This post was originally produced for Forbes.
Social innovator Lexi Barrett is helping to lead a non-partisan effort at New Profit, a venture philanthropy fund, called America Forward focused on supporting results-oriented organizations working in education, workforce development and poverty alleviation.
Barrett, who has spent most of her career in government service, says, “Although the impact of our sector, and our New Profit Portfolio and America Forward Coalition Members in particular, is impressive—millions of communities and individuals go unserved each year and the problems we seek to solve are even greater. And while the federal government ought to be learning from and expanding these efforts, in too many cases government is getting in the way by creating unnecessary barriers, stifling innovation, and investing in programs that do not work.”
Barrett hopes to change that. She says, “America Forward is turning the page from an era of unprecedented gridlock to one of unprecedented problem solving.”
She adds, “The organizations that America Forward works with recognize that policy change is an essential part of scaling the solutions that they are advancing on the ground, and have come together as a Coalition to advance a policy agenda that champions social innovation.”
Barrett reports that the formal launch of the effort last month included the release of a briefing book called Moving America Forward: Innovators Lead the Way to Unlocking America’s Potential. She explains, “This book offers transformational policy ideas shaped by the experience of social innovators who are solving problems in their communities every day. These policy ideas are framed around five challenges for the next President, including government that works, education for the future, ‘market-able’ America, first jobs, and second chances.”
America Forward is hoping to get the attention of presidential candidates and policymakers. Barrett says the solutions to America’s biggest problems are apparent. “To scale the results we are seeing everyday on the ground in communities across the country, it is imperative that we activate America’s problem solvers. We envision a government that identifies innovative solutions, invests in what works, and engages everyone to solve our nation’s problems. By doing these things, we believe that together we can move America forward,” she concludes.
On Thursday, November 5, 2015 at noon Eastern, Barrett will join me for a live discussion about America Forward and the solutions that she sees to some of America’s biggest challenges. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.
More about America Forward:
America Forward is a nonpartisan policy initiative of New Profit, a national venture philanthropy fund that seeks to break down the barriers between all people and opportunity in America. America Forward unites social innovators with policymakers to advance a public policy agenda that champions innovative and effective solutions to our country’s most pressing social problems. We lead a Coalition of more than 70 social innovators who foster innovation, identify more efficient and effective solutions, reward results, and catalyze cross-sector partnerships. Our Coalition members are achieving measurable outcomes in more than 14,500 communities across the country every day, touching the lives of nearly 8 million Americans each year. Since 2007, America Forward’s community of innovators has played a leading role in driving the national dialogue on social innovation and advocating for lasting policy change. America Forward played a critical role in the creation of a federal tiered-evidence fund aimed at scaling high-impact organizations and significantly leveraging federal dollars; our community influenced the creation of the White House Office of Social Innovation; and we continue to advocate for the inclusion of provisions focused on outcomes in key pieces of federal legislation. Together, we have leveraged $1.5 billion for social innovation and have driven millions of federal resources toward programs that are achieving measurable results for those who need them most. America Forward believes that our nation’s social innovators can lead the way to unlocking America’s potential — and help move all of America forward.
As Policy Director for America Forward, Lexi focuses on developing and implementing federal policy initiatives that accelerate social innovation, leading policy communications strategies, and supporting the education policy work of the America Forward Coalition. Before joining America Forward at New Profit, Lexi spent nine years in federal service. She served for six years on Capitol Hill as legislative assistant to Senator Richard Durbin, working on a variety of education, national service, and early childhood policy issues. Lexi also worked as a policy advisor at the U.S. Department of Education in the Office of Elementary and Secondary Education. Most recently, Lexi served as a Senior Policy Advisor on Education at the White House on the Domestic Policy Council, helping to shape and advance President Obama’s early education and K-12 education agenda.
Over the last 30 years or so, a growing movement that expects capitalism to drive social benefit rather than tolerate its own harm has led to a burgeoning demand for capital with a conscience. Michael Sauvante of Commonwealth Capital has developed a model for financing social ventures that could rapidly increase available capital for social ventures.
Michael explains, “Small business with 20 or fewer employees provide more U.S. jobs than all the jobs in big business, government, non-profits and all the other sources of jobs combined. Yet small businesses are struggling to survive and are desperate for capital and credit, both exceedingly difficult to obtain.”
“One of the biggest problems with raising money for such small businesses is that, unlike investing in the stock market where investors can buy and sell anytime they want, when they invest in small private businesses, investors cannot easily get their money out of them once they put it in. What is needed is a way for investors to support small businesses, but still be able to get their money out anytime they need or want to,” he continues.
His innovation has been around for decades, but Michael wants to breath new life into it for the sake of social enterprises. He notes, “BDCs (Business Development Companies) overcome this problem by serving as an intermediary between investors and small companies. BDCs are a special type of venture capital company that is a public company listed on the stock market. That means anybody can own a piece of them, not just wealthy people like they do in regular venture capital funds. It also means their investors get freely tradable stock that they can buy and sell anytime they want.”
He adds, “BDCs take the money they get from investors and invest it in and/or lend it to small companies. That way small businesses get the money they need, but their investor backers don’t have their money tied up if they need or want to get it out. Commonwealth Capital is taking the basic BDC concept further by forming lots of smaller BDCs under it to help spread this concept much wider than would normally be possible.”
Michael is passionate about social entrepreneurship. He says, “Small businesses are the backbone of every local economy. Commonwealth Capital (CC), along with other BDCs it will help to sponsor, will provide a means to financially help small businesses at an unprecedented level, all across the country. That alone will go a long way to uplifting local economies and making them more sustainable. However, CC was also formed as a special type of corporation called a benefit corporation. Benefit corporations are legally mandated to address the social and environmental needs of their employees, their customers, their suppliers, their investors, and the broader community they serve, in addition to paying attention to their financial bottom line. That makes them model corporate citizens and fixes what is currently broken with the old model of greed capitalism. And CC will require all the companies it invests in, lends to and/or acquires to follow that same beneficial mandate as well.”
On Thursday, November 5, 2015 at 2:00 Eastern, Michael will join me for a live discussion about the BDC concept for social entrepreneurs. Tune in here then to watch the interview live. Post questions in the comments below or tweet questions before the interview to @devindthorpe.
Commonwealth Capital (CC) is a California benefit corporation, Business Development Company (BDC). BDCs are public venture capital companies that invest in small businesses. Being a public company, anybody, not just wealthy investors can invest in them. And its investors will have freely tradable stock. CC thereby resolves what has been an irresolvable dilemma – how to invest in small private companies but retain the liquidity that comes with investing in large public companies. As a result of its “benefit purpose,” CC expects to work primarily with impact investors. Such investors pursue investments that normally have a sustainability focus around environmental, social and governance concerns.
Michael is the Executive Director of Commonwealth Group LLC (www.commonwealthgroup.net), the leading consultancy in the U.S. with respect to using Business Development Companies (BDCs) for Main Street small businesses. He is also the chief architect of Commonwealth Capital, a California benefit corporation, soon to be first benefit corporation BDC in the country. He has over 30 years of experience in founding and running more than a half dozen companies in diverse industries and has long been a progressive thinker in the field of sustainability, corporate social and environmental behavior, and corporate responsibility.
Sauvante’s philosophy for building sustainable businesses is outlined in “The Triple Bottom Line: A Boardroom Guide,” published in 2001 in the “Director’s Monthly” of the National Association of Corporate Directors (NACD). His efforts to change California’s laws (in 2004) to make corporations more socially and environmentally responsible (six years before the first state approved benefit corporations) is highlighted in the book, Megatrends 2010: The Rise of Conscious Capitalism, by Patricia Aburdeen.
He expanded on that topic in an article “Rewiring Corporate DNA,” published in 2008 by the Center for Business as an Agent of World Benefit at Case Western Reserve University’s Weatherhead School of Management.. His article “A Primer on Going Public: How companies too small for the national stock exchanges can access public capital” laid out the concepts that later would best be described as crowdfunding. Michael subsequently promoted the concept for regional stock exchanges, which resemble crowdfunding portals. His stock exchange idea was explored in the book “Local Dollars, Local Sense” by Michael Shuman. Many of Michael’s other ideas were published in a number of articles, books and other writings including, “A New Stock Exchange Where People and the Planet Matter” which explores the question, “What if there were a stock exchange where society and the environment were the top priority and profit a means to maintain continuity and not an end in itself?” Corporations listed on such an exchange would be valued based on how well they served society instead of solely by short-term profit. In 2002, Michael was recognized by the World Economic Forum in Davos, Switzerland, as one of 35 “Technology Pioneers” worldwide. For a full bio and comprehensive list of his writings, visit www.commonwealthgroup.net/sauvante.