Why Starting Social Businesses (not Job Training Programs) is Essential to Moving People out of Poverty

By Rick Aubry, CEO and Founder

One of the few ideas that won’t start a fight between Democrats and Republicans, conservatives and liberals is the social bromide to fight poverty: “We need jobs, jobs, jobs….”

But what about job training, or its current euphemism “workforce services?” The logic itself seems straightforward—people who have been chronically underemployed need skills to enter the workforce and people who have been recently laid off need new skills to prepare for a new job. Emerging industries also need newly-trained people that have the skills demanded by the industry. The government’s job is to pay for the retraining of people in the interest of both industry and people’s need for work. Job training, however, does sometimes create some political discussions about the role of government, such as who should operate the job training, the question of “entitlement” to such training, etc. Nevertheless, job training is still a point of general agreement amongst various factions; remember that the major U.S. training programs of the 80’s were co-authored by Ted Kennedy and Dan Quayle.

But what does job training mean when there are no jobs? Hard to remember, but just a few years back we had unemployment rates below 5% and were reaching what economists call full employment status. Jobs were left unfilled, employers were eager to hire, workers had choices, and job training programs had seemingly huge successes, at least as measured by the “placement counts,” that is how many people walked in for training services and left to go to a job. The fact that people were working obscured the question about how much it cost for the process in the middle (the job training) and whether there were any actual effects from the training and the placement, as opposed to the fact that there was a huge industry need for any worker.

It’s a new world order for workers now. Unemployment is disastrously high, hovering officially around 10%. Further, discouraged workers, part-time workers, and others who have given up trying to find work but still want a full-time job have the “real” unemployed rate around 17% in the country, according to the U.S Department of Labor.

A powerful investigative report in the New York Times, part of their ongoing series “The New Poor,” raises significant questions about the whole field of job training in the United States:

“It’s such an ugly situation that job training can’t solve it,” said Ross Eisenbrey, a job training expert at the Economic Policy Institute, a labor-oriented research institution in Washington, and a former commissioner of the federal Occupational Safety and Health Review Commission. “When you have five people unemployed for every vacancy, you can train all the people you want and unfortunately only one-fifth of the people will get hired. Training doesn’t create jobs.”

In such a climate, we need to re-think dramatically how we are going to help people move out of poverty, and the relative role of job training vs. job creation as an effective tool for achieving that goal.

“A lot of the training programs that we have in this country were designed for a kind of quick turnaround economy, as opposed to the entrenched structural challenges of today,” said Carl E. Van Horn, a labor economist and director of the John J. Heldrich Center for Workforce Development at Rutgers University. “It’s like attacking a mountain with a toothpick. You take a policy that was designed for the best economy that we had since World War II and you lay it up against the economy that is the worst since World War II. It can’t work.”

At New Foundry, our work has focused on the power of social businesses to create positive changes for low-income communities. In some cases this means access to goods and services at a fairer price than currently exists in urban communities. For example, our alternative to payday lending business, Emerge, provides non-exploitative emergency loans to workers while helping build long-term credit and establish savings plans. At scale, the business will serve hundreds of thousands and can change the equilibrium in the payday industry, which is currently gauging working folks and part of causing what Gary Rivlin has called “Poverty, Inc.” Another example is our newest exploration in developing a business to provide access to healthier food to address the “food desert” challenge in many urban communities.

Most frequently, our social businesses are designed to create actual jobs for folks not getting hired in the current environment. Our energy efficiency enterprise provides hard-to-employ workers who complete the Rising Sun Green Energy jobs training program transitional employment to perform residential energy efficiency retrofits. This fills the employment gap between completing the time-intensive training program and finding a full-time job and also allows the trainees to get real work experience using their new skills. Too many green job training programs are proving to be a dead end, so we are trying to create the social market for successful businesses that will create the jobs for all these trainees.

What is the new answer to unemployment? We believe that true unemployment will remain painfully high in the U.S. for a long time, particularly for the communities we serve. The best way we can have an impact is to focus on finding and starting businesses that go right to the source of the problem and address it head on by creating jobs in places where there are too few, and for people who are too often the first fired and the last hired. While New Foundry Ventures is sometimes mistakenly lumped in with job training and workforce programs, we have deliberately focused on the primary goal of job creation. Yes, many folks who come to us will be receiving training on the job. Yes, many people who come to us will move on to other employers, and we thus have some similar role in helping create a more effective workforce for the general economy.

Further, there are some great job training programs across the country we partner with who can help our entry level workers succeed and play a crucial role in the success of our strategy. Here, perhaps is the sweet spot for job training programs—helping new businesses find, train and sustain workers for a new enterprise.

Our primary role is starting businesses that create real jobs that can scale nationally and increase the net number of real jobs that exist because the businesses and workers provide a value to customers for which they are willing to pay. The current job training paradigm is about getting workers ready for an insatiable industry need for workers. The way forward is to help underemployed and disenfranchised communities create the new social businesses that have an intrinsic need for people from those communities to work and make those businesses thrive.

Follow Rick on Twitter @raubry.

Setting the Record Straight on Energy Efficiency

By Jade Rex, Project Manager

Most of the time when I talk to people about energy efficiency, they start talking about solar and how expensive it is. I think this is a common association to make since media ubiquitously refers to the two in the same breath. Just to set the record straight, energy efficiency and solar (renewable energy) are not cut from the same cloth. I like to think of them as more distant cousins than siblings.

Energy efficiency or ‘EE’ is the practice of making your existing energy source work more efficiently for you. For example, using a CFL light bulb in place of an incandescent light bulb provides the same amount of light, while consuming less energy to do so. Renewable energy, such as solar, is about generating energy from natural and renewable sources, including sunlight, wind, rain, tide, and geothermal. The fundamental difference between the two is that energy efficiency is about how you use energy, while renewables are about how you generate energy.

Now that we’ve established that EE isn’t solar, nor is it trying to achieve the same goals as solar let’s discuss why EE is important and something you should care about. The EPA defines energy efficiency as “products or systems using less energy to do the same or better job than conventional products or systems.” In other words, EE is about using your existing energy sources more thoughtfully. Making your home more energy efficient has huge implications for your comfort, health, and wallet. With approximately 87 million of the 130 million U.S. homes built before the advent of the modern-day energy code, this means that most homes in the U.S. use energy very inefficiently and cause their owners to needlessly waste tons of money. For example, leaky ducts usually waste between 10 and 30 percent of the heating or cooling energy a homeowner purchases.

So what’s the first and most significant step you can take if you are interested in saving money, making your home more healthy and comfortable, and decreasing your home’s green house gas impact? Invest in a whole home performance test—the best and most thorough way to identify the exact fixes your home requires to improve its efficiency. An energy-efficient retrofit typically includes sealing holes, gaps, and spaces where air leaks out; adding insulation to attics, crawlspaces, floors, and walls; replacing energy inefficient appliances; upgrading doors and windows; and replacing incandescent light bulbs with CFLs, in addition to other measures.

Check out the Department of Energy video below to see what a whole home performance looks like.

Compared to solar, installing energy efficiency measures is an easy and less expensive way to significantly reduce your energy usage and impact on the environment. Once you make your home energy efficient, you’ll be able to make your renewable energy investment go a lot further.

P.S. To stay current on energy efficiency news follow me on Twitter @jade_rex.

Fighting Food Deserts with Social Enterprise

by Kari Ness Riedel, Director

One of the enterprises we are exploring at New Foundry Ventures is a social business that provides greater access to healthy foods while also creating jobs for those with barriers to employment. Many urban and rural areas are considered to be “food deserts”–that is, areas where residents have little or no access to healthy foods but have plenty of access to fast food and less healthy options. It may be hard to believe that food deserts exist when some neighborhoods boast a Safeway, Whole Foods, Trader Joe’s, and Super Target all within a one mile radius. But, in many communities, fast food outlets and local bodegas that primarily sell liquor, cigarettes and canned food are the only convenient, affordable places to get food. Take a look at his map to see food deserts around the country.

We’ve all seen the stats on the alarming rate of obesity in our country–27 percent of adults and 19 percent of kids in the U.S. are obese, and these figures are worse for communities of color and low-income communities. Studies have shown direct links between food deserts and obesity and obesity-related diseases such as Type II diabetes. We need to improve food access and promote healthy eating to reverse these disturbing health trends. Remember all the work that went into fighting the “digital divide” from the early 90s? We need to engage in a similar fight to remove this “healthy eating divide” that is plaguing our communities today.

OK, enough doom and gloom, here’s the positive news…there’s already some amazing work being done across the U.S. to address these issues. Most efforts to improve food access are focused in three areas:

1. Get mainstream grocery stores into food deserts
2. Make bodegas, or corner stores, healthier
3. Provide alternative places to buy fresh, healthy food like farmer’s markets, produce markets, and mobile markets.

A great model for all three of these efforts is The Food Trust based in Philadelphia. Their work to bring affordable, nutritious food to all is starting to be replicated around the nation.
But access alone is not sufficient; behavior change is needed to shift how people shop, cook, and eat. There’s also some great work being done on this front through community cooking classes, nutrition education, backyard gardening lessons by organizations, such as Operation Frontline based in Washington D.C. and their local chapters throughout the U.S.

And, of course, it’s fantastic to see First Lady Michelle Obama bringing attention and energy to these issues through her Let’s Move campaign, along with the celebrity power provided by Jamie Oliver’s Food Revolution.

At New Foundry Ventures, we see a great opportunity for a social business that fights food deserts. We are currently doing due diligence on scalable, sustainable business concepts that would increase access to healthy foods in low-income communities; encourage families to shop, cook, and eat healthier meals; and create new jobs. We’ll be posting our findings over the coming weeks…so stay tuned! If you have ideas for fighting food deserts that you want to share with us or would like to learn more about our work in this area, please contact kari@newfoundryventures.org. Follow me on Twitter at nesskari.

Rubicon National is now New Foundry Ventures

By Rick Aubry, CEO and Founder

As many of you know, our work at Rubicon National grew from the work we began at Rubicon Programs nearly 25 years ago, starting and operating social businesses such as Rubicon Bakery and Rubicon Landscape Services. In 2007, we realized that as important as our work had been to date, we needed to find dramatic new ways to significantly increase the impact of our work. While we had created jobs in our businesses for hundreds of people, we needed to develop businesses that created jobs for tens of thousands of people. While our services positively affected 4,000 people a year at Rubicon, we needed to develop new models that would serve hundreds of thousands of people in order for our efforts to change the inequity challenge in our country.

To achieve these audacious goals we came to the conclusion that it was essential that a new generation of nationally-scaled social enterprises be created. We initially incubated this theory as part of Rubicon Programs. To increase the likelihood of our success and to focus on our ability to build significantly larger national impact, we created and spun off Rubicon National as a separate nonprofit in 2009 to focus on our mission of building the next generation of scalable social enterprises. While we are extremely proud of the work we achieved as Rubicon Programs, we want to make sure the work we are doing today is clear as national in vision and scope and distinct from the activities focused primarily on one local region. A board member of Rubicon Programs once said to me, “National reputation, local player, what’s wrong with this picture?” We believe our new identity as New Foundry Ventures will allow us to build on our national reputation and focus on national issues.

Our reputation as action-focused, “doers” is baked into our organization’s DNA, so we loved the image of a foundry that gets things done. The work of our foundry is to build new ventures – in collaboration with others and through ventures we incubate and grow. We are market-fixers that identify opportunities where traditional markets don’t exist or are failing. By building social businesses that provide good financial credit, greater access to healthy food, and energy efficiency for low-income communities—while also creating jobs for those in need—we create lasting, sustainable and systemic solutions to some of the most important challenges facing disenfranchised communities in the U.S. Learn more about the work we are doing today across Financial Services, Energy Efficiency, and Community Food Access, as well as our Advisory Services.

Rubicon National Wins Social Impact Exchange Business Plan Competition

By Rick Aubry, CEO and Founder

Greg Dees, Ed Skloot and their colleagues from Duke University as well as the folks at the Growth Philanthropy Network pulled together an impressive group of conference attendees to focus on the question of how philanthropy can scale the impact of social innovation at the Social Impact Exchange’s Inaugural Conference on Scaling. Over 450 people gathered in NYC June 17-18 to look at the challenges involved in moving to scaled solutions and look at examples of some of the best solutions available for creating this scaled change. Philanthropists, academics, practitioners and financiers spent two days hearing about the latest thinking on how to take big ideas and bring them to scale. Given Rubicon National’s mission to serve as a laboratory for scaling social impact, it was a timely conference for us to attend; and we also had a dog in the hunt at the conference.

The central part of the conference is a social business competition featuring leading new innovations ready to scale. One of Rubicon’s social businesses, Emerge, was competing in the early-stage growth category. Our venture was created as an alternative for working folks who have had no choices when they need small, short-term loans in emergencies than to go to the predatory lenders. Over 200 organizations submitted plans and 8 finalists were selected to present. Jonathan Harrison and I pitched our presentation on Emerge for 10 minutes on Friday afternoon and later that day we found out we won! In addition to $25,000 in cash, we also will receive six months of pro bono consultation from Public/Private Ventures to help us achieve the scaled impact we all are interested in. (See the press release we published on the win.)

So of course, we are jazzed and excited that we received such a prestigious recognition (and the cash could not have come at a better time for our start-up venture). We have spent nearly two years dealing with all the behind-the-scenes steps necessary to create a system-changing business—one that provides working folks access to fair credit, connections to financial services and asset building programs, and a pathway out of the debt traps that payday lenders and other predatory financial services help create. It’s satisfying to know we won because we created this solution within the construct of a market-based business that is designed to grow to scale and be sustainable. This is what Rubicon National set out to do from the beginning.

NPR Fresh Air Interview with Gary Rivlin Highlights Need for Payday Lending Alternative

NPR’s Fresh Air recently invited Gary Rivlin to share his research on predatory lending in the United States. Rivlin’s work is particularly pertinent at a time when Americans are strapped for cash and stretching their dollars, especially at the bottom of the socioeconomic pyramid. His work is not only pertinent to the current economic climate, but to the initiative that Rubicon National Social Innovations is launching through our new social business, Emerge.

Payday lending accentuates the problems people who live paycheck to paycheck face, putting them at odds with making ends meet as roll-overs lead them to face nearly 400%+ APR while paying back their advance. Rivlin makes it clear that the same payday lenders that many might see as exploiting the poor working class see themselves as nobly extending services that would otherwise not be available to a large population of people. At the same time, he tells a very clear story of how the flight of traditional banks combined with the much-higher-than-average profit margins to be made by serving the working poor lead to the abundance of payday lenders in poor, urban areas.

Our alternative business model, Emerge, is positioned to fill the gap left by the imbalance in the marketplace. Seeking to systematically bring about a more equitable society through its employer-based credit offerings, Emerge aims to migrate the underbanked from predatory high-profit payday lenders toward mainstream financial services. -Josh Engel, Summer Associate

Listen to the full NPR interview with Gary Rivlin.

Welcome New Summer Associates

With summer, comes summer interns, and at Rubicon National Social Innovations we're excited to welcome our outstanding group of summer associates this month. We have a diverse group of MBAs and undergrads from top-notch schools, including Northwestern University, University of Pennsylvania, and Wake Forest University. To kickoff their time with us, and to thank many of the volunteers who have generously given their time this year moving our mission forward, we took everyone to AT&T ballpark to soak in a beautiful San Francisco day and watch the Giants beat the Orioles (6-3). Check out photos from our outing.

Lucky Sharma, Josh Engel, Jonathan Harrison, Bernard Geiger, Brendan Pierpont, Andrew Kintner, Melissa Foley, and Mark Ding

Jade Rex, Bernard Geiger, Brendan Pierpont, and Andrew Kintner

Lucky Sharma, Josh Engel, and Jonathan Harrison


Bernard Geiger, Brendan Pierpont, Andrew Kintner, Melissa Foley, Mark Ding, Ashima Sukhdev, Kathy Liu, and Sandie Taylor