How a nonprofit human services program came up with a fun-raising effort that will raise the roof in more ways than one.
Marin County has been leading the Bay Area in dealing with the homeless issue for some time. Homeward Bound of Marin is a nonprofit agency incorporated in 1974 as the Marin Housing Center. Prior to its establishment, a mix of congregations and community groups individually provided shelter and support for homeless people during emergencies and especially cold and wet weather. Deciding they could more effectively handle the rising population of homeless men, women and families, the interfaith group recommended the formation of a separate, public benefit, nonprofit organization whose sole (and soul) purpose was to shelter people.
In the early days, the shelters Marin County provided were comparable to emergency shelters cities and counties everywhere routinely established in armories or other warm, dry and affordable places that could be opened when the rainy season arrived.
Back then, the National Guard Armory was used from October to May each year to shelter Marin’s homeless people. But with the impending closure of Hamilton Air Force Base in Novato, the winter shelter was moved to a big tent on the outskirts of the base, circling the temporary quarters with a security fence to calm the nerves of residents fearful of what a community of homeless people would do to the neighborhood. The tent was later exchanged for a warehouse situated on four acres of the mothballed air base that Homeward Bound had acquired under the McKinney Act, which identifies homeless services as a primary use of base closures. But warehouses are intended for just what the name implies: storing things you no longer need, don’t need yet or just don’t know what to do with.
As the result of a blue-ribbon taskforce on homelessness, a new vision emerged. Built in 2000 at a cost of $4 million, the New Beginnings Center is a year-round transitional home for 80 single men and women who, for one reason or another, find themselves homeless. And rather than serving as a warehouse, New Beginnings is a launchpad for its residents, providing them with counseling, training and the stability necessary to climb out of the situation that made them homeless to begin with.
By all standards, the program is a success. About 75 percent of New Beginnings residents become self-sufficient and move into their own independent living situation. Most residents can stay up to six months although if a resident is clearly moving effectively toward independence that time period can be extended. Veterans can stay up to two years.
The operation’s central location—across the street from the Courtyard Marriott Hotel, a skateboard park and residential homes priced in the high six figures—has helped to overcome stereotypical (and sometimes hysterical) fears about what a homeless shelter could do to the neighborhood. Through a contract with the city of Novato, the skateboard park is actually opened, closed and maintained by residents of the New Beginnings Center.
The program has been so successful, in fact, that New Beginnings has, in recent years, become a model for other communities, including Sonoma County, that struggle to sell innovative homeless programs to skittish political leaders and worried homeowners. But New Beginnings is only the beginning—and by itself isn’t sufficient for dealing with the number of Marin’s homeless that need help getting back on their own feet.
Finding the key
Homeward Bound is embarking on a major expansion of the New Beginnings program by building another 32 units of transitional housing, a large commercial kitchen, conference center and offices for Homeward Bound’s administrative staff. It will be called Next Key, and to make it all happen Homeward Bound has borrowed from the playbook of the private sector—adapting a fund-raising scheme generally found in the world of bottom lines, profit margins and stock indexes. In effect, it’s the nonprofit cousin of the initial public offering, and Homeward Bound is believed to have launched the nation’s first “IPO” in the world of human service agencies.
Homeward Bound has approximately $6.5 million either in the bank or otherwise committed to the expansion project. But Next Key is going to cost $9.5 million, and that means Homeward Bound needs to raise another $3 million.
Mary Kay Sweeney, executive director of the organization, says the idea of making up the difference by using a fund-raising mechanism learned from private enterprise came to her when she read about a Marin County bank raising capital through an initial public offering.
“I thought, ‘We should be able to do this kind of fund-raiser, too,’” she says.
Thus was born Homeward Bound’s IPO, a variation of the initial public offering that’s being called “an immediate public opportunity…to end homelessness.”
Homeward Bound is “issuing” 200,000 shares. The price is $32 a share. If all the shares are sold, that’s $6.4 million—well above the amount needed to pay for the expansion project. But it’s really not an IPO in the business sense, and investors who buy “shares” won’t own any part of Homeward Bound, says Paul Fordham, development director of Homeward Bound. “But it is using investment strategies to help people move out of poverty,” he says.
Sweeney explains that shares are priced to make it very easy and affordable for almost anyone to become part of the solution to one of the nation’s most critical social problems. “This is for people who don’t have a lot of resources,” she says. “For $32, they can be part of the action. Everybody can take stock in their community.”
The IPO was launched in May 2007 during Affordable Housing Week in the nine Bay Area counties. Within three months of the launch, more than 13,800 shares were sold, raising $441,000. The idea captured the imagination of the community and found friends and supporters with unusual spheres of influence—from the very highest levels of the investment community to icons of popular culture and even beyond the nation’s borders.
Homeward Bound board member David Smith of Tiburon encountered his friend Warren Buffett, second only to Bill Gates in personal wealth, at a Berkeshire Hathaway annual shareholders meeting in Omaha, Nebraska. Though Buffett doesn’t traditionally invest in IPOs, he agreed to buy a share.
“He bought the first share,” says Fordham. “We only asked him to by one share, as we were particularly interested in his endorsement and how that would capture the imagination of the local community.”
It worked.
“News that he had bought a share in an IPO—and that it was the first ever nonprofit IPO—projected our cause into the headlines locally, nationally and across the world,” says Fordham. “We’ve received share purchases from as far away as the Netherlands, Canada, England, New York and have even had interest from China.”
The Buffett marketing shot was heard across Marin County, too. Rock and Roll Hall of Fame singer Sammy Hagar, a Mill Valley resident, also put his influence behind the project with the purchase of what Fordham calls a “significant amount of shares.”
To carry the campaign further, Hagar and Buffett were among several of the IPO’s investors—in addition to Neil Hennessey of Hennessey Funds in Novato and Yau-Man Chan of “Survivor Fuji” fame —to donate their names and faces to a series of quarter-page ads that the Marin Independent Journal has been running at no charge to support the program.
The IPO is pushing the kind of buttons Sweeney and Fordham had hoped for, and a spirit of community support and friendly-but-serious competition is emerging. Marion Weinreb, whose firm, Marion Weinreb & Associates, advises pharmaceutical and medical device firms on regulatory guidelines, recently bought 500 shares and challenged other businesses to match her $16,000 investment.
“I’m a community-minded person. I think, as a businessperson, I have a social, moral and ethical responsibility to give back to the community,” she says. “The IPO is a great idea, and I’m hoping I can encourage other businesses to follow suit.”
Weinreb’s challenge went out to 700 Bay Area businesses and within a week or so, Grosvenor, the Bay Area construction and development firm whose projects include Hamilton Market Place in Novato, responded with a $5,000 investment (156.25 shares).
So what do you get for a $32 investment? A bigger and more complete program for homelessness, a problem that (given the current wave of housing foreclosures) could well get worse in the coming months and years.
Over the 33 years since its founding, Homeward Bound has established a network of 10 programs for homeless people, including 343 beds at several different facilities in Marin County. It serves as many as 2,000 adult men, women and families, including many veterans and people suffering from chronic mental illness. The New Beginnings Center on North Hamilton Parkway provides dormitory housing for 56 men and 24 women. Residents are eligible for job training, job counseling and assisted employment searches. Classes are offered in computer software, janitorial and building maintenance, public works, landscaping and gardening.
The Center also has the Fresh Starts Culinary Academy, which operates a commercial training kitchen that’s the basis of Homeward Bound’s professional catering service. In addition to helping support the Academy via a catering business that raises $50,000 a year, the kitchen cooks and serves more than 300 breakfasts, lunches and dinners to the residents. It’s also used for luncheons for community and business groups, Rotary Club meetings and other gatherings.
And the Center is a safe and clean place for homeless singles to get on their feet. All the residents have to be working. They pay about $280 a month in room and board, and they’re required to save 75 percent of their income (after their bills are paid) for becoming independent. This is the model Homeward Bound wants to expand under the Next Key expansion, which will be built in two phases. Phase One involves construction of 32 studio apartments for single men and women, couples or a single parent and child. Residents will be able to stay up to 24 months and must be in a job-training and income-earning program. Phase Two has several steps:
• Construction of a second commercial kitchen, approximately six times larger than the New Beginnings kitchen.
• A 150-seat conference center and classroom available to both Next Key residents and the public at large. The conference center will include a demonstration kitchen to work in conjunction with the Culinary Academy.
• Expansion of the Homeward Bound catering business.
• Administrative office space for a staff of about 10 (which now operates in a church in downtown Novato at an annual cost of about $30,000).
That’s the investment in community Homeward Bound is marketing to the North Bay in a colorful prospectus that introduces “an IPO that’s more than a tax shelter; it’s a human shelter.”
In return for helping support the program, investors will get annual “keyholder” reports documenting how residents of the program are progressing. They’ll be invited to an annual open house and will receive a share certificate they can hang on the wall of their office, classroom or home, a 10 percent discount on Fresh Starts Catering services and recognition in subsequent media attention. And they’ll own a piece of the public commitment to help their neighbors. For those consumed by the bottom line, the $32 share price is tax deductible.
Sweeney says the Next Key project is the product of recent community outreach Homeward Bound undertook trying to determine the next steps Marin County needed to take to deal with homelessness. “We had white-linen lunches for 30 and 40 people at a time,” she says. “Board members invited friends, sorority sisters, retirement groups, business partners and neighbors. We brainstormed, said ‘We need your ideas. What do we do next?’ And we kept notes.”
A plan emerged to expand job training, education and the availability of transitional housing. Homeward Bound then took the Next Key plan to Novato city planners and won approval—even the neighbors endorsed the expansion. “It’s pretty rare to have neighbors come out in favor of a homeless project,” says Sweeney.
Building on hope
Construction is scheduled to begin on Phase One this fall; at press time, a ground blessing was scheduled for September 26. Even though the organization has millions of dollars left to raise, Sweeney reasons that, at some point, an organization has to take a leap-of-faith plunge. “You have to set a goal,” she says. “And you have to set a date to reach it by. We’re going for it!”
Brian Scrip, community reinvestment act officer for WestAmerica Bank in Marin, says Westamerica has launched its own fund-raising campaign to support the Next Key project. It’s important for homeless people now and in the future.
“Homelessness is a problem in Marin County, and it doesn’t receive the attention it deserves,” he says. “I’m worried about the homeless issue becoming much worse because of the huge increase in foreclosure rates throughout all of the Bay Area counties.
“Forty percent of all homeless people are in families. Where will these families live after foreclosure?” he asks.
Homeward Bound is hoping it can help these families back into their own homes, and believes Next Key will be an important part of the network of services helping to end the homeless cycle. That’s the goal and vision espoused at New Beginnings, where Deputy Director Bob Puett often challenges the program’s residents.
Fordham says Puett often holds up his own house keys during group meetings and asks: “Who has one of these?”
The question is always met with silence, and that’s Puett’s point.
“Well, if you’d like a house key, stick with the program,” Puett tells residents of the transitional shelter. The IPO funds raised to build Next Key will be dedicated to that effort.
For more information on the Homeward Bound IPO, visit www.ipohomeward.com or call (415) 455-5681.
