In praise of the California Local Empowerment Fund

While political disagreements rule the day, most people do agree that greater economic and social mobility is needed so that all Californians are able to contribute, and to afford the basics – a secure home, food, health care, child care and education.

With a new Governor and Legislature eager to achieve this goal, we believe the time is right for action.

The Fund would be administered by a state Joint Powers Authority (JPA) comprised of the public agencies responsible for employment, health, corrections and other services.

But government alone cannot solve these problems. Increasing economic security will require citizens, businesses, philanthropists and government to work together – and to forge changes in three areas:

• Define outcome goals and measure results – common in business, but costly and thus less used by social programs. It is time for communities to define the metrics of economic mobility and the California Dream that are most relevant to their region and develop the data infrastructure so state regional and community leaders know what is working and what is not. This will enable policymakers and program managers to focus on clear goals, adjust programs as needed, and provide government and private funders information so they can drive“data-informed”capital to what works best.
• Break down silos – major social challenges are not resolved by one agency or sector alone. Human problems cross the boundaries of silos like health, workforce development, education, and criminal justice. But most funding flows in silos.

• Align private sector resources and priorities with civic objectives. The epicenter of philanthropy has moved from New York to California, but California does not have a platform with public accountability where private philanthropy and state and local agencies can routinely work together to understand mutual interests and target resources accordingly.

A brief example tells the tale. We all want Californians to work and support themselves. But when one of the thousands of men and women exit prison in California each month, they face employers who are generally unwilling to give them a chance, not to mention daunting requirements for technology aptitude and other skills and attributes they may not have had a chance to learn.

This approach would deliberately leverage the knowledge and resources of large-scale California private philanthropies and smaller funds.

Special businesses called employment social enterprises have been proven by third-party evaluations to effectively provide the on-the-job training and support that improves the chances that these individuals will get and keep jobs. The employers cover much of the costs of these “double bottom line” companies, while philanthropy and public sources pay for services the business cannot cover. Competitive businesses are essential partners – purchasing and hiring from employment social enterprises.

This growing social enterprise ecosystem is employing and training about 5,000 Californians every year. With greater investment, many more people would benefit. But these business/social service hybrids do not fit neatly into existing capital channels.

There are dozens of other examples of local initiatives that would increase economic mobility, often developed at the grassroots level by people who are most impacted, sometimes with the backing of philanthropy and cities or counties. It is past time to figure out how tobetter resource those that demonstrate accountability to economic mobility goals so that they can deliver results at the scale our daunting problems require.

That is why we are proposing the California Local Empowerment Fund (Cal Empower). The Fund would be administered by a state Joint Powers Authority (JPA) comprised of the public agencies responsible for employment, health, human services, and corrections, and the Treasurer. In addition, the Governor and Legislature would appoint to the JPA representatives of local government, with the participation of philanthropy and impact investing.

Selecting the most promising initiatives through statewide competition, the resources would be used to scale up evidence-based initiatives, while investing in the data and systems required to really assess whether programs are achieving results against economic mobility objectives.

This approach would deliberately leverage the knowledge and resources of large-scale California private philanthropies and smaller funds and family offices established by thousands of generous people who have made their fortunes in technology or other areas who now want to give back. There is precedent for this structure within government, including both the federal Social Innovation Fund (that brought millions of dollars to California but is now unfunded) and the recent U.S.congressional approval of a $100 million investment for the Social Impact Partnerships to Pay for Results Act (SIPPRA), a program will pay for a project only if predetermined project outcomes have been met and validated by an independent evaluator.

The Golden State has the opportunity to learn from these public private partnerships, and to build a unique platform like the California Local Empowerment Fund that deliberately enables private and public sectors to align, building on a foundation of transparency and citizen input.

Now we have a chance to lead the nation by creating a system for the State and local governments, side by side with private philanthropy, to jointly assess and put wind in the sails of initiatives to accelerate greater economic and social mobility that are often incubated locally, but never get the necessary resources to go big.

Now is the time!
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Editor’s Note: Carla Javits is president and CEO of REDF (The Roberts Enterprise Development Fund), a pioneering venture philanthropy group.  Jim Mayer is president and CEO of California Forward, a nonprofit, bipartisan government reform organization. Caroline Whistler is the founder and CEO of Third Sector Capital Partners, a nonprofit that works with communities to improve  educational, housing, health and other services.