I have failed at my job.
To my credit, I’ve only been in my role for a few years and have spent most of that time developing new programs and shaking the trees for funding in response to government cuts.
To the credit of my peers in the nonprofit sector, we can’t do it all, especially with under-funded organizations and a historic “charity mindset” that works to alleviate symptoms rather than creating empowered, intelligent, coordinated approaches to structural change.
Government is often a scapegoat in these situations, but they also aren’t solely to blame. Lancaster City consists of a tax base where 30% of the population lives below the poverty line and 65% of the city budget is spent on the police and fire force and their rapidly escalating pension costs alone. Most of those public employees also live outside of the city, which removes a middle-class demographic from a population that skews heavily toward poverty. The City’s main way to increase revenue is through property taxes on a geographically constrained and nonprofit-heavy (i.e. tax-exempt) tax base. There is only so much they can do to proactively fight poverty.
To the point of individual responsibility – while this may sound like heresy in a conservative community like Lancaster – pulling oneself “up by the bootstraps” is virtually impossible if you don’t have boots. The roots and depths of poverty are deep and depend on the individual (both those in poverty and those exploiting the poor), the community and political and economic structures.
In light of the challenges faced by the nonprofit sector and government, I believe the largest current opportunity in the fight against poverty may be in the private sector. After all, it is the largest segment of our economy. In 2014, Government represented 13% of the US economy and nonprofits somewhere around 5% – leaving the vast majority of economic activity in the private sector.
While the federal government stagnates and nonprofits work to align our scarce resources, short-term hope lies in private sector businesses that operate with multiple bottom lines; not maximizing profit at all costs, but also considering the sustainability and health of the community as a whole when making business decisions. We need more companies that are innovating to fill gaps in the market. We need consumers who think about where their goods and services come from and how their spending decisions contribute to the problem or to the solution. Most importantly, we need businesses that pay living wages and work to employ those in our community with barriers to employment or who are working at minimum (or poverty) wages. After all, the surest path out of poverty is a good job.
Through our traditional work with underrepresented entrepreneurs, Assets helps people create their own jobs through self-employment. This includes training and innovative lending for those that can’t access traditional capital. Last year, we also launched the Great Social Enterprise Pitch – a social enterprise idea incubator and business planning competition with the Lancaster County Community Foundation, to spur additional private sector social enterprise growth. The hope is that these local social enterprises will create new economic opportunity around poverty alleviation.
In the past year, we have also been able to attract new government funding to make a low-cost loan of over $500,000 to a local social enterprise working to create “thriving wage” (a step above living wage) jobs in Lancaster City. As that loan is repaid, it will be recycled to make more impact loans supporting job-creating social enterprises in areas where jobs are needed most. The “social return on investment” of this kind of work is significant: for every dollar spent by a social enterprise, over $2.23 is returned to society in total benefits, primarily by reducing the cost of public assistance to those who were trapped in poverty and are now employed at family-sustaining wages. So while this type of lending may not have a huge financial return to Assets, the net value to the community is tremendous. We expect the capitalization of this loan pool will amplify the efforts of entrepreneurs to make a deeper financial and social impact in the local economy.
We can’t afford to fail in the fight against poverty. This means aggressively seeking new approaches, assessing impact and quickly adjusting course when needed. We have to do this work differently if we want to see different results.
Jessica King is executive director of Assets Lancaster, a nonprofit that provides “microenterprise” support, teaching entrepreneurs how to start and grow early stage companies.