Is Social Enterprise the Answer to the Reentry Problem?

   Social enterprise, or business with a social purpose, is a relatively new term that is getting a lot of play lately.  There seems to be a social enterprise to support just about every type of cause now, so the unique power of this tool of social good is often lost until one really digs down deeply.  Just to make sure we are operating on the same page, one should realize that there are two types of social enterprise, but they share a lot in common.  The distinction is in who the profits eventually end up benefiting.  The first type of social enterprise is one owned by a traditional non-profit organization, like the Salvation Army's clothing stores.  The clothing store operates just like a traditional business, except that it hires and trains disabled workers as part of its mission.  It pays taxes on any profits, just like a traditional business, but the profits are then either re-invested in the business or distributed to the larger non-profit organization.  This type of business arose out of necessity, when grant funding started becoming more scarce.  It serves as another revenue stream beyond donations and grants.  No single individual or group of individuals can benefit directly from the profits, except to receive a competitive salary.  The second type of social enterprise is almost exactly like the first in that it might train and employ a certain demographic of disadvantaged workers or it might donate a pre-determined percentage of its profits to a social cause, but it is owned by private individuals.  After paying taxes on the profits, the owners are then free to determine what the profits are used for, including benefiting the shareholders financially.  It is just like any other business in the marketplace, but it has the additional mission, beyond benefiting the shareholders, of having a social cause.  There is even a business structure in some states called a benefit corporation that allows the management to prioritize the mission over the benefit of the shareholder, which is different than the traditional fiduciary duties of the corporate officers.

     These types of businesses seem to particularly fit the plight of returning citizens.  It is often difficult to generate interest or sympathy for non-profits that deal with reentry, so it is natural that social enterprise has emerged as a method of generating revenue for non-profits that serve this demographic.  It is also a great way for returning citizens to overcome the traditional barriers to employment that they face.  Discrimination against returning citizens in the workplace is rampant, so they must rely on social enterprise to train, employ, or place them in jobs that fill marketplace gaps.  Both types of social enterprises have emerged to help tackle the employment problem in reentry, and I think they can serve as a model for the nation in that regard.  Some examples of successful social enterprise in reentry include Columbus, Ohio's Hot Chicken Takeover, a fast food restaurant, (See http://www.huffingtonpost.com/molly-tavoletti/the-hot-chicken-takeover-_b_5973976.html) and Clean Turn, a social enterprise that does landscaping, demolition, and cleaning. (See: http://www.cleanturn.org/.)  In Cleveland, one of the most outstanding social enterprises, which is also a nonprofit, is Edwins Restaurant and Culinary Institute.  They have a fine french dining restaurant on Cleveland's historic Shaker Square, but they also run a culinary school both inside and outside of the prison walls.  Owner Brandon Chrostowski learned from culinary masters around the world, and he started Edwins to help returning citizens receive a marketable skill after he had a run-in with police as a young man.  He has even solved the problem of housing for his students by recently opening a dormitory for them.  While he does a lot of good, don't mistake Chrostowski for a softy.  He demands hard work and long hours from his students, which he says weeds out those who are not really serious about changing their lives.  If they complete his program, they have received training in all aspects of working in a restaurant, and he places them in jobs around town. (See: http://www.cleveland.com/morris/index.ssf/2016/01/edwins_restaurant_is_saving_li.html.)  Long-time local non-profit Towards Employment has decided to join the social enterprise game too.  They are starting a high-end bakery, called Bloom, with the aid of world renowned baker Maurice Chaplais, who has started many such bakeries around the world.  They will follow a model similar to Edwins where they train their mission employees in the techniques of this type of baking as well as the operation of two retail locations and then try to place them or retain them.  The whole project is being managed by serial social entrepreneur, Logan Fahey, who was hired to get this project off the ground.  It should launch in February 2016.  (See: http://www.bloombakery.com/.)  This author also has a small for-profit social enterprise called the Lakeside Holdings Group, LLC.  We seek to train and employ those with barriers to employment in the landscaping, painting and janitorial services. The landscaping portion has taken off more than the others, and we turned a profit in our first year with no debt and low overhead. (See: http://lakesidegrounds.com/.)  These are just a sampling of some of the successful reentry social enterprises, and combined, they are doing a great deal of good in training a workforce, employing those facing barriers, and reducing recidivism.

     It really doesn't matter which type of social enterprise is performing the work, they must still compete with all of the other businesses out there in the marketplace.  This means that they have to be more efficient or profit less than traditional businesses, but that doesn't seem to bother these entrepreneurs.  There is something satisfying about helping others while still conducting a profitable business.  Capitalism isn't always about greed.  Many entrepreneurs have a heart, and they use their businesses to do good for the less fortunate.  I think that's what America is about.  We use innovation and business skills to solve problems.  In this case, it is a social problem, like recidivism, that has a high cost to all of us.  It has been demonstrated that returning citizens who are employed are less likely to re-offend, so we are reducing the costs associated with criminal behavior by training and employing this segment.  We are also teaching the value of responsibility and hard work, perhaps for the first time, in some of these people's lives.  So, it seems that social enterprise can have a big impact on reentry, and it will likely continue into the future.  Ultimately, I would like to see entrepreneurship taught to returning citizens.  With the skills taught by social enterprises and the knowledge of entrepreneurship skills, returning citizens could start their own businesses, which is really the ultimate freedom from employment discrimination.  Lakeside has plans to franchise in the future to workers it has trained, and I think this will be a starting point down the path to that ultimate freedom for the right person.

Richard E. Alvarez

Executive Director, Comprehensive Reentry