Changing the Way that Charity Changes the World.
Why are you still, my brother?
The lights go out in an hour, the guard is waiting;
why have you stopped here to gaze at the stars?
“Did you know they burn in silence?”
The whistle blows. Feet shuffle. The guard’s eyes rise.
What good is a flame that gives no heat?
What use is a blaze that cannot roar?
The guard draws near. The path grows clear.
Lights out,
Today, my friend Mark L. was released from prison … 20 years, 1 month, and 13 days after he first entered in October of 1994.
I met Mark when he joined the Prison Entrepreneurship Program in 2013. He was a member of PEP’s Class “Tenacious” 20, and he graduated in December 2013. Through PEP, Mark earned a Certificate in Entrepreneurship from Baylor University’s Hankamer School of Business.
As impressive as this certificate is (particularly for someone in prison), Mark learned something far more valuable than how to launch and grow a business. He learned how to live a life of purpose through service.
Mark Lewis in the Prison Entrepreneurship Program
After he graduated, Mark could have spent the rest of his incarceration the way that typical inmates do … watching TV, exercising on the rec yard, etc. But instead, Mark asked to return to PEP as a “servant leader.”
In the prison where Mark lived at the time, there were 520 inmates. Over 300 of these were currently involved in PEP: either as participants in the current class, new recruits awaiting the start of their journey, or past graduates who were still incarcerated. Within the latter group were a few dozen remarkable men who, like Mark, were volunteering to guide the classes that came after them.
PEP only has two staff members inside of prison on a daily basis… creating a student:teacher ratio of more than 125:1 (and needless to say, these are not your typical students). Their work would be impossible without the support of these extraordinarily committed servant leaders. These generous volunteers are the true hands and feet of PEP’s daily operations inside of prison.
Servant Leaders at the Prison Entrepreneurship Program’s facility near Dallas, Texas.
After guiding Class 21 from their Kickoff in January 2014 through their Graduation in June 2014, Mark was one of ten servant leaders who received a special invitation:
Transfer to another prison
on the other side of Texas
to bring PEP to other inmates.
Unlike their current facility, this new prison would have twice as many inmates… 1,040. And the men who accepted this challenge would be the only ones who were involved in PEP. The other 99% of the prison would be filled with members of the Texas Department of Criminal Justice‘s general inmate population.
Your task, should you choose to accept it, is to instill a new culture within this prison… a culture based on brotherhood, on love, on peace. You will be outnumbered 100-to-1. The other inmates will likely not share your values. But you will not be allowed to waver in your own.
These servant leaders knew that they would be subjected to harassment. They knew that physical, social, and emotional dangers would possibly confront them on a daily basis as they sought to transform the lives of the complete strangers around them.
And yet 10 of them accepted that call. And in August of 2014, they courageously joined PEP’s effort to expand into a new prison near Dallas, Texas.
Mark Lewis on the Day of His Release from Prison
Even among such servant leaders, Mark’s self-sacrifice stood out.
Shortly before he transferred, Mark was offered early release from prison. After more than two decades behind bars, he would finally be given his freedom.
And yet … he declined it and opted to stay in prison. Why?
With a level of sincerity and humility that I have found increasingly common among the men whom I have met in PEP, he told me:
I was chosen for a reason. My job is not yet done, and I am going to see it through to the end.
By sacrificing months of his own freedom, Mark equipped nearly 40 other inmates to complete this new program in PEP. He showed them a profound example of the transformation that would be possible in their own lives.
And today … after 7,349 days behind bars … Mark is free at last.
Welcome home, Mark!
ABOUT PEP
An independent evaluation from Baylor University determined that the Prison Entrepreneurship Program outperforms all nine other prison rehabilitation groups in Texas with a long-term success rate as high as 95%. This study determined that every $1 donated to PEP generates at least a 340% ROI. Learn at www.PEP.org.
This story was originally posted on November 14, 2014 on LinkedIn. It was later distributed via StackStreet.
At the Prison Entrepreneurship Program, we just announced one of the most significant milestones in our organization’s recent history … the acquisition of a master franchise for the entire state of Texas by our for-profit subsidiary, the Communitas Auto Group.
(Read more here)
Over the next twenty years, we will develop around 20-30 automotive repair shops under the brand of The Auto-Lab Complete Car Care Centers. These shops will provide hundreds of living wage jobs (many of which will be for graduates of PEP); by 2023, we anticipate they will also grow to provide around $1 million per year in revenue to support PEP’s mission.
Those facts alone are worth celebrating. But there are two aspects of this initiative that get me even more excited… because they are far larger than just PEP.
First, this effort represents a seismic shift in the franchising world. There are fewer than 100 franchise stores that are owned by nonprofits; most are in the food services arena, like Ben & Jerry’s, Nathan’s Famous, Annie’s Pretzels, etc. And in the majority of cases, nonprofits only own a single store.
Through our subsidiary, PEP owns the rights to the entire state of Texas for The Auto-Lab. Within a few years, we will likely own more franchise stores than any other nonprofit in the country.
This will be a game-changer for nonprofits, because we will prove the value that nonprofits can bring to the franchising community as BUSINESS PARTNERS. After all, here are some of the assets that PEP brought to the table that most typical franchisees lack:
The latter is particularly valuable for franchisors. Once we open a store in Houston or Dallas, we will have thousands of people in those markets who already know about PEP and who would be willing to give our store a try. And for a new entrant to the market, that is an invaluable asset to tap.
Further, within each of those three groups above, we have not only potential customers and employees … but potential investors. And more importantly — potential franchisees.
Yes, this venture will provide jobs for our graduates and revenue for PEP.
But the broader impact will be on how we can transform the way
that the franchising community looks at nonprofits.
Thankfully, the remarkable leaders at The Auto-Lab had the vision to see what we could offer. Yet throughout this process of securing a franchise, we encountered a high degree of skepticism from other franchisors about working with a nonprofit (let alone one that worked with felons!). The success of Communitas Auto Group will force other franchisors to take notice … and, we hope, become much more open — indeed, eager! — to engage nonprofits as franchisees.
That is the first reason why I am excited.
But the second makes me even more so.
To fund this initiative, we pioneered a new financial model, with the help of software similar to what is offered by Synario, that we believe could serve as a template for how to finance social enterprises and earned income initiatives owned by nonprofits. Thanks to the guidance of our board and some very wise counsel from one of the preeminent Houston corporate law firms, we have built a model that allows the Communitas Auto Group (“CAG”) to harness the power of private equity while maintaining PEP’s long-term ownership of the venture. This is definitely a step in the right direction, but that’s not to say that we won’t need the help and guidance of somewhere like Sidley Austin in the near future to ensure that we get the advice we need to be successful in our ventures, as well as staying within the appropriate law.
In brief, CAG is incorporated as a for-profit company. As explained in the link at the top, CAG was capitalized with an initial investment from Mike Humphrey of Houston, Texas. Mike is now the majority owner of the venture, but PEP was granted a sizable carried interest in CAG at essentially no cost. There is a mandatory distribution to PEP of $50,000 per year from CAG, and a scheduled buy-back of the equity from the initial investors through the profits generated by the business. This will allow PEP to fully own the company within approximately ten years, if CAG grows in line with our conservative financial models.
Once that occurs, we anticipate that CAG will be contributing approximately $1MM per year in unrestricted revenues back to PEP. That is the equivalent of building a $25-30MM endowment for the organization … only this is one that creates hundreds of jobs along the way for our graduates.
All without relying on philanthropy.
THAT is what is really sexy about all of this. We are blazing a new trail in how mission investors can complement their charitable giving with strategic investments that create both market returns AND social benefits.
And when we can do that … we exponentially multiply the amount of funding that we can access. After all, just look at the world of grant-making foundations. They distribute, on average, 5% of their assets in the form of grants. But the other 95% is held in investments.
By tapping into that 95% … we effectively multiply the base of support available by a factor of 19X.
That’s no different for major donors. However generous they are, the vast majority of major donors have more money in their investment budgets than in their charitable giving budget. By tapping into those far larger pools of capital, we dramatically expand the percentage of “wallet share” that can be tapped by the social sector.
And THAT is something that our team will be very proud to leave as part of our legacy.
Onward!
self portrait as a shadow on a prison parking lot
The paths down which we walk within our dreams
have led us to this place we dare not sleep:
this place where waking is not what it seems.
Our words have traveled down the narrow streams
of halting conversation from the deep
chasms carved by weeping in our dreams.
What scribes have caught our thoughts within the reams
of parchment buried deep beneath the keep
that slumbers here where waking shows no seams
against the teaming cauldron of our schemes,
across the patchworked calculus we heap
to bind the paths down which we walk our dreams
like dogs that bark at every light that gleams
within the shadows cast around the sheep
whose dim-eyed waking is not what it seems?
None but these, who prowl upon the lams
to gauge the ripeness of the time to sweep
along the paths down which we walk in dreams
towards a waking state not what it seems.
licensed via creative commons
A place from which you can’t escape is prison.
A place to which you must return is prison.
The space between the place where you were born
and everywhere you fear to go is prison.
Your shame has strapped a saddle on your back
and whipped your ass to ride you back to prison.
Their faces — all the ones you can’t forgive —
become the guards who lock you in your prison.
Pull back the shades; reveal the fragile glass
that forms the razor fence around your prison.
What taste now aches within your bitter palate?
What sweetness haunts your memory in this prison?
You see your lover standing at the gate.
You wave to her — but turn into your prison.
“Injustice anywhere is a threat to justice everywhere.” – MLK
My friend Salah Boukadoum is the founder of Soap Hope, an amazing company with an even more amazing mission. In brief, they sell all-natural, organic, high-quality products … and invest 100% of their profits in microloans to impoverished women. Their model — which Salah calls the Good Returns model (click for his TEDxGrandRapids talk on the topic) — can equip any company to generate a sustainable impact on the world at no direct cost to them other than a year of interest.
But that is not why I am writing about Salah. I am writing about him because I was shocked into a stupor by a very poignant question that he asked on Facebook. I post in its entirety below… and welcome your thoughts.
Why, when a skier is lost on the mountain, do we deploy a search party using helicopters and snowmobiles to see if it’s possible to find him and save his life, but we don’t deploy anything for the child whose life is in grave danger in a village in Africa? The skier consciously made the decision to take a dangerous path, but we don’t hold that against him and give up on his life. The child made no decisions, and was just born in a place of grave danger. If we abandoned the skier on the mountain, we would be accused of being heartless and inhuman. But we abandon the child every day.
The reason boils down to who we consider to be in our community. This is the same reason we celebrate when a plant moves from Mexico to Texas, and denounce a plant moving from Texas to Mexico – the job in our community is more important than the job in “their” community. It’s the same reason that a massacre in our country is worthy of a trillion dollar global mission, but a massacre in Syria is not worthy of any action at all. Because “they” are responsible for “their” problems, and “we” are responsible for “ours.” Who counts in the “we” and who in the “they”?
If we are going to express the full potential of humanity, we will need to expand our understanding of our community to include all people, in all places. Because determining the value of a human life on where you happen to be born, or where you happen to be at this moment, is the same as determining the value of human life by rolling dice.
Robert Egger, founder of DC Central Kitchen, founder of CForward
“Just be cool, drop f-bombs & embrace an unwavering faith in the power of #nonprofits to help rebuild the economy & you’re there.”
NFTE Dallas
Among the many privileges of my career, I have the honor of working alongside some of the best nonprofits in town. This morning, I was invited to speak to the students of the Network For Teaching Entrepreneurship (NFTE) at their 3rd annual Young Entrepreneurs Rally.
NFTE is a remarkable organization that is always on my short-list for year-end donations. They are a national nonprofit organization that partners with public school systems to offer a course on business basics and entrepreneurship to students (primarily focusing on children from low-income families). While they have created many entrepreneurs who have grown up to launch successful businesses, this is actually not their primary goal.
Their primary goal is to use the theory of entrepreneurship to build a bridge between the core academic curriculum in the public schools and the way to make money in the real world. It is very hard to get a teenager excited about algebra… but it is remarkably easy to get them excited about making money. Teenagers like the thought of making money, so teaching them from a young age how to save and make money is one way of teaching them important life skills. For example, lessons on maths don’t interest a 15 year old. However, lessons on saving certain amounts of money (perhaps by using coupons like eBay coupons, or selling clothes) will grab their attention for a lot longer.
By building this bridge, NFTE is successfully increasing school attendance, grades, test results and — most importantly! — graduation among a group of children who are at the highest risk of dropping out.
Here is a shocking number: in 2008, Dallas had the nation’s worst dropout rate among cities with over 1 million people.
NFTE Dallas directly targets this problem by connecting one of these children’s primary desires — to make money! — with the necessity of making good grades and graduating. I think that this is a very elegant solution to the otherwise intractable problem of low academic achievement in public schools. When you combine this model with my deep respect for the organization’s board and staff (who will manage to engage over 2,000 kids in their program this year), you can see why I would be so happy to join them on a beautiful Saturday morning for a few hours.
Today’s event was at my alma mater, University of Texas at Dallas. I love driving into the campus, which is markedly more beautiful than when I completed my MBA here in 2006 (thanks to the generosity of Mrs. Eugene McDermott). The tree-lined drive up to the Naveen Jindal School of Management provided a serene backdrop for me to prepare my remarks for the day.
After parking my car and walking up to the school, I finalized my idea for how to present on the topic that I was assigned: “Money Matters: How to Raise Funds for Your Business.”
This class of 18 was comprised of students from 4-6 different high schools. Most had never seen each other before. Needless to say, this group of aspiring entrepreneurs was not feeling incredibly talkative when the class began.So, of course, I did not make silence an option. We started by having them brainstorm possible sources of capital. While I have had this conversation many times before, today’s responses shocked me.The first response was “ask a wealthy person.” Then, silence.Finally a second response: “you could start a lemonade stand.”
Basically, the student’s idea was that to fund a larger/riskier venture, you should first start another, less lucrative one that has more of a guaranteed income. Other students agreed — with another idea coming to do a car wash.
I prodded some more. No one had any ideas. Finally, the student who had the lemonade stand idea said: “Maybe a bank?”
We wrote all of these down. And then I mentioned some others, including CDFIs (microlenders) like the PLAN Fund. I then told them that the most common way to fund a business is to raise capital from friends and family.
The response was mostly blank stares and a few eyes rolling. Here I was, a white guy in a suit-and-tie, talking to a predominantly black and Hispanic group of public school students about raising money from friends and family.
The facts are not foreign to me. Around 90% of students in the Dallas Independent School District are on the free- and reduced-price lunch (i.e. their families have incomes less than 185% of the federal poverty level).
Later, when we were talking about the students’ ideas for businesses, one soft-spoken girl in the back row raised her hand. She said that she had a business idea but that it would “not be something that people in my community could afford,” and she wanted to know how she could learn about building a business, whether it be an internet sharing business (https://www.rmhbangor.org/how-to-start-an-internet-sharing-business/) or anything else, to serve the wealthier demographics of other communities.
It was a fair question. In many ways, it is no different than any other entrepreneur asking how to learn about accessing a new market where they have little knowledge or few relationships. But somehow, all of the lessons that I learned in this very same building about “expanding businesses into new markets and geographies” did not apply here.
Her question did not just arise from curiosity about opportunities in new areas.
It sprung forth from the same source that caused many of these students to roll their eyes at my proposal that they could raise initial funds from their family and friends:
It arose from these children’s basic self-definition as being outsiders. Being “low-income,” or — worse — “at-risk.”
Instantly, my thoughts turned to my own daughters. I could not imagine them ever self-identifying as “at-risk” for anything other than physical health problems handed to them by their genetic code.
Yet here was this girl — someone else’s child, the daughter of a stranger — who could not fathom her community providing her with the initial support to launch her dream . . . let alone the on-going support to sustain it.
As she spoke, heads nodded around the room. This was not just about this girl. This was about all of these children, and the thousands more who fill the classrooms of the DISD each day.
What dreams lie within their hearts, unspoken for fear of watching them die? How many amazing entrepreneurs, artists and leaders lie hidden even from themselves because of an inability to see a path for their talents to be utilized?
What dreams do we hold for our neighbors’ children? for those whom we will never meet, yet whose lives are so intimately tied to our own that we cannot truly separate our own dreams from theirs?
What Dallas do we imagine handing over to the next generation — one in which opportunity is allocated merely by selecting the right parents, or one in which the dreams of every child are provided rich soil in which to grow and mature if provided the right love and care by their owner?
I do not know. But I do know this — the work of NFTE, the PLAN Fund, and hundreds of other local nonprofits all give me hope that the answers to those questions will be better for the children of the children with whom I spoke today.
But that is not enough. We cannot write off entire generations of children under the banner of “slow and steady progress by the charitable and educational institutions” of our community.
We need business leaders to volunteer with NFTE to walk into these classrooms and inspire these young people to believe in themselves. We need them to mentor these kids — not just throw canned goods at them through food pantries and keep them locked in free after-school programs during the hours when we don’t want them out on the streets.
We need to dream not just of our own future, or of the futures of our own children, but of all children. We need to collectively will our community into achieving its own potential, which can only be the case when there is no child whose greatest barrier to their own success is their inability to believe in themselves.
Hannibal the Great
I recently had the chance to enjoy a lunch with Patrick Esquerre, the founder of La Madeleine Country French Café. Over a delightful meal of mussels and lamb at the impeccable Salum, we discussed Patrick’s career as an entrepreneur and philanthropist.
Patrick offered an interesting analysis of the three types of people involved in any successful venture:
On the latter, he cited examples such as the brilliant military commander, Hannibal the Great, who not only envisioned a way to beat the Romans by leading his war elephants over the Alps, but had the capacity to motivate his armies to do so.
In the world of social enterprise and nonprofit management, we need more “bridger-steppers” who are capable of balancing the relentless pressure of today with the focus on improving the situation tomorrow.
This is no small feat. While our peers in the private sector can rely on executive leadership, we generally must rely on legislative leadership (as discussed eloquently by Jim Collins in his brief but wonderful volume, Good to Great for the Social Sectors). This is quite a challenge, particularly when most nonprofits are saddled with the burden of a constantly rotating volunteer governing board whose members are largely uninvolved in the organization’s daily operations (particularly fundraising). Worse, they are largely unaffected by their own poor performance compared to their peers on for-profit boards (whose incomes will be affected if their company under-performs).
Add to this the pressure of under-resourced staff teams and the chronic impoverishment of the philanthropic “annual recapitalization” financial model, and you can see why most leaders capable of being “bridger-leaders” either go into the corporate sector … or, increasingly, just start their own private venture. Entrepreneurship is a noble pursuit with its own immense challenges, but what our world needs is for more of these talents to be harnessed by the social sector. Only then will we see large-scale progress against poverty, illiteracy, disease and a faltering sense of genuine community among people at all levels of wealth.
Or, as Collins might say, we need the great to focus on the good.
Carlos Sepulveda, President and CEO of Interstate Batteries, delivered the following “Five Requirements and One Standard” at this morning’s Core24 event hosted at Jones Lang LaSalle.
Five Requirements
1. Deliver Value
2. Develop People
3. Deposit Positive Net Cash (“the more you take, the more you should bring back”)
4. Demonstrate Area Expertise (“Are you a thermometer or a thermostat?”)
5. Display Commitment to Enterprise Success (“care as much about the success of the organization as your personal success within it”)
One Standard
Collaboratively demonstrate the above requirements consistent with:
– Our mission statement
– Our philosophy statement
– Biblical principles
– Common Sense
– Sound business practices
Thank you to Sunny Morris (@sunnymorris) for organizing!
Click to learn more about my first children's book, which explains incarceration to children with a parent in prison. You can also buy the book on Amazon here.
Click to learn more about the children's book I created for the North Texas Food Bank, which explains food insecurity to children who want to help others. Rather than emphasizing charity, the book integrates a participatory model that demonstrates how to engage those who suffer from hunger in co-creating an equitable community solution to it.
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