It started with a contest.
In 2001, Bill Young had 20 years experience in business and a windfall to invest. He wanted to fund a social enterprise, a start-up that would turn a profit, but also create quality employment opportunities for people who face barriers getting into the work force, including aboriginal people, single parents, new Canadians or people with disabilities.
He set up a new non-profit, Social Capital Partners. But he was looking for ideas, so he launched a national competition to find a grassroots initiative to fund.
“We said we would award a $15,000 cash prize for a business plan around this concept of social enterprise. But the real prize was that it wasn’t an academic enterprise and if we liked it, we would fund it,” says Mr. Young.
The winner was Inner City Renovations, a construction company formed by four non-for-profit housing agencies in Winnipeg. It wanted to revitalize the inner city, and in the process, create jobs. Today, it employs over 50 people, most of whom are urban aboriginals.
Mr. Young, now 58, has come a long way since that initial contest. Over the decade that followed, he set increasingly lofty goals for his non-profit. He now wants to see virtually every company in the country implement a community hiring program like the one that worked so well for Inner City Renovations. Community hiring is good for business, he argues, but it can also help hundreds of thousands of Canadians get into the workforce.
Mr. Young grew up in Ancaster, Ont. His family had been in business in the Hamilton area for more than 100 years and and has a strong tradition of philanthropy. He has an MBA from Harvard and started his career as a chartered accountant at Ernst & Young. His career as a social entrepreneur began with the great good fortune most of us can only dream about.
In 1999, Mr. Young, the former chief executive officer of Hamilton Computers, made millions of dollars when he sold his interest in Red Hat Inc., his cousin’s company. He took some time to think about his next step. His research led him to the idea of using a business model to solve complex social and environmental problems.
“It didn’t makes sense that doing business and doing good had to be two separate worlds. That was the inherent challenge, how do you find more sustainable ways that might involve generating revenue and harnessing market forces to do good?”
In particular, he wanted to help match people who were ready to work with meaningful employment opportunities.
In that first contest, Mr. Young asked for a regular business plan from each company that entered, but also a social business plan. Who would the company hire? What skills would they teach employees? How would they measure success?
“We joked that it wasn’t like we knew how to put one of these together ourselves.”
It took more than four years to make Inner City Renovations profitable. It was emotionally-satisfying work helping the company, and other new social enterprises become successful. But it didn’t have the impact Mr. Young wanted. In total, the new businesses funded by Social Capital Partners hired 300 people.
“But what are 300-odd jobs in the global scheme of things? It is not like we were changing the way we think about our hiring practices in any mainstream way,” says Mr. Young.
So, he decided to change his approach.
Social Capital Partners had been focused on the non-profit sector, where everybody understood the social mission side of social enterprise.
But Mr. Young decided they had to engage the private sector and started a pilot project with Active Green + Ross, a tire and auto company. The non-profit offered start-up capital for new franchises, at an attractive rate and subordinate to bank debt.
In exchange for the loan, the new franchise had to agree to hire a fixed number of staff from community agencies.
Social Capital Partners worked with those agencies to make sure that only suitable candidates applied.
“We wanted to treat the business as the customer. … It is our job to figure out what makes for a successful lube tech at Active Green + Ross, and marry that to a pool of candidates and only send those who are likely to be a good fit.”
If the company didn’t feel the candidates were of a high enough quality, it didn’t have to hire them.
The pilot program was a success, providing six jobs to people who needed a bit of help to break into the work force, and it was quickly expanded.
Social Capital Partners has helped establish 30 new franchises with Active Green + Ross, and 20 more with Mr. Lube.
“We like the car service model. You don’t need that many skills to change oil, but you can work your way to being a licensed mechanic. We have a bunch of criteria about what kind of franchise we are looking for and it has to have that good career path,” says Mr. Young.
It has also funded TurnAround Couriers, a Toronto bike courier business that recruits at-risk youth from shelters, and Fripe-Prix, a Montreal chain of second-hand stores that uses revenues to train people who have difficulty accessing the job market.
Social Capital Partners ties its interest rates to the number of community hires.
“As they hire more, our rates go down, so we link our financial return to our social mission.”
When the loans are repaid, the money goes toward new ventures.
Community hiring programs give employers access to a bigger labour pool, and the employees tend be loyal and stay on. When Active Green + Ross decided to use community hiring in its company owned stores, without financing from Social Capital Partners, Mr. Young decided it was time to scale up his efforts yet again. He began working on ways to implement successful community hiring policies in large companies.
Many social entrepreneurs start small but scale up their projects, says Tim Draimin, executive director of Social Innovation Generation National, a collaborative partnership that aims to foster social innovation. “They start off with something that is the pea in the mattress … then they recognize that what they want to fix is part of a bigger system.”
Mr. Young says it is important to prove the business case, to show that community hiring brings in high-equality, entry-level employees. He is now working with three Fortune 500 companies. They are now tracking their new employees, looking at how those engaged through a community hiring program fared compared to those hired in the conventional way. The idea is to tweak the program, improving pre-employment supports, for example, until the data show the community hires are doing as well or better than other workers.
Social Capital Partners is also working with employers, staffing agencies, community service agencies and government.
“Our goal is that 10 years from now, virtually every employer has a community hiring program integrated in the way they recruit entry-level employees.”
Mr. Young isn’t sure what his friends and colleagues in the business world make of what he is doing. “Do they think I am a nut? There is a little of everything. They get intrigued and engaged and yet they aren’t sure if they would make that career choice. But it is coming. It is starting to shift. You hold a conference on this and gazillions of people come. I am hugely optimistic,” he says. “It has been a fascinating journey and transformation. It is every bit as challenging as anything I have ever done.”