Case Studies: Leveraging Public and Private Resources

While social entrepreneurs will never take the place of government, social entrepreneurship is uniquely positioned to help government officials better address societal needs in two primary ways: (1) leveraging public and private resources and (2) testing and developing solutions.

Because of their focus on financial sustainability, social entrepreneurs often end up identifying and capturing new resources, both financial and nonfinancial, to help them address social problems. Often this means that social entrepreneurs are able to implement solutions that have previously been too costly. At times, social entrepreneurs also end up shifting costs from public budgets to private resources, thus freeing up government tax revenue to address other needs. Two case studies provide examples:

• KaBOOM!
• ITNAmerica

KaBOOM!

Market Failure

Swing, slides, and seesaws are the setting for many a childhood memory. Creation of those playgrounds and outdoor play spaces for children has traditionally fallen under the domain of local parks and recreation departments of municipal governments. For many communities, however, building quality playgrounds competes with a variety of other pressing needs for limited public funds-often leaving children in poorer communities without access to great places to play. Unfortunately, the same places that lack public resources for playgrounds also typically lack private ones, as the parents who live there cannot pay for their own playground equipment.

Transformative, Financially Sustainable Innovation

KaBOOM!'s innovation was to leverage private resources by identifying an alternative revenue stream that would provide the organization with the funds to build quality playgrounds in underserved communities-thus adopting a no-market approach that channels new resources for playgrounds into these communities where the beneficiaries have no ability to pay. By working with major companies, including Home Depot, Sprint, and PepsiCo, KaBOOM! has been able to offer two products-corporate team-building and social marketing-that capture resources for playground building via donations, service fees, and employee volunteer time. According to Founder Darrell Hammond, "It's beyond sponsorship. It's beyond partnership. We've really embedded ourselves into corporations and become a part of their long-term strategy-not just their community affairs and do-good strategy, but their business strategy as well, which means that, from a fee side, they're willing to pay for it." Corporate volunteers gain team-building experience as they work with neighborhood residents and one another to fund, design, and build new playgrounds. KaBOOM! also works with companies to develop social-marketing campaigns centered on KaBOOM! projects. The result is a financial model that is almost 100 percent supported by fees.

As KaBOOM! has expanded in size and reach, the organization has been able to achieve even greater efficiency in its financial model, as a result of the cost efficiencies and benefits gained from operating at a much larger scale than municipal parks and recreation departments ever could. By linking a social problem without a market to a stable source of resources, KaBOOM! has built 1,196 new playgrounds in 11 years.

Societal Benefits

KaBOOM! has helped government to benefit Americans by developing and leveraging a new source of private resources that supplements public budgets, and at times even shifts costs from public budgets to private resources. This approach has helped to build playgrounds in communities that otherwise never would have been able to build them, or that can now spend the funding that would have been spent on the playground on other priorities.

ITNAmerica

Market Failure

Too often, older Americans must choose between their safety and their mobility-between continuing to drive as their abilities decline or remaining homebound and dependent on others after giving up their cars. Seniors, as a result, have the highest fatal crash rate of any driving population in the United States. Prior attempts to address this problem have failed to fully meet the needs of their target senior consumers. Senior transportation programs, often government funded, have typically relied on attempts to convince older people to ride buses or subways; on organizing volunteers to pick up vanloads of seniors for group trips; or offering rides to a handful of specific destinations, such as medical appointments. Finding these options insufficient, many seniors continue to drive when they are no longer fit to operate a vehicle, or become increasingly housebound as they restrict their own driving and become dependent on favors from family and friends. As ITNAmerica Founder Katherine Freund explains, "Depending on the private automobile for transportation is inadequate for years before people actually stop driving. And then people who do stop driving outlive that decision by about ten years. It's a very big problem because of the aging of the population. There are more older people. There are more older people living longer. There are more older people outliving the ability to drive longer. You can see if you multiply those things together you come up with a pretty big social problem."

Transformative, Financially Sustainable Innovation

ITNAmerica created a new option for seniors, providing rides in private cars available 365 days a year, 24 hours a day, with "door-through-door" service using a combination of paid and volunteer drivers. Taking a limited-market approach, ITNAmerica charges a nominal one-time membership fee of $35 and about 50 percent of the cost of a taxi for each ride. Payments must be made for every ride, but no money changes hands in the vehicle. Seniors fund their personal transportation accounts in advance and receive a monthly statement in the mail.

As the organization has embarked on an ambitious five-year growth strategy, ITNAmerica has been quite efficient in leveraging private resources. According to Freund, "We have a very flexible approach to resources. We say ‘money is one kind of resource, but there are other kinds of assets that have economic value.' And if we can find a way to capture different kinds of economic value, then we can use those resources also to pay for rides." Volunteer drivers, for example, make up about 40 to 60 percent of the driving team. This helps the organization keep costs manageable, and also offers a way for seniors to subsidize the cost of their own rides. Many of the volunteers who are over the age of 60 contribute their own volunteer driving time through ITNAmerica's Transportation Social Security program, building up credits in their personal transportation accounts for their own future use of the services while they are still safe and healthy to transport others. Family members may also supply volunteer time and make in-kind contributions of their driving credits to their relatives who are using the service. Seniors may trade their personal vehicles when they are no longer able to use them and apply the liquidated equity to fund their personal transportation accounts. The donated vehicles are often used to deliver rides.

In addition, ITNAmerica's software, ITNRides, plans and tracks membership accounts, rides, and distances, maximizing the efficiency of routes. Freund characterizes this system as one of the organization's most important innovations: "One way to describe it is that we married a very grassroots model to a very high-tech support system. So, we used technology to create efficiency, and we took the unusual step of building it ourselves, instead of purchasing off-the-shelf technology, so that it would be affordable to small organizations and communities."

Societal Benefits

ITNAmerica has developed a highly efficient model that ultimately funds itself-by capturing nominal fees from customers and leveraging private resources through volunteer time and community philanthropic support. When the organization starts up an affiliate program in a new city, it limits the amount of public funding it accepts to 50 percent or less of the capital necessary. Moreover, no public funds may be used for day-to-day operations, because ongoing use of public funds crowds out the development of the private community support so essential for long-term sustainability. Freund explains, "Most of the resources for transportation are private. If you don't have a model that is built to access them, then you'll fall into the pattern of being one of many providers in a turf war over the public dollars." She notes that while many social problems require ongoing public support, senior transport-which targets a population willing and able to pay modest fees-is not one of them. Once ITNAmerica affiliates reach their full capacity, the pubic funding that helped to get them started can be directed to other needs. As a result, ITNAmerica leverages minimal initial support from government to meet the transportation needs of older Americans across the country.