Project Name: Primavera Foundation
Challenge: The homeless and former prisoners have trouble finding well-paying jobs and affordable housing.
Solution: Nonprofit temp agency and housing assistance projects that generate income.
Can a grassroots-oriented nonprofit organization launch businesses without compromising its social justice mission? Absolutely, says Peggy Hutchison, executive director of the Primavera Foundation in Tucson, Arizona. Hutchison led Primavera through the establishment of two entrepreneurial programs that generate income for the organization and social value for the participants.
NOW: What's the mission of Primavera?
Hutchison: Bringing social and economic justice to our community. We do that by focusing on the most marginal — which are the homeless. We provide services that are education and advocacy oriented. From drop-in programs for the homeless to shelters to transitional housing — housing that can last up to two years and people pay no more than 30 percent of their income on rent. We also have permanent affordable housing and workforce development programs focused on homeless people and people getting out of prison.
The philosophy is we meet people where they are and as they develop their goals and where they want to go we partner with them so that they can transform their own lives and transform our community.
NOW: What role does social enterprise play in your operation?
Hutchison: A little more than a third of our revenue comes from government contracts - government hires us to run transitional housing. Another third is fundraising and donated goods and services. The third area is income-generating, but it doesn't generate quite a third [of our income]. It's property management. We own all of our properties free and clear. We offer affordable housing — people pay under-market rate rent but that generates income. We have an assets-management plan like a professional property management company would. We make sure you fill apartments as soon as they become available. You learn to manage the property in a very business-like way. The property management helps pay staff salaries. Now we're not totally grant dependent. We're beginning to have some replacement reserves to add to the income.
Another line is Primavera Works — our alternative staffing agency program. That could be anything from landscape or maintenance to clearing debris to helping people move to construction. We make sure that the workers get a decent wage and we get a little more above that because we may provide transportation for the worker, lunches and water. Again we're working to help people to have a stable work history who haven't had one. But were also making a little bit of money to pour back into that program.
NOW: Who are your workers?
Hutchison: Many of the people getting the jobs are people who are unemployed or underemployed, homeless or vets or people getting out of prison.
NOW: How does the business perform?
Hutchison: We're very competitive. Although we pay higher wages than other companies they charge higher overall fees. The value to the business is that they want decent workers and people who can show up on time. All the added pieces — transportation, lunch, water, case management — a lot of temp agencies don't do that and that improves quality of worker. Even if another business can undercut us financially we've learned that if we provide quality workers who are timely, then paying a little bit more is worth it.
NOW: What's the social return of the business?
Hutchison: We're able to pay our workers a living wage. The more business that we can add, the more income we're bringing in and we can pour that back into the program and make it big and better.
NOW: And what's your other social enterprise program?
Hutchison: The other income-generating program is the Home Ownership Program. All of our services are free — our classes, our financial education classes. However we also prepare the loan package for people who want to purchase their first home. So, for example, someone has gone through home-ownership class and they're home-owner ready within six months and we partner them with one of our staff. They know how much they can afford. So my staff can say here are all the loan products available that are the best deal for you. If one of them happens to be with a bank [we work with] we charge that bank for each loan we close that comes from one of their loan products.
NOW: You must need a very different skill-set from the usual nonprofit employee.
Hutchison: All my homeowner team goes through rigorous training. The challenge is when you provide that training and you get top of the line staff it's easy for them to get attracted elsewhere. But that's another way we invested in the community - we're hopeful that the person will continue to see us as a value and support us as well as care about homeless and work poor in the community.
NOW: Have you had to make any compromises in the process of setting up businesses?
Hutchison: We've had to do a lot of internal leadership development and capacity building. Historically, nonprofits aren't built on a business model. We also do marketing now, not only fundraising. It's not compromises we've had to make as much as leadership and training to help staff be the best we can be.
NOW: What kind of business thinking do you need to run this kind of operation?
Hutchison: I created the position of a marketing coordinator. Somebody who could do a training with staff on how you market a service. How you work with businesses. Often people within social services are used to working with program participants but not work with businesses.
Another thing we're starting to do is forecasting to see what kind of workers are most needed. And as that forecast changes, how do we adapt? We look at a 3-5 year period. We have to be able to adapt within a year if some dynamic changes. We've just gone through a major housing boom in Arizona so it's been really hard to get enough construction workers. So that's starting to slow. How are we going to adapt to that? Where else are there gaps within the workforce that we could provide workers for?
NOW: Do you identify with the terms social entrepreneur or social enterprise to describe what you're doing at Primavera?
Hutchison: They definitely resonate but we haven't defined what were doing historically as that. I've always thought of what we're doing as income generation but it is very entrepreneurial. I think many people think of [social entrepreneurial projects] as something that start immediately as social entrepreneurial and immediately pays for itself.
NOW: How did you start thinking in entrepreneurial terms about Primavera's programs?
Hutchison: I came from doing global economic development. I came here and thought about whether there was something we could do that would generate income. Asked myself what are our lines of business? Now it's become so challenging and so competitive, some nonprofits are starting to look at what they do and ask: What would we say what are our primary lines of business? When I first came to Primavera we were doing property management but not treating it differently. So I set it apart and set performance measurements. We got staff trained in asset management and property management. And in the course of one year picked up $44,000. You go from taking a given and asking, how do you do that better?
The other place where I learned [about entrepreneurship] was when I worked with a nongovernmental organization in New York City and got to work with small community groups in North Africa and the Middle East and Latin America. I really saw how organizations could take a small amount of money and be creative in doing more. They get a small grant and they would turn it around and make more out of it. For me, it was very inspiring and very educational. How is it when people who are extremely poor are able to create wealth out of that? You begin to see wealth in a new way — as the assets of a community, not just dollars. And that broadened my understanding of wealth building and social entrepreneurship. It's about dollars, but it's about much, much more than that.