Investing in People

Someone once noted that the houses make the town, but the people make the city. Similarly, historian Lewis Mumford wrote that if you are interested in the short term, plant crops, but if you are interested in the long term, plant people. The Sustainable Jobs Fund shows its interest in the long-term vitality of cities by investing in the people who live there.

David Kirkpatrick and Rick Defieux hatched the idea for the Sustainable Jobs Fund (SJF) when they were involved in events which matched promising recycling businesses with venture capitalists. Kirkpatrick wanted to help environmental companies which often have a hard time obtaining working capital. Meanwhile Defieux was concerned about the impact of welfare-to-work mandates on low-income citizens. They both felt that the environmental industry was well suited to generating jobs.

While almost all traditional venture capital goes to fund Internet and biotechnology companies that create jobs in the suburbs, this creative enterprise finances industrial and environmental businesses that create good blue-collar jobs in cities and economically distressed rural areas.

Today the fund anticipates a community development impact of more than 1,500 jobs created, along with revitalization and environmental benefits, as a result of its $17 million or more in investments.

With offices in Durham, North Carolina, and Philadelphia, Pennsylvania, the fund invests in growing environmental companies located in the eastern United States. To date, the fund has provided capital to companies from Tennessee to Massachusetts.

The sustainable products created by SJF portfolio companies are as diverse as the people the fund helps.

R24 Lumber in Charlotte, North Carolina, makes new products from wood that was previously land filled. Container Technologies Industries of Helenwood, Tennessee, makes engineered steel containers. Zapworld.com (which purchased a Massachusetts-based SJF investment) makes electric vehicles at its California and North Dakota production facilities, and SelecTech of Taunton, Massachusetts, makes flooring and outdoor products from scrap plastics.

"'Sustainable,' in our case, refers to three things," said SJF Associate Anne Claire Broughton. "It refers to the long-term and high-quality nature of the jobs created, the types of businesses we invest in, and the hope that these businesses will be around for a long time to provide good jobs in communities that need them."

SJF is structured as a limited partnership; limited partners include Metropolitan Life, Bank of America, the CDFI Fund of the U.S. Treasury Department, Deutsche Bank, First Union Corporation, MBNA America Bank, Citibank, a member of Citigroup, the John D. and Catherine T. MacArthur Foundation, and the Dakota Foundation. The Community Reinvestment Act is one incentive for banks to invest in low-wealth cities and rural areas, which they can accomplish through an investment in an entity such as SJF.

SJF and its ally the National Recycling Coalition, with funding from the First Union Regional Foundation, recently awarded a business development contract to a company called Greensgrow, which operates an urban organic farm located in inner city Philadelphia. Greensgrow not only grows lettuce and other vegetables marketed to high-end restaurants, but it grows them on a former brownfield and employs former welfare recipients from the neighborhood.

"Visiting the site today would show the physical transformation from a deserted brownfield to a dynamic farm with vegetables and wildflowers," Broughton said. "This thriving farm is contributing to the ongoing neighborhood revitalization and the livelihood of the people who reside there."

Broughton explained that a growing business, by definition, needs more employees. "We finance businesses that hire entry-level folks. We would not invest in a company that did not create a significant number of new jobs for our target population."

Paul Chaunt works at SelecTech in Taunton, Massachusetts, and was hired with the help of the Sustainable Jobs Fund. Chaunt says he will never look at plastics as "throw-away" items again.

"At first I just figured it was a job," Chaunt said. "After I started, I became excited about how we could use things other people would throw away to make something useful."

While at work, Chaunt separates different varieties of plastic so that they can be correctly blended, melted and mixed. Afterward, he explained, the molten soda bottles and other plastic items are poured into molds and cooled, becoming landscape timbers, floor tiles and planters.

Broughton said that by funding growing businesses like SelecTech that provide needed employment, along with tax base and environmental benefits, the Sustainable Jobs Fund has been able to bring about real changes in communities.

Also, environmental businesses like SelecTech often have a hard time obtaining bank financing. But equity investment help from the Sustainable Jobs Fund, Broughton explained, can be the leverage needed to get a loan. "Banks have a higher level of comfort making a loan when they see someone else willing to take a higher risk position." Broughton explained. "Also, banks prefer to fund hard assets like equipment and land, but these new companies also need funds to operate, which we can provide."

But the idea for a job creation-oriented fund isn't what sets SJF apart. "There are lots of inspiring stories of the impact efforts like ours have on communities," Broughton continued. "The thing that sets the Sustainable Jobs Fund apart is that we have a broad geographic focus--the Eastern U.S.--and a narrow sector focus--environmental businesses.

"Often when an employment base leaves, industrial towns are left without the help they need to get things going again," Broughton explained. "I've been impressed by other community development venture capital funds and how well they have been able to foster an entrepreneurial ethic and get people off unemployment, starting businesses and creating wealth.

"These are the things we need to see happen if communities want to bring about real and sustainable change," she concluded.

More information on the Sustainable Jobs Fund is available at www.sjfund.com.

Eric Miller

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