What goes around comes around – a brief historical perspective

In the late 1930s, in the midst of the Great Depression, the small Goodwill organization in Indianapolis was offering the following services:

  • A kindergarten
  • A pre-natal clinic
  • A dental clinic for school children
  • In conjunction with the Marion County Medical Society and Methodist Hospital, a home-based health care program
  • Classes for female heads of households. Topics included childcare, food preparation and purchasing, and how to run a household when a spouse is in prison
  • A library with books that mothers could read to their children

And yes, the organization also provided jobs in Goodwill stores. While the available resources and number of people served were small, the approach Goodwill took in those days was – using current terminology – holistic and dealt with the whole family.

When the U.S. became involved in World War II, Goodwill’s primary emphasis shifted to employing people – particularly people with disabilities – who previously had few, if any employment opportunities. Following the war, an emphasis on vocational rehabilitation was added. For the next forty years, Goodwill’s primary mission could be paraphrased as helping people – primarily, but not exclusively people with disabilities – prepare for, find, and keep jobs.

By the early 1990s, major societal changes – some of which began gaining momentum in the 1960s – prompted Goodwill to become involved in several initiatives designed to address growing social problems. Eventually, we launched efforts to try to improve education outcomes for young people who had struggled or failed in other settings. Those experiences, in turn, made us increasingly aware of the need to work with students and their families in a much more holistic manner.

Simultaneously, we began seeing a great deal of dismaying data that vividly illustrated the long term negative trends of a number of significant social indicators, despite massive increases in public spending and a huge proliferation of not-for-profit organizations. We also began searching for programs that have demonstrated long term positive impact reducing social problems.

As a result of all of this, we have begun implementing Nurse-Family Partnership in Marion County. In addition to the basic, nurse-led services offered under this highly regarded, evidence-based national program, each mom or mom-to-be will be linked with a Goodwill Guide who can assist her in accessing education services (e.g. through Goodwill’s Excel Centers) and/or employment opportunities (e.g. in Goodwill’s retail system). The Guide will also advise the mom on financial matters, housing and transportation, child care, and health care. It is a holistic, whole family approach that we believe can help reduce generational poverty.

With and for parents who so desire, we intend to take a similar holistic approach with the children of Indianapolis Metropolitan High School students and graduates, Excel Center students and graduates, Goodwill employees with barriers, and families of all of these individuals. To the extent possible and desired by the parents, we intend to maintain these relationships for a long period of time – ideally, until the children are grown.

As this approach develops, it may increasingly resemble Goodwill’s approach in the late 1930s – only with much greater scale, current information and technology, and, hopefully, long lasting impact – in the lives of people and in the larger community.

Goodwill and the Economy

Goodwill in central Indiana was founded in 1930 during the depths of the Great Depression. Since that time the organization has experienced the effects of several recessions, several wars, many changes in the political landscape at the local, state, and federal levels, and incredible technological changes.

During the recession of the early 1980s, it became apparent to us that nothing would help Goodwill or the people we assist more than a strong, growing economy. That continues to be the case.

Despite the economic challenges of the past several years, though, Goodwill has had some significant growth. At the end of 2007, we had 1867 employees in central Indiana. Today we have 2500, nearly 2/3 of whom have limited options because of disability, criminal history, or low education level. We weathered the most recent recession better than we had any right to expect. However, with continuing uncertainty about the economy, the toxic political atmosphere in this country, and a widespread lack of confidence that our elected officials in Washington will be able to agree on a course of action likely to lead to a renewal of economic growth , we wonder if we will be able to continue to grow.

Time will tell, of course, but at Goodwill we’re in a stronger position today than we were in 2007. During the last three years we’ve taken advantage of some opportunities that were a consequence of the slow economy and opened several new stores that have been well supported by our customers and donors of goods. We have also invested in and seen rapid growth in our e-commerce operations, which now employ 80 people. The success of these initiatives has helped further strengthen our balance sheet.

The largest customers in our Commercial Services Division, which employs over two hundred people with significant disabilities, are in sectors of the economy that are more stable than many, and funding for the schools we operate is likely to remain reasonably stable.

It’s not all positive, of course. The outlook for job opportunities for people who come to us for employment assistance is not likely to improve – and may even worsen – thus placing even more importance on Goodwill’s ability to provide jobs for a lot of people with limited options. That, in turn, is dependent on our ability to continue to grow our businesses in a financially sustainable manner.

Also, the amount of money we have to invest in new initiatives might be reduced by the negative effect of market declines on the endowment in the Goodwill Foundation. Fortunately, we do not rely on those funds for day-to-day operations.

The brightest comment we can offer about the gloomy economic outlook is that it will continue to be a good time for people to upgrade their education and skill levels. For those who lack a high school diploma, it’s a great time to return to school. The Excel Center, launched by Goodwill Education Initiatives in 2010, offers a viable option for many adults, and we’ve expanded the school this year in response to heavy demand. And for adults who have some college, but no degree, this may be a very good time to go back and finish.

We have no control over the economy. But we do have control over how we respond and adapt to the circumstances we encounter. At Goodwill, we will continue to take actions that we believe will enable us to have maximum mission-related impact while maintaining a financial position that will enhance our prospects for continued long term viability.

Early childhood development – a key to reducing a lot of social problems

Throughout Goodwill’s history, we have worked primarily with older youth and adults. Yet, the more experience we have and the more we learn, the more I have become convinced that if we are to substantially reduce the incidence of poverty in the U.S., we must dramatically increase our investment in children from the womb to kindergarten.

There is a large body of evidence illustrating the positive return to society of investments in high quality early childhood development programs for children in low-income households. For example, Nurse-Family Partnership (www.nursefamilypartnership.org) is a nurse-led, evidence-based home visitation program that works with expectant mothers from pregnancy until the child is two years old. Three decades of randomized controlled trials have shown incredibly positive long term impact, including:

  • 67% reduction in behavioral and intellectual problems in children at age 6
  • 59% reduction in arrests of children at age 15
  • 72% fewer convictions of mothers when children are at age 15
  • The Rand Corporation found a net return to society of $5.70 per dollar invested in Nurse-Family Partnership

More evidence comes from extensive research done by Professor James Heckman (www.heckmanequation.org), a Nobel laureate economist at University of Chicago. His work has confirmed high returns to society from investments in high quality early childhood development programs for children living in poverty. Professor Heckman emphasizes that many of America’s major economic and social problems – crime, teenage pregnancy, high school dropout rates, adverse health conditions – could be reduced as a result of early nurturing, learning experiences, and physical health from birth to age five – the most economically efficient time to develop cognitive and social skills, both of which are essential for success.

It’s sometimes useful to remind ourselves that no child had any choice about the circumstances into which he or she was born. Some were luckier than others. For children born into situations that lack advantageous educational and developmental resources, we can pay up front to help prevent problems and develop human potential or we can continue to pay much more downstream for public assistance, remedial education, rehabilitation, incarceration, and in all the insidious ways we all pay when economic growth is stymied by a poorly educated, under-skilled workforce.

Some say we have no money to do this. I say we can’t afford not to. Because there’s not enough to pay for everything everyone would like to do, we need to begin shifting more support from programs with marginal return to programs with demonstrated high long term benefits. Doing so will upset some people, but will result in a wiser, more effective use of the dollars that are available. The potential long term benefits are enormous.

Why do some social problems persist. . .

Why do some social problems persist despite massive expenditures to solve them?

Consider the following:

  • From 1968 to 2007, the amount of money spent on income security programs – the bulk of all federal anti-poverty spending – increased 484% in constant, inflation-adjusted dollars. Yet, the poverty rate is higher today than in the early 1970s.Federal Anti-Poverty Spending and Poverty Rates graph
  • Per-pupil spending – in constant dollars – on public K-12 education has more than doubled since 1969. Yet, measures of education attainment have fallen (e.g. On the U.N. Education Index the U.S. ranking has dropped from No. 1 in the world in 1980 to No. 17 in 2010).Elementary & Secondary Education Spending and High School Graduation Rates graph
  • We are incarcerating people at three times the rate we were in 1980 and four times the rate we were in 1970.Correctional Spending & Population graph

Consider, too, that as public spending on education and a wide array of social programs has increased, so too has the number of not-for-profit organizations. Yet, many major social indicators have gotten worse instead of better.

Why?

The root causes are debatable, but it’s safe to say there’s no single reason. Regardless of the causes, we have an enormous problem for which there is no quick fix. Long term thinking is essential, as is a willingness to face facts.

There is an enormous amount of data showing the links among poverty, low education levels, crime rates, teen pregnancy, and a number of health issues. They are inter-related and tend to negatively reinforce each other. Yet, we tend to treat them individually.

The public sector has a lot of resources, but typically administers them in large, bureaucratic silos – education, workforce development, social services, criminal justice, housing, transportation, etc. More often than not, those silos don’t communicate well with each other.The Public Sector graph
Meanwhile, the not-for-profit sector is composed of hundreds of thousands of mostly small organizations that do a lot of good work, but that typically focus on one problem, one target population, or one (often tiny) geographic area. It’s an incredibly fragmented sector that has great difficulty replicating what works and achieving scale.Not-for-Profit Sector graph

While a lot of the pieces needed to reduce some of the problems do exist, neither of our “helping” sectors is structured to deal effectively with complex social problems. Yet, our experiences working with people in high poverty situations reinforce the notion that if we are to have significant, long-lasting impact helping people move out of poverty, we must work with them holistically, in many cases with the whole family, and over an extended period of time.

We cannot solve our major social problems by layering on another massive bureaucracy, and spending more money to do more of the same won’t work either. We must try some different approaches.

So what can we do?

We can improve overall results by learning how to combine resources across organizational lines and across the sectors, aligning them in new ways toward specific goals. The not-for-profit sector could become more effective with a lot of consolidation, and social enterprises (organizations that operate businesses as a means of accomplishing a social mission) can play an increasing role, as can the emerging field of impact investing.

Our problems are pervasive enough that we need to attack them on multiple fronts simultaneously. But to substantially alleviate poverty in the U.S., the greatest long term impact would come from focusing on children in low income households from the womb to kindergarten. I’ll write about that in my next post.

Evolving to Increase Impact

In the late 1980s, most of the people we worked with were adults with disabilities. We employed several hundred and helped others become employed with other firms. Then we were asked by a state agency if we could help “welfare” recipients find jobs. We found that we could, but only low paying jobs because hardly any of them had high school diplomas. Still, we continued to provide “welfare-to-work” services for 17 years. Meanwhile, we also continued to work with people with disabilities. We had simply expanded our scope to include more people than before.

In the early 1990s, unemployment in the Indianapolis area was very low, and employers were desperate for workers. We responded by aggressively trying to find anyone who was employable, but not working, and helping them find jobs. In addition to persons with disabilities and those on public assistance, we started assisting larger numbers of people coming out of the corrections system and newly-arrived immigrants with poor English language skills.

In the mid-1990s, we became involved in the operation of the one-stop employment service centers in Indianapolis, which were serving an average of 45,000 unemployed people each year. When we started examining demographics, we found that 50% of those individuals did not have high school diplomas.

About the same time we were becoming increasingly aware of the magnitude of the dropout problem in several of the city’s high schools, and we began to wonder if, as an organization, we had anything to offer young people who weren’t headed in a positive direction. We thought that if we could help them stay in school and graduate, they would be less likely to need Goodwill’s services once they became adults. Therefore, our organization’s long term impact would be greater.

We became involved in a number of small scale initiatives with local schools, found that we did have something to offer, and started exploring ways to maximize our impact. That led to a decision to start a charter high school that has now completed its seventh year of operation. The learning from that experience and the relationships that have developed led to our designing and launching a second school, the Excel Center, to provide a diploma option for older youth and adults who had dropped out. The demand for space in the Excel Center has been overwhelming, and we will begin replicating the school this fall.

These and all other major steps we’ve taken during the past twenty-five years have been to increase the organization’s long term impact. A few years ago we articulated the following as the ways Goodwill can add the greatest value in the communities in which we operate. Those are:

  • Help young people and adults who have struggled or failed in other educational settings complete high school and attain a post-secondary degree or other recognized credential.
  • Employ people whose work options are limited by disability, criminal history, low education level, or other significant barrier to employment.
  • Help unemployed people become employed.
  • Leverage Goodwill’s resources with those of others to help develop and implement practical, effective approaches to reduce major social problems.

Of those four, only one – providing employment for people with limited options – has been part of the organization since its founding in 1930. The others are a reflection of how we have evolved over time as we’ve learned more, our external environment has changed, and our internal resources have increased.

That process continues.