UNIVERSITY OF SOUTHERN CALIFORNIA Sol Price School of Public Policy June 3, 2016

1. Social Enterprises to Serve Community Needs: Eusébio UNIVERSITY OF SOUTHERN CALIFORNIA Sol Price School of Public Policy June 3, 2016

2. USC meets Eusébio

3. Agenda • Eusébio Community Context • Solutions: Social Innovation • Social Enterprise Model • Appreciative Inquiry • Performance Evaluation • Partnerships & Financing • Case Studies • Applied Examples: Potential Social Enterprises in Eusébio • Community Garden-Nursery • Social Enterprise Incubator • Questions

4. Community Context: Eusébio

5. Research Question Are there currently community needs in Eusébio that are not being met by the public, private, and nonprofit sectors?

6. Quick Facts: Eusébio

7. Bairros by Alphaville Ceará: Santo Antônio, Jabuti, Urucunema • Lower educational levels; many students drop out of high school to work informally for small enterprises • Lower income; many residents depend on Bolsa Familia & Renda Minima • Problems: violence, basic service infrastructure Source: Jovem Sustentavel research

8. Context: Public Health & Crime Crime • Crime rates have been increasing • Violence, drug trafficking, and feeling unsafe were identified as biggest concerns by community residents • Within the region, 222 violent crimes reported in 2015 Public Health • Eusébio offers free public healthcare to its residents and spends more than 25% of the city’s budget on health • Local health centers provide: • Gynecological services • Mammograms • Birth control • Sexual health education • Support and treatment for those who are struggling with drug abuse • Main health concern: poor sanitation infrastructure Photo from Municipality of Eusébio

9. Context: Workforce Development Opportunities • Individuals in Eusébio are employed in many different occupations and industry sectors, but the most common industry is the services sector, which makes up 45% of all jobs. • Currently, the largest employer is M. Dias Branco with over 1,500 jobs. • Upcoming major developments will create new opportunities for residents. • The Polo Tecnológico de Saúde do Ceará and Fiocruz (vaccine manufacturer and pharmaceutical research center) hub • Eletra (Chinese solar panel manufacturing and installation plant) • Mall (on EC-040 in previous Centro Educacional Padre Piamarta) Creating more than 1500 new jobs

10. Context:Inequality • Eusébio’s Gini Index, measuring income disparity, worsened from 0.59 in 2000 to 0.65 in 2015 • Potential for dramatic increases in wealth inequality and spatial segregation with rapid real estate investment & development • Ensuring that locals will be able to capitalize on new workforce opportunities is essential for avoiding displacement and the negative effects of excessive growth, like overcrowding, informal housing, traffic congestion, and social unrest • More diverse neighborhoods and public spaces build civic trust and spur economic development through opportunities for collaboration and innovation1 • Concentrated poverty is costly for cities because it creates higher public service burdens2 1. Neace, M. B. The Impact of Low Trust on Economic Development: The Case of Latin America. Review of Policy Research, Volume 21, Number 5. The Policy Studies Association. 2004. 2. Goetz, Edward G. Clearing the Way: Deconcentrating the Poor in Urban America. Washington, D.C.: The Urban Institute Press, 2003.

11. Social Innovation

12. Social Innovation • “Social innovation is a process in which public-private partnerships come together so that greater social impact is generated and scalability, as well as sustainability, is achievable.” • Social entrepreneurship and social enterprise are components of social innovation • Two criteria need to be met for a process or outcome to be considered innovative: • Novelty • Improvement • Social innovations seek to increase social value (benefits or reductions of cost for society) and to go beyond the private gains and general benefits of market activity. • Meets needs of the public that would not otherwise be met

13. Social Enterprises • Social Enterprises apply commercial strategies to maximize improvements in human and environmental well-being, with the profits reinvested into the project. • Social Enterprises follow a sustainable business plan that ensures the project will continue achieving social impact and financial sustainability • Revenue generating activities inherently further the mission of the enterprise.

14. Social Enterprises Methodology for developing a social enterprise: • Identify a stable but unjust equilibrium that negatively impacts a disenfranchised population • Develop a social value proposition to create change • Redefine the equilibrium that improves the quality of life for a targeted group, and is sustained with a stable ecosystem

15. Developing a Social Enterprise Model

16. Research Questions What are the necessary components of a successful social enterprise? How do we evaluate community strengths and weaknesses to identify opportunities for social enterprises to address needs? What partnership and financial models could a social enterprise utilize? What impact evaluation strategies and metrics should be pursued to ensure effectiveness of social impact?

17. Application of Appreciative Inquiry Potential social entrepreneurs should use the Appreciative Inquiry (AI) methodology employed by the Alphaville Foundation to conduct a community diagnostic and market analysis before starting a social enterprise.

18. Community Diagnosis: Discovery Community Diagnostic • To ensure that the social enterprise is: • Addressing a real need • Not duplicating work currently being done • Operating in manner appropriate to local context • Methods • Collect information from existing NGOs and public entities • Strength-based tools • Community mapping • Participative processes: surveys and focus groups • Community member calendars Market Research • To understand the role of public, private, and nonprofit partnerships • Tools • SWOT analysis • Market Facilitation Diagnostic

19. Performance Evaluation & Indicators: Dream & Destiny Impact Value Chain Routine assessments and measurements ensure focus on mission & objectives and allow for regular readjustments. Evaluates impact through validated, cost-effective, and integrated perform-ance measurements. Impact Measurements to analyze: • How the organization is having a social impact • How to market to customers and stakeholders • How to acquire funding and continually develop and enhance products, services, and organizational processes

20. IRIS Impact Metrics Impact Reporting and Investment Standards Economic Social Environmental • Biodiversity conservation • Energy and fuel efficiency • Pollution prevention & waste management • Sustainable energy • Sustainable land use • Access to clean water and sanitation • Access to education • Access to energy • Community development • Conflict resolution • Disease-specific prevention and mitigation • Equality & empowerment • Health improvements • Access to financial services • Income/productivity growth • Employment generation • Capacity building

21. Performance Evaluation Frameworks for Social Impact Social enterprises are dual-mission, so metrics must evaluate both social impact and financial success. Logistical Framework Analysis (LFA) • Holistic social impact program monitoring for international development • Embedded theory of change • Qualitative focused Social Return on Investment (SROI) • Approach to understanding value of the social, econ- omic and environ- mental outcomes • Measures intended and unintended outcomes and applies a dollar value to those outcomes. • quantitative focused

22. Evaluation Frameworks for Social Impact By working collaboratively, sharing what works and what doesn’t, and defining collective solutions to our common problems, we might just answer questions about social impact. • Brian Trelstad, “Simple Measures for Social Enterprise”

23. Tools for Performance Evaluation for Social Impact Source: http://impactinvesting.marsdd.com/social-impact-measurement/measurement-dashboard/ PRESCRIPTIVEADAPTIVE

24. Design: Social Enterprise Models A producer-owned cooperative structure A micro-distribution or micro- franchising model for underserved groups Workforce development: providing high quality jobs to difficult-to- employ individuals Examples of Public Benefit Corporations (B Corps) Models Purchasing fair or direct trade to improve livelihoods of employees in supply chains Formal commitment to donate significant sales, profits, or ownership to charitable causes

25. Design: Social Enterprise Partnerships Public Sector • Key ally in achieving legitimacy, broad reach, and awareness • Access to funding, networks, and other potential partners • Impacts policies Private Sector • Investment • Industry expertise • Opportunities for collaboration through corporate social responsibility Nonprofit Sector • Anchor institutions can leverage assets by: directing purchasing power to local vendors, hiring workers from local community, providing workforce training, etc. • International nonprofits have established programs that can provide a framework for new social enterprises in other locations

26. Social Enterprise Financing

27. Summary: Social Enterprises Social enterprises are for-profit companies with a social mission. They work to solve social issues that governments and private markets cannot reach. The "Appreciative Inquiry" model can be used to develop a social enterprise. The steps are: • Discovery: Research and outreach to understand the state of a community • Dream:Identifying goals and metrics • Design:Formulating the financial and organizational model • Destiny: Reevaluation and adaptation to maintain long-term sustainability

28. Successful Social Enterprise Case Examples

29. Social Enterprise Case: Sanitation Sanergy: Franchised community toilets (Kenya) • Mission:Provide safe, accessible and affordable sanitation products and services to slum residents across Kenya. • Organizational Structure: Sanergy collects and treats waste. Revenue stays in community. Waste is processed and turned into fertilizer, animal feed, or energy. • Financing: Startup $200K in grants from MIT and USAID • Partners: Government of Kenya, City of Nairobi, Kiva, Climate Foundation, SIDA, Oxfam, Bill & Melinda Gates Foundation, venture catalyst firms, nonprofit organizations SOIL: EcoSan facilities placed in homes (Haiti) • Mission: Provide access to safe, dignified sanitation that produces rich, organic compost as a natural resource for Haiti • Organizational Structure: Facilities maintained for a small monthly fee. Waste is collected and turned into compost. • Funding: Grants from foundations, public and corporate donors, crowdfunding. “SOIL Cultivators” are steady funding stream. • Partners: American Red Cross, UNICEF, NRG METRICS: Clean water, quality of health, access to hygiene sanitation, food security, energy and economic development

30. Social Enterprise Case: Textile Care Evergreen Laundry Cooperative(Ohio, U.S.) • Industrial laundry serving hospitals, hotels and other institutions. Leader in sustainability and wealth creation for local residents and economy. • Individuals hired as temporary workers for 6 months before invitation to become worker- owners with higher living wages, health benefits • Metrics: Employment rate, accumulation of assets, economic development, number of worker-owners • Partnerships: the Cleveland Foundation, the University of Maryland, Kent State University and Cleveland’s Greater University Circle • Financing Start-Up • $5M New Market Tax Credit • $0.3M Common Wealth Bank • $0.2M Economic Development Authority Loan

31. Social Enterprise Case: Solar SELCO (India) • Mission: Enhance the quality of life of underserved households and livelihoods through sustainable energy solutions and services • Organizational structure and strategy: • Create products based on end user needs • Installation and after-sales service • Standardized financing packages • Partnerships: nine regional rural banks, commercial banks, NGOs, and rural farmer cooperatives, international investors (S3IDF, the Lemelson Foundation and the Good Energies Foundation) • Metrics:Type of investors; Number of users, offices, employees, and social entrepreneurs; Tailored products for target audience • Financing Start-Up: • 1995: Started company with USD $40K, USD $150K grant, USD $2.5M private equity financing from European investors • 2003: USD $1M loan from the International Finance Corporation • 2005: Reached more than 0.5M people, became one of the largest solar system providers in the world

32. Applied Examples: Potential Social Enterprises in Eusébio

33. Research Question Based on the community context, what might a successful social enterprise look like in Eusébio?

34. Applied Example 1: Community Garden-Nursery and Community Retail Hub

35. Community Garden-Nursery Phase 1: Community Garden and Nursery • Provide access to healthy locally-sourced produce, Preserve native plant species, Create jobs, leverages the environment as a resource, cultivate a sense of community • Potential Partners: • City of Eusébio, Universities, Prohuerta, Organizacao Cidades Sem Fome, RAUF Foundation, Ciclo, and Horizonte Fertil, Progento Fome Zero

36. Community Garden-Nursery + Community Retail Hub Phase 2: Community Retail Hub • Entrepreneurship hub for community members to share their business experience and purchase market products • Retail location to bridge communities • Potential partners: • City of Eusebio, Sebrae, and Prohuerta, community members Midtown Market, USA

37. Community Garden-Nursery + Retail Hub

38. Community Garden-Nursery + Community Retail Hub Metrics Community Garden-Nursery • Revenue • Rate of individuals with access to healthy food • Rates of obesity and associated conditions • Number of events connecting communities in Eusebio • Income level of members of cooperative • Number of native species of plants successfully propagated and planted • Savings of non-imported plants (on transportation and pollution costs) Community Retail Hub • Revenue • Number of products marketed • Number of small enterprises operating • Rate of participation by neighborhood • Market share by category in comparison to retail sector

39. Applied Example 2: Social Enterprise Incubator

40. Social Enterprise Incubator Practice Space (Detroit, Michigan, US) Mission • Develop social enterprises through access to financial capital investment, mentorship, training, and networking • Serve as post Jovem Sustentavel program to allow youth to make social impacts in their neighborhoods • Provide a space to cultivate local social enterprises and social innovation • Create economic development, job creation, and social good Logistics • Focused on single social enterprise field, such as environmental sustainability • Located in Alphaville Ceará town center on one floor of commercial/mixed-use development

41. Social Enterprise Incubator Organizational Structure & Financing Partnership: Alphaville Foundation, City of Eusébio, and University (UFC) Financing Initial Startup • Land from land allocated to city from Alphaville • Facility may be donated from public or private partner • Grants, loans, or equity partnerships • Loans or grants from foundations or federal/state governments • Equity partnership or loans from high-capital impact investors Sustainable Phase • Program and Staff • Potentially requires ongoing support from city or partner foundations. However, the city could still have a positive return due to savings on other social programs. • Social Enterprises • Impact investors recruited from Alphaville Ceará & elsewhere

42. Social Enterprise Incubator Metrics • Potential social enterprises • Strength of team • Value proposition • Business model & governance • Validation1 • Success of social enterprises launched • Social impact • Number of underserved people employed • Number of underserved people impacted • Financial health • E.g., return on Investment, gross revenues/profits, net income, assets • Environmental impact • Number of social enterprises supported • Network strength • Market penetration/exposure • Brand awareness • Number of mentors • Number of investors & investment • Number of visitors • Number of events • Educational Impact • Number of training programs and workshops • Number of experts brought in • Santa Clara University Miller Center for Social Entrepreneurship (www.scu-social-entrepreneurship.org/impact-capital-overview/)

43. Final Thoughts

44. Final Thoughts Social enterprises present an opportunity to pursue novel and sustainable solutions. Based on our research, we have observed a couple key findings that may be useful in Eusébio’s pursuit of innovative problem solving. • Policy as a Catalyst for Success: Incentivising social enterprises • Finding Momentum in Partnership Building: Institutionalizing intentional partnership-building across sectors

45. Muito obrigado a todos! University of Southern California

46. Questions?