leverages real time, predictive information on bus arrival times, data currently available through the MBTA system, which tells the user when the bus will arrive to the stop.  

In Phase 2 of the BlindWays project, the team is piloting the use of IoT (Internet of Things) technology for enabling micro-navigation. To do so, Bluetooth beacons are being mounted directly on the bus stops. The beacons enable the transmission of a location and positioning signal from the bus stop. As commuters approach the stop, once the beacon signal is detected, their phone switches from the distance estimates provided by the GPS navigation systems to the beacon distance estimates to facilitate more precise micro-navigation. The beacons transmit a signal to the app, which provides the commuter with information about their distance from the bus stop, via both verbal and vibrating notifications, as they move closer to or further away from the stop. While the crowdsourced navigation clues are subjective reference points entered by other commuters (e.g. “To the left of the stop there is a Bike Rack” or “Before the stop there is a fire hydrant”), because the beacons are mounted directly on the bus stop, they provide the commuter with an objective estimate of their distance from the bus stop. This feature augments the capabilities provided by the crowdsourced clues and enables the visually impaired commuter to get even closer to the bus stop.

Citizens can contribute navigation clues to BlindWays

Challenges and Critical Success Factors for Cross-Sector Collaboration

Social issues are complex problems which require cross-sector collaboration because they impact multiple stakeholders, because numerous organizations have partial responsibility for addressing the problem, and because no single sector has access to all the resources needed to solve the problem. However, while these collaborations hold the potential to generate significant shared value, they are also fraught with the potential for failure. Challenges include ideological clashes, contradictory organizational objectives, non-viable economic models of cooperation, and difficulties in the operational and logistical coordination. The partners in the BlindWays cross-sector collaboration found that three main factors were critical to the success of their partnership (Kania & Kramer, 2011):

  1. Common Mission
  2. Collaborative Process
  3. Complementary Resources 

Common Mission

Throughout the literature on cross-sector collaborations, the importance of all partners having a common mission and a shared vision of the goals and priorities of the partnership has consistently been highlighted as a critical success factor (Kania & Kramer, 2011). All three partners in the BlindWays project share a deep commitment to leveraging technology as a tool for social innovation and to creating inclusive and accessible cities and communities. Founded in 1829, Perkins is a non-profit organization and is the oldest school for the blind in the United States, which boasts Helen Keller as a past student.  The BlindWays project is led by Perkins Solutions, which is the division of Perkins School for the Blind which focuses on pursuing new opportunities for leveraging emerging technologies to help solve accessibility challenges for the visually impaired. Beyond their internal commitment to creating an inclusive and accessible society, in 2016 Perkins launched a public campaign called BlindNewWorld to promote its mission to create a more inclusive and accessible world for the visually impaired. The second partner, the Massachusetts Bay Transportation Authority (MBTA) believes that they have a commitment and an obligation to provide transportation services to one hundred percent of the population, regardless of physical ability. This commitment continues to be demonstrated by investments in their Program for Accessible Transportation Infrastructure (PATI) project, an initiative which falls under the MBTA’s Department of System-Wide Accessibility (SWA). The third partner, Raizlabs, has as its stated impact-driven mission: “To improve lives through design and technology.” Raizlabs lives out this mission by allowing employees to volunteer to be staffed on projects which align with their personal interests and values. As an example of Raizlab’s alignment with the project mission, in the BlindWays project one of the Raizlabs development team leads, who opted to work on the project, was himself legally blind. 

Collaborative Design Process

In cross-sector partnerships, the ability to coordinate activities through a joint problem-solving process is also a critical success factor. Every design process goes through three main stages: Inspiration, Ideation, and Implementation (Brown, 2008). In the BlindWays project, all three partners jointly participated in every stage of the design process, with each partner playing critical roles at various stages in the process. The key to the project’s success was that each partner was able to provide their unique expertise for various sets of activities, but did so in a coordinated fashion, so that the collective impact was greater than the sum of the individual parts. 

The inspiration stage of the design process focuses on needs-finding and involves immersion in a user community to discover an unmet need and understand the users’ problems and challenges. In the inspiration stage, Perkins School for the Blind, surfaced a challenge faced by their core constituents, the community of blind and visually impaired commuters. Perkins committed to identifying a solution that could be delivered within 18 months, and sought a systems development partner to help create the solution. Next, the ideation phase focuses on brainstorming new ideas and exploring possible solutions to resolve the challenge. In the ideation phase, Raizlabs, the private sector partner, provided the systems development expertise for the developing the proposed solution. Finally, during the implementation phase the solutions are prototyped, tested, built, and delivered to the user community.  Prior to the BlindWays project, the MBTA had already made investments in their PATI (Program for Accessible Transportation Infrastructure) project which involved surveying all of their 8,000 bus stops. During Phase 1 of the project, MBTA was able to leverage their existing System Wide Accessibility team, and add to the duties of their surveyors, in order to aid in implementing navigation clues for 2,000 bus stops. In Phase 2, the project direction was inspired by the MBTA’s thought leadership and experimentation with using emerging beacon technology to facilitate accessible and inclusive public transit. In this phase, all three partners simultaneously contributed to the co-design of the beacon-enabled micro-navigation capability, with Perkins representing the lead users, Raizlabs as the developer, and MBTA responsible for the implementation of the beacon technology and sensing infrastructure across the bus system. For any cross-sector collaboration coordination and communication are both vital for managing the collaborative process. During Phase 1 of the project, Perkins served as the “backbone” organization which provided this coordination role and took responsibility for driving the project to a successful completion. During Phase 2 that role was assumed by the MBTA. Throughout the project Raizlab’s use of an agile software development process enabled all partners to share and receive project updates on a bi-weekly basis; a communications strategy which ensured that all the partners remained informed and involved. 

Common Mission and Complementary Resources

Complementary Resources and Cost-Sharing

Cross-sector collaborations have become increasingly important as a strategy for tackling challenging social issue because they leverage the “linking or sharing of information, resources, ties, and capabilities by organizations in two or more sectors to achieve jointly an outcome that could not achieved by organizations in one sector separately” (Bryson, Crosby, & Stone, 2006). This project was successful because of the complementary financial, intellectual, reputational, and infrastructural resources which were contributed by the three partners. As the non-profit sector partner, Perkins School for the Blind, not only surfaced the challenge but also provide the $750,000 funding for Phase 1 of the project, based on funds they received from the Google.org Impact Challenge Disabilities grant. Raizlabs contributed their design and development expertise in app development, web development, and emerging technologies such as Artificial Intelligence, Virtual Reality, and the Internet of Things (IoT).  In addition, because of Perkins’ status as a non-profit and the project’s alignment with Raizlab’s impact-driven mission, Raizlabs supplemented the project by making financial concessions to complete the project at a discounted rate compared to their standard commercial pricing. For the project MBTA contributed the data set containing the essential information on bus stop locations, which they made publicly available via through the General Transit Feed Specification (GTFS), which defines a common format for sharing public transportation information. Throughout the product development process, Perkins recruited members of their visually impaired community to serve as product testers who could provide feedback to the Raizlabs design and development team. During the implementation rollout MBTA was able to contribute visibility to the project with the participation of the senior leadership of the MBTA and MassDOT. In addition, for 30 days MBTA contributed advertising space on 400 buses to facilitate a Perkins marketing campaign for the project launch, which they amplified through their MBTA social media channels. The campaign featured a call to action for commuters to enter clues for their bus stops. While Phase 1 of the project was funded by Perkins, the non-profit partner, Phase 2 of the project, which encompasses the pilot implementation of the beacon-enabled micro-navigation capability in the BlindWays app, is being funded by the MBTA, the public sector partner.  

The Outcome

In September 2016 Perkins made the BlindWays app available for free on the App store and launched it at -- where else? -- a bus stop! Perkins sponsored a press event and invited MassDOT and MBTA to participate and amplify the launch via their marketing communications.  The community-driven collaboration among citizens, Mass Department of Transportation, the Massachusetts Bay Transit Authority, Raizlabs and various other local organization and Perkins made a huge splash in the news media and social networks. Today over 5,300 MBTA bus stops have BlindWays clues, with a goal of finding enough citizens and volunteers to enter navigation clues for all 8,000 bus stops. Pilot testing for the beacon-enabled micro-navigation solution is also well underway. Currently, beacons have been mounted on the stops along the Route 70 (Cedarwood, Market Place Drive, or Central Square, Waltham-University Park) and Route 71 (Watertown Square-Harvard Station) bus lines. With thousands of BlindWays app downloads by users and clue contributors -- blind as well as sighted -- the mission to make the Massachusetts transportation system inclusive and accessible for all continues, with ongoing efforts to inform both the blind and sighted communities about this novel mobility-enhancing social innovation.

The Opportunity

The Internet of Things (IoT) is being hailed as the next technological revolution and will generate many new entrepreneurial opportunities, business models, and solutions to some of the world's toughest challenges. To inspire and incubate technology-driven opportunities for social innovation Babson College and Verizon have partnered to create the IoT For Good Lab. The lab provides resources to encourage inter-disciplinary, cross-sector teams of entrepreneurial thinkers, engineers, and designers to envision and experiment with ideas for generating social value using the Internet of Things (IoT), human-centered design, innovative engineering, and creative business models.  

Works Cited

Brown, T. (2008). Design Thinking. Harvard Business Review.

Bryson, J. M., Crosby, B. C., & Stone, M. M. (2006). The Design and Implementation of Cross‐Sector Collaborations: Propositions from the Literature. Public Administration Review, 66(s1), 44–55.

Kania, J., & Kramer, M. (2011). Collective Impact. Stanford Social Innovation Review. Winter.

Author Bios

Jennifer Bailey PhD
Faculty Director, IoT For Good Lab, Babson College.
Assistant Professor, Technology, Operations and Information Management, Babson College. 
Follow at www.babson.edu/IoTforGood

Luiza Aguiar
Executive Director, Perkins Solutions, Perkins School for the Blind. 
Follow at http://www.perkins.org/solutions/featured-products/blindway

David Block-Schachter
Chief Technology Officer, MBTA.
Follow at https://www.mbta.com/accessibility

Greg Raiz
Founder  and CEO, Raizlabs. 
Follow at https://www.raizlabs.com/

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