Small Business

A New Model for Community Service


"Do good by doing good." More entrepreneurs are heeding the principle by creating profitable businesses that provide jobs to the underprivileged

Twenty-five years ago, Bernie Glassman, a former McDonnell Douglas space-programs manager and a Zen Buddhist abbot, along with a small group of like-minded Buddhists, borrowed $300,000 to launch Greyston Bakery in a Bronx storefront. The idea was to start a company that was both entrepreneurial and spiritual, and that would employ the conventionally unemployable by giving jobs to the struggling urban population. In other words, to do good by doing good.

Today, Greyston sticks to this formula, while continuing to turn out quality, locally made products, including gourmet wedding and specialty cakes. The company produces 20,000 pounds of ice cream mix-ins per day, and is the exclusive supplier of brownies to Ben & Jerry's. Last year, sales totaled $6.5 million, up from $4.5 million in 2004. Indeed, business is so brisk that in 2004 the company moved to a new $9 million state-of-the art Maya Lin-designed facility in Yonkers, N.Y.

"Businesses can make sure to respect profit goals," says Julius Walls, Greyston's chief executive officer, "but they also need to respect their responsibility to the world community and their employees." To that end, Greyston's 50 employees are plucked from the ranks of the homeless, single mothers, new immigrants, drug abusers, and ex-cons, and are given work and training via a one-year apprenticeship program. All new hires start at entry-level positions and are given opportunities to advance in the company. "We give jobs without regard to past performance or issues," says Walls.

Twin Mandates

According to Walls, one out of every three new hires makes it through the apprenticeship program. About 10 to 15 employees have been with Greyston for seven or more years, with the majority staying between one and three years. Greyston even helps those workers interested in moving on with classes in résumé writing and interviewing, and it also offers job counseling. "This is founded on the idea that an employee that wants to be with us is more productive," says Walls. And if not, the business offers assistance for those moving on.

Like Greyston, a growing number of businesses operate under the twin mandates of making a profit while maintaining a sense of strong social purpose. Co-op America’s Business Network, a membership network for for-profits that fit this dual profile, has gone from around 500 businesses in the mid-1990s to about 3,000 today, according to the nonprofit’s corporate responsibility programs director, Todd Larsen. He says most members are small and midsize businesses, with a number of them playing pioneering roles in underserved communities, roles traditionally held by nonprofits. And a 2006 report released by Co-op America’s sister organization, Social Investment Forum, shows community investing assets growing to $20 billion in 2005 from $4 billion in 1995.

Allen Grossman, a professor of management practice at Harvard Business School, says businesses with a strong social core have been around for a long time, but the niche is expanding. "People are experimenting a great deal in this area because of deficiencies in the capital markets for nonprofits," he says. "They aren't necessarily aligned when it comes to [measuring] good performance."

Three years ago, Ruth DeGolia and Benita Singh were working on their senior theses in international relations at Yale when they came up with the idea to launch Mercado Global, an online store that today sells handmade jewelry, handbags, accessories, and ceramics from women's handicraft cooperatives in Latin America. Working with partner nongovernmental organizations, Mercado Global scouts U.S. markets in which to sell these handcrafted products. All of the profits are returned to the cooperatives in order to promote fair-wage employment, as well as an investment in the workers' children's education.

Becoming Self-Sustainable

Last year, the company earned $160,000, and this year, Mercado expects to generate $500,000 in revenue. Right now, Mercado works with 200 women and 20 cooperatives in Guatemala but is planning to expand to Mexico, Brazil, and Ecuador. "We want get to get it right in one country and then move on," says Erin Ruck, Mercado's executive director.

According to Ruck, the business has also expanded its distribution channels. In addition to its Web site, Mercado has been working with retailers such as Whole Foods (WFMI) to sell its wares, as well as launching a private-label program with participating retailers, such as home furnishings chain ABC Carpet & Home.

Currently, the majority of the company's operating costs are funded by grants and donations, but Mercado plans to be completely self-sustainable by 2008. "We will still use grants as a buffer and to allow us to expand. But we function as nonprofit but act like a for-profit," says Ruck. "We want to ensure that all of the money is invested back into the cooperatives."

An Education with Pay

In 1996, the Enterprising Kitchen was launched after Joan Pikus, who was tutoring and counseling low-income and unemployed women in the Chicago area, realized that what many really wanted was an opportunity to earn an income. She settled on the idea of launching a business that manufactures premium natural soap and spa products, and created a program to help women learn job skills.

From a facility in Chicago's Ravenswood neighborhood, women recruited from social-service agencies are employed in all aspects of the company's business—from product shipping to customer service. Unlike the Greyston model, the Enterprising Kitchen isn't set up for long-term employment but is intended as a place for people to generate a salary while receiving counseling and job training in order to move on to other positions.

"The women come from a range of substance-abuse programs, domestic-violence shelters, ex-offenders who have left incarceration, and immigrants getting their citizenship," says Lynn Cunningham, the Enterprising Kitchen's executive director. "They're using their time with us to create a new work history." Last year, the outfit served 70 women and took in $660,000 in sales. This year, the goal is to hit $700,000 in revenue.

Spreading the Word

"In the overall scheme of things, we're small in this movement," says Walls of Greyston Bakery. "But in fact, there's a movement, and it ranges from those trying to be socially responsible to a model of trying to use businesses and all the means possible to bring resources to bear on the community that doesn't necessarily have access or control of resources."

Indeed, Greyston founder Glassman left the company in 1996 to help replicate the Greyston model in troubled areas such as the Middle East and in homeless programs of big cities such as Paris. In other words, he's hoping to broaden the geography on his mission to do good by doing good.


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