Investing for Social Change in Detroit

Earlier this month, I had the opportunity to attend Detroit Mayor Mike Duggan’s second State of The City Address. While he highlighted the progress that has been made, ranging from increased lighting on the streets to faster EMS response times, he did not shy away from the challenges that lay ahead for the city.  He outlined five specific areas that he felt were critical for Detroit’s continued recovery: violent crime reduction, blight removal, job creation, auto insurance reform and education improvement.

He also mentioned one other challenge that lay ahead — filling a pension funding gap estimated at $450 million. This raises a serious question: who is going to help fund the areas critical for recovery, if the city also has to fund the pension gap?  The answer is: you! But it is a great opportunity. This is because it does not have to be in the form of increased taxes or charitable donations, but rather in the form of financial investment.

Detroit is certainly not alone in facing a funding gap. At a national level we have trillions of dollars of need for social and environmental programs, but the federal government only spends  $695 billion a year on its “safety net programs” and Medicaid.  Our annual charitable donations account for another $368 billion dollars, which still leaves us with a shortfall in the trillions. However, US households have $33.5 trillion in investable assets, and Southeast Michigan households have $488 billion (adjusted based on population). This money is currently invested around the country and the world; but if we as a community could tap into a small percentage of those investable assets and invest here in Detroit, we could help to close the funding gap to provide support to those most in need.

Let’s take a look at past, present and future examples of the types of investments that could help the mayor and the city move the needle in five key areas.

Crime Reduction: ShotSpotter is a gunshot location system that helps law enforcement locate gun fire in real time, allowing them to react more quickly than in the past.  Detroit has already deployed this solution, and the mayor acknowledged its contribution to the reduction of crime over the past year.

Blight Removal: Loveland Technologies has built a web based property visualization and survey tool. In 2014, they partnered with Data Driven Detroit, a data analytics company, to survey the entire city. This allowed the Blight Task Force to develop a data supported recommendation and implementation plan.

Job Creation: While Mayor Duggan is focused on job creation for all Detroiters, he also highlighted the importance of providing jobs for those who are difficult to employ. Several local organizations are working to address that issue, including Rebel Nell, which sells jewelry made from fallen graffiti, and provides employment for homeless mothers.  Better Life Bags provides employment opportunities for the industrious Bangladeshi women in Hamtramck. And Urban Ashes trains ex-felons recently returned from prison to make custom wood products.

Auto Insurance Reform:  This one might be a bit tougher.  Perhaps the Mayor could help finance the establishment of the D-Insurance program in order to bring down car insurance rates? Of course, I can’t mention auto insurance reform without mentioning the broader issue of increased access to transportation in Detroit. Belle Tire and the Detroit Lions Charities recently helped bring Baltimore-based vehicle donation program Vehicles for Change to Detroit. The program trains underemployed individuals to be auto mechanics who rehab cars that are sold to financially challenged families, at below market rates. The mechanics also provide services for paying customers in order to bring earned revenue into the organization.

Education: The topic that is on everyone’s mind.  Detroiters and the nation continue to be outraged at the conditions school children in Detroit are exposed to.  While it may be difficult for people to invest in DPS unless a bond is issued, community members can and have provided loans to both for-profit and non-profit charter schools for new construction, renovation, and equipment.

Detroiters have demonstrated that they want to invest in the success of their city.  Recently, the beloved Detroit City FC raised a $741,250 investment for their new stadium. If families and individuals throughout the region were willing to rally to that cause, I have to believe we can create the same momentum around investments that provide a hand up for those in our community who need it the most.

Jamie Shea is Managing Director of Investments at Mission Throttle. If you’d like to learn more about how you can use investments to create positive change in your community, please contact him at info@missionthrottle.com

 

 

 

 

 

 

The Path to Investment Readiness: Asking for Capacity Building Grants

“Capacity building.”

It’s a nebulous term. It pops up now and again, at conferences, meetings and in various interesting articles about the necessity and often scarcity of resources to fund expansion / growth within impact organizations.  Capacity building is not new. It is described by the Foundation Center and generally, as “a broad term that encompasses actions that improve nonprofit effectiveness in terms of organizational and financial stability, program quality, and growth.” These are not small feats. And yet, for all of their importance, not many of my impact partners and clients seem to be asking for this type of support.

I must admit I haven’t given much thought to this topic until now. I’ve spent the last 20 odd years in the private sector, providing financial advisory services to distressed companies. I’ve recently spent considerable time thinking about the role of capacity building as it relates to my work with impact organizations. In the private sector, the term ”capacity building” means funding R&D, IT, talent, continuous improvement, and often, the hiring of outside expertise to develop and implement such strategies. And yet, when applied to a nonprofit organization, capacity building seems to be a well-meaning abstraction, a catch-all, and often, a luxury. Why is funding these critical activities optional for any organization that wants to be successful?

 Donors and the nonprofits they fund seek to tackle increasingly complex problems from education and health, to community and workforce development, to global climate change. Collective impact on this scale requires, among other things, high-functioning organizations. However, these vital organizations generally lack the equivalent of a for-profit R&D team to propel this systemic change.  Not only are most nonprofits starved of financial capital, they often lack the human capital to be innovative and create widespread change.

Notwithstanding the incredible leadership and knowledge housed within nonprofits, these operating constraints (limited cash, tight staffing issues, and inadequate capacity) often hinder their ability to realize growth.  As a result, many brilliant nonprofit leaders are forced to be a jack of all trades, leaving little time or energy to scale their work and create increased impact.

I recently completed an engagement where within six months, my team successfully helped our client create a business plan and revenue model for a scalable social enterprise. The client received board approval to self-fund this important project.   Our team provided focus and expertise that would have otherwise been difficult to achieve.

There are, of course, no easy answers to addressing sustainability issues within impact-driven organizations but I offer a few thoughts:

 For grant makers:

  • Be innovative. Think differently about what your capacity grants can fund – you’re investing in R&D and ultimately growth.
  • Do your grantees have sufficient core support to execute their strategies? Capacity grants could provide for this external expertise.
  • Capacity building is an investment in an organization’s future. These grants can be used to develop opportunities for scale and earned revenue, ultimately lessening the potential need for grants

For grantees:

  • Be bold…ask for a capacity grant. Funders are often overwhelmed with program support requests and may likely welcome ­­­innovative requests. Step up and ask for an investment in the sustainability of your organization.
  • Remember, you’re not seeking to operate as usual – you’re striving to be extraordinary.
  • Provide a clear path to results. Identify and articulate the purpose of your capacity building, including the desired impact.

While these ideas may appear somewhat unorthodox, I firmly believe that unconventional thinking is necessary in order to address large-scale social issues.   Don’t be afraid to rise above challenging conditions if you have an innovative strategy you think will help your organization, now and in the future.

“What is now proved was once only imagined.” – William Blake

Michigan can be global laboratory for new ways to solve old problems

I think most people would agree that Michigan is on the rebound. In Detroit, where I live, new restaurants are popping up on a weekly basis, national retailers are moving in, and corporations are opening new offices. This hint of change in the Pure Michigan air is still polluted, however, by many of the same intractable issues — homelessness, unequal access to education and food, and environmental degradation, to name a few.

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Mission Throttle to Offer Impact Investing Course for Executives

A dynamic learning opportunity for any mission-driven leader considering social impact investing

Mission Throttle is committed to empowering nonprofit leaders and social entrepreneurs with the knowledge and resources necessary to successfully pursue impact investment funding. We are pleased to partner with the Tony R. Wells Foundation to offer a three-day course that explores the legal, tax and financial considerations of using impact investments to support operations or social enterprise initiatives.

KEY TOPICS

  • Understand the broader social impact investing ecosystem and how industry trends are creating exciting new funding opportunities.
  • Discover how a nonprofit organization can generate earned income without jeopardizing its tax exempt status by using hybrid legal structures, contract relationships, or joint ventures.
  • Learn ways a foundation can leverage its balance sheet to support nonprofit organizations and social enterprises beyond grants.
  • Assess your organization’s risk from a lender’s perspective and learn about easy first steps to prepare to receive impact investment funding.

PROGRAM DATES

Tuesday, February 10th – 12th 2015
9:00 a.m – 5:00 p.m.Two Towne Square
Southfield, MI 48076

PROGRAM FEE

$2,100 (scholarships are available in amounts of 60-100% of the program fee)

Learn More 

Apply now

Common Ground cuts hospitalizations, costs by widening access to services

Seeking ways to expand and improve its services for mental health patients in Oakland County, Common Ground looked in a surprising direction — inward.

It had offered a number of programs, including a crisis hotline, the mobile Crisis Intervention Recovery Team, a crisis residential program, a runaway and homeless youth shelter in Royal Oak, a transitional living program for homeless ages 16-23 and other services, such as its victims of crime counseling and advocacy program.

But those programs had been operating in silos and rarely, if ever, were offered to the mental health clients it had been assessing for psychiatric hospitalization under a contract with Oakland County Community Mental Health Authority.

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Mission Throttle Invests in A2B Bikeshare

Mission Throttle has invested in A2B Bikeshare, a Michigan-based social enterprise dedicated to helping urban communities of all sizes become better connected, healthier, and more environmentally responsible.

A2B Bikeshare provides urban communities with a distributed network of bikes that contain automated, solar-powered software, at rental stations in which bikes are made available for individual riders for short-term use (thirty minutes to one hour). Once rented, a bike can be returned to any other station. The A2B system provides accessible, affordable, environmentally sound transportation solutions for any urban area without using taxpayer subsidies.

“We are grateful for the funding from Mission Throttle and excited to see this program thrive in Michigan and beyond,” A2B Bikeshare Founder and CEO Ansgar Strother said. “Our success is made possible because of the support from a wide range of community partners who all share our belief in accessible urban transportation.”

With a swipe of a credit card on their bike of choice, A2B Bikeshare members can rent a bike and new riders can register for membership. This streamlined process enables riders to quickly check out bikes and begin their ride. The on-bike software provides maps and directions and can display promotions for local organizations as riders stop nearby. An A2B Bikeshare mobile app is available on personal smartphones and, in conjunction with the A2B Bikeshare website, allows access to a real-time system map which shows bike and station availability. The personal app also allows members to place short-term reservations that ensure a currently-docked bike will still be available when they arrive at the station.

“Communities throughout the U.S. are looking for affordable, healthy, and environmentally friendly ways for community members to navigate around their urban centers,” says Jamie Shea, Managing Director of Investments for Mission Throttle. “Traditional methods such as walking, taxis, cars, buses, and rail systems only provide part of the solution. We are pleased to be partnering with a social enterprise that has such a strong model, and we believe that over time this program will contribute to the health and economic vitality of Michigan’s urban communities.”

A2B Bikeshare maintains an in-house engineering team to assist individual communities with developing custom bike sharing solutions. A2B successfully piloted its system in Lansing, Michigan in 2013 and will be returning there this spring to expand the current operation. They also plan to launch a 120-bike system this summer in the City of Fairbanks, Alaska.

About A2B
A2B Bikeshare is a transportation startup company that is passionate about helping communities become better connected, healthy and environmentally responsible. Founded in 2011 with support from University of Michigan’s Center for Entrepreneurship, A2B Bikeshare was created to address a need for affordable and flexible urban transit.

About Mission Throttle
Mission Throttle, LLC is an impact investing firm dedicated to accelerating positive social change in our local community. We invest in, advise, and support mission-driven organizations and entrepreneurs that intend to use business solutions to generate positive social outcomes. Although our work is based and focused in Michigan, we share our learning broadly, supporting tools and research to drive the global impact investing system forward.

Ann Arbor nonprofit wins top prize, raises $94,850 in RiseDetroit crowdfunding challenge

Ann Arbor-based Non-Profit Enterprise at Work leapfrogged two other leading contenders on crowdfunding website Crowdrise, to take the $50,000 grand prize for raising the most money in the RiseDetroit Challenge. The winning nonprofit, which does business as NEW: Solutions for Nonprofits, more than doubled its fundraising total in a surge between last Wednesday afternoon and the contest’s conclusion Thursday at 11:59 p.m.

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A Way for Local Businesses to Grow

ON Tuesday, Michigan became the first state in the country to enact a law allowing the modern equivalent of a local stock market. The Michigan Investment Markets bill went little noticed. But it revives a forgotten American tradition that once fueled economic growth — and perhaps could again.

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