What Works: Incubating Social Impact Enterprises to Drive Hyper-Local Revitalization in Pittsburgh

Objective: This case study highlights a new approach to building economic opportunity in distressed urban communities, using a model that brings together and incubates early-stage social enterprises and innovative nonprofits that share a joint commitment to reinvigorating their neighborhood. 

Geography: Pittsburgh

Major Participants: New Sun Rising; The Henry L. Hillman Foundation; The Buhl Foundation; The Pittsburgh Foundation; Neighborhood Allies; various local community development organizations, technical assistance providers and neighborhood stakeholders

Background: In the aftermath of Hurricane Katrina in New Orleans and Hurricane Ivan in Pittsburgh, brothers Brian and Scott Wolovich witnessed incredible grassroots efforts to rebuild and stabilize neighborhoods that were devastated by these storms. They were determined to help. So in 2005, they co-founded New Sun Rising (NSR), a nonprofit that provides fiscal sponsorship and mentoring to social enterprises. But a decade after NSR’s launch, the brothers realized few of these social enterprises went on to achieve long-term success. There just wasn’t a support structure in place that provided social innovators with the resources they needed to tackle real world problems and community challenges.

The Wolovich brothers hypothesized that hyper-local social innovation clusters, tied closely to the vision and goals of a specific community, would accelerate business and economic development in inner city neighborhoods where companies otherwise struggled to survive. In 2015, the organization revamped their programmatic offerings and launched a new suite of services (dubbed “MODEs”) to test that very hypothesis. NSR would begin with pilots in three Pittsburgh neighborhoods. Neighborhoods were chosen based on an assessment of community indicators and perceived fit for the MODE programs. NSR initially held roundtable discussions with six neighborhoods before selecting Millvale, Allentown (also known as “The Hilltop”) and Northside for pilot projects.

The Millvale pilot focuses on food-related enterprises and nonprofit agencies; the Hilltop works with social impact startups. The Northside cohort is still in the early stage of development where through a series of community conversations and workshops, NSR helps to identify entrepreneurs and community projects to help achieve the goals outlined in a community plan, the One Northside Consensus Plan.

How it Works: NSR’s efforts to promote social innovation and business growth are delivered via four channels:

• Ignite MODE is a series of strategic mentoring workshops and events where budding social entrepreneurs and innovative nonprofits have an opportunity to connect with like-minded industry experts. Ignite MODE provides a forum for people to ask questions, shape their ideas and leave re-energized and connected with resources to move their projects forward. To date, 68 percent of Ignite MODE participants have been women or minorities.
• Launch MODE is a year-long program split into a six-month incubation phase and six-month acceleration phase. Social innovators are grouped into pods of 10 and go through Launch MODE together. In addition to experiential group learning, ventures receive one-on-one mentoring and professional services to help them with business planning, growth strategies, web development, marketing/branding and legal/accounting support. Participants are also eligible for loans and grants with flexible repayment terms through the NSR Impact Fund.

  The Launch MODE call for applicants is directly tied to what the community has identified as its needs. Strong preference is given to neighborhood residents, those who want to have a direct impact on the neighborhood, or those who plan to establish a physical presence in the neighborhood. The majority of selection committee members are stakeholders from the community. Roughly 75 percent of Launch MODE participants had previously attended Ignite MODE workshops; the other 25 percent were recruited through a broader public marketing campaign.

• Grow MODE is NSR’s consulting arm that helps established social enterprises and innovative nonprofits bring their work to the next level. Services include new product development and refinement, impact fundraising, and shared management services that help ventures realize efficiencies, access new markets and scale their impact in the community.
• Arts MODE provides professional development and incubation for groups of up to 10 artists and art/creative organizations using an adaptation of the Launch MODE curriculum. Participation includes six weekly intensive business development training sessions, one-on-one mentoring, strategic and business plan assistance, and various group activities all specifically tailored to the unique needs of social artists and their organizations.

Services are delivered in conjunction with neighborhood-based technical assistance providers (local community development corporations) and a freelance network of local accountants, lawyers and marketing firms. NSR tries to hire and source partners from the local community to the greatest extent possible, aiming to facilitate existing networks through cross-sector collaborations.

Results for Local Economy: To date, NSR has worked with more than 120 social enterprises and community projects in Pittsburgh and surrounding communities. Now, many of these projects are becoming established businesses.

The first Launch Millvale cohort began in Spring 2015 and included 10 food-related ventures. The hyper-local cluster development approach appears to be working already. Growers are targeting products for retail establishments; distributors are aggregating products from local farmers to meet the needs of the local community; and three of the businesses that couldn’t have hired an employee just yet have jointly hired a single employee that works across the three companies on a full time basis. Four of the companies have established a physical presence in Millvale. Collectively, the cohort has raised more than $300,000 in investment and created six new full-time jobs.

Incubation for Launch Hilltop is currently underway and includes 10 social innovation teams focused narrowly on identifying and deploying strategies to activate local communities. The Ignite Northside workshop series is currently underway and NSR has worked with over 20 businesses and community project leaders to identify an appropriate mix of organizations to enter the incubation phase with their partner, the Riverside Center for Innovation. This incubation phase provides more intensive business support and consulting services to serve a total of 75 more well-established entrepreneurs and community project leaders this year.

Given the early success and demand for the MODE programs, NSR is planning to launch the initiative in three additional neighborhoods by September of this year.

Remaining Challenges: Teaching entrepreneurial skills (e.g. budgeting, cash flow analysis, managing talent) is critical. In order for these ventures to find long-term success, its leaders must be able to balance social and financial realities.

Another challenge has been identifying capital resources. NSR’s ability to advocate for and secure financial resources on an ongoing basis will be a determining factor in its ability to scale and implement the model in Pittsburgh and beyond.

One way to secure funding is to prove that NSR’s model works. In order to do that, NSR has to figure out a way to measure its impact. Traditional business development programs have well-defined metrics that typically focus on financial return on investment. But NSR programs target entrepreneurs and their effect on revitalizing community, and measuring social capital is challenging. NSR is working to develop tools that measure both economic and social impact.

Lessons Learned: NSR has learned that communities are full of innovators and creative minds – sometimes, people just need a vote of confidence and structure to pursue their ideas. The MODE process allows these innovators to develop a plan that they can vet with advisors, experts and other entrepreneurs. The peer group provides safety and security for teams as they all begin their initial foray into entrepreneurship together. They see that other teams struggle, too, but they can work through these struggles together.

NSR has also found that the success of ventures largely depends on the commitment of the individual entrepreneurs. Many are still working traditional full-time jobs and can only focus on their projects during off-hours and weekends. Balancing other commitments with the attention a startup needs is no easy task. Not surprisingly, teams that are more present and dedicated are already proving to be more successful. Likewise, the more present individual teams are, the more effective the cluster proves to be as a whole.

To learn more about NSR, visit www.newsunrising.org.