For years, the folks at the Clarence Darrow Community Center complained about the lousy lunches being served by their day-care program.
And then, in late 1980, they decided to do something about it.
They fired their catering service and began cooking lunches themselves for the 90 or so youngsters–most of them low-income residents of the LeClaire Courts housing development. And within a few years, they formed the Clarence Darrow Catering Service, whose six employees now service day-care centers throughout the city.
“Our business started by an accident, really, out of our desire to provide a good, balanced meal for our people,” says Stanley Horn, the center’s executive director. “The food we had been eating here was bland in taste and of poor quality. Instead of 100 percent ground beef, for instance, it would be soybean. And the vegetables they served us were not top quality.
“Well, next thing you know, word gets out that our food is better. And soon we started catering for Henry Booth House, and the Parkway Community House. That’s when we started our business. I got six more contracts. Suddenly we weren’t a little community venture anymore. We became a business.”
The center’s story is one of eight related in a booklet called Digging In, recently published by the Community Workshop on Economic Development, a not-for-profit network of community-based development corporations. Digging In is a textbook, of sorts, filled with case studies of community organizations that have succeeded–or failed–over the last several years in creating not-for-profit ventures to produce jobs and revenues for their neighborhoods.
“Our purpose is to press for community-based economic development,” says Tom Carlson, CWED’s executive director. “That has become a buzz phrase recently, and people aren’t sure what it means. We see it as projects that enfranchise residents in low-income communities. So many times federal programs are not invested properly. They never take root. But a community-based operation can help people if they control it.”
It sounds good on paper, but as Carlson knows–and Digging In shows–in practice, such ventures often go sour. The naivete and inexperience displayed in some of these hopeful attempts can be almost painful to relive.
“We hope to learn from our mistakes, and use them to make sure they are not repeated,” says Carlson. “You can’t just say ‘Well, we’re going to start an economic enterprise.’ You have to assess your organization’s mission and capacity. Businesses are not ends in themselves. Business activity is a means to an end. That means you have to set your goals: are they profit, jobs, or training? Do you need a consultant? Many times a consultant ends up running the program, which doesn’t give community people experience.
“You even have to consider whether the business should be located in the community. There was this group in Oakland, California, that ended up buying a Thrifty rent-a-car franchise at the San Francisco airport. That’s 50 miles away from Oakland. But the group saw tourism as a major part of the area’s economy, and so that’s where they got involved. The point is they created jobs for people who live in Oakland.”
Carlson has a ready supply of information, like the Oakland anecdote, that he gets through an informal network of grass-roots organizations he has put together. CWED has come a long way from its humble start, in 1982, as a loose coalition of neighborhood activists who were discouraged with the drift of community investment programs.
“CWED was started by a number of people who thought there should be an alternative to the type of neighborhood development that was promoted by most business groups,” Carlson recalls. “That’s exemplified by the world’s fair, where you pour a lot of investment in a project that no one particularly needs. It makes investors and designers and tradespeople–who largely live in the suburbs–a lot of money, but it does not leave much for the inner-city communities.”
At that time, unemployment rates in some communities soared above 50 percent. The entire country was in the midst of an economic recession, which in Chicago was made worse by changes in the city’s economy. Industries were closing and the service sector–based downtown–was growing. The only strategy government offered to reverse the tide was enormous tax breaks as incentives to promote investment in poor communities.
“In its early days,” says Carlson, “CWED was heavily focused on opposing enterprise zones”–blighted areas given tax breaks as inducements to developers. “We didn’t think they would do much for the residents in our communities. You might keep one factory from closing, but it doesn’t generate investment that people control.”
When Carlson took control of CWED in 1984, his main assignment was to build a network of organizations that could pool their resources. By working the phones and attending night meetings, Carlson managed to swell CWED’s ranks to 49 organizations.
“Basically, we operate a coalition and network,” says Carlson. “We’re also a policy forum. We like to say we’re a network for mutual aid, a forum for development, and a coalition that can mobilize its membership.
“Our members are community organizations from just about every area of Chicago. They range from Alinsky groups to settlement houses and community centers to public housing organizations.”
A couple of times a month, representatives of CWED’s member groups meet to discuss the progress of their work.
“We meet in the afternoon, from four to six,” says Carlson. “We serve coffee, it’s a good atmosphere, conversation is candid. People feel comfortable. They don’t hold back. There’s no sense in trying to disguise your problems.”
“You hear many sad stories of frustration,” adds the Darrow Center’s Stanley Horn. “But, in a way, it’s refreshing. You learn that you’re not the only group in the world with problems. You realize that you’re not alone.”
The big problem all of the groups face is financing. Essentially, banks, insurance companies, and other big investors do not invest in poor communities because they don’t think they can make any money there. The city’s resources are limited, and the federal government is cutting back. Thus, the challenge for any group is to creatively exploit what few federal or state funds exist. One group, the Uptown-based Organization of the NorthEast (ONE), toyed with the notion of using federal energy-conservation moneys to develop a laundromat operated by low-income women.
“ONE considered using a grant for energy saving as its equity financing for a laundry,” Digging In reports. “They were going to make the connection between the grant’s purpose and the laundry by making some innovative changes to enhance energy use–obviously a high cost of doing business for a laundry. In one case, [a] technician estimates that for $3,000 the laundry can be changed from a system of one boiler for heating the laundry, and individual heaters for each dryer. This adaptation would rechannel the heat and use one system to do both, with a savings of 10 to 12 percent.”
ONE, however, dropped that proposal, and their plans for the laundromat are on hold, according to Digging In.
Another problem with not-for-profit spin-offs of community organizations is that they can become top-heavy with staff hired before the financing was in place. This contributed to the downfall of Peoples Property Services, a spin-off from Peoples Housing Inc.
“Peoples Housing has been rehabbing housing for low-income people in the area north of Howard Street since 1981,” according to Digging In. “It has rehabbed 123 low-to-moderate-rent apartments, has another 25-plus housing units in progress, and manages these units.”
In 1985, the board of Peoples Housing founded Peoples Property Services, which ran landscaping and home-improvement businesses. The reasoning was sound, most observers agree. The area was undergoing a good deal of investment; its new residents would need home-improvement and lawn services.
But from the outset there were problems. Peoples Property Services went into debt by buying lawn equipment in expectation of a grant that never came through. Two staffers whose hard work was crucial to the project found new jobs and left the organization in 1986. Disorganized and hard up for cash, Peoples Property Services sought a bank loan. They were turned down, and the spin-off businesses closed last year. The key lessons to be learned from this failure, according to Digging In, are:
“Say ‘no’ to business venture opportunities for which the board and staff are not ready; monitor the business; and don’t expect (as many nonprofits do) to learn everything ‘on the job’ or that it will be possible to muscle through every difficulty.”
The catering company also had its growing pains, most of which, Stanley Horn admits, stemmed from ignorance.
“We started having problems because we operated from a social service perspective, not a business perspective,” says Horn. “We were losing money because we were literally giving away too much food. We were setting out adult portions for kids. It just never crossed our minds that our portions could be smaller.
“Another example has to do with vendors. They figured, you know, here’s this social service agency, we must have federal dollars. That’s not so, but they charged us like a big restaurant. They never told us about bulk rates. We were spending way too much money on food.”
After its first two years, the catering service ran a deficit of nearly $15,000. This was especially frustrating because business was brisk. So Horn went to Carlson, who, in turn, introduced him to George Kalidonis, president of the Chicagoland Enterprise Center, and Michael Freedland, of the National Economic Development and Law Center in Berkeley, California. Both men had business experience and were able to offer money-saving advice to the catering center.
“They helped us with menus, purchasing, and warehousing,” says Horn. “Warehousing is really important because you need to have an adequate stock on your shelf so that you don’t run out of food. Most important, you’ve got to do an inventory of that warehouse so you know what’s there. You don’t want to keep ordering more food–that doesn’t make sense. Then you would be stuck with too much food and too many bills. But we didn’t know any of this stuff at first; we had to learn.”
The catering service is now making money, and has started catering large receptions–like weddings and annual meetings. Its profits help pay for senior-citizen and youth programs offered at the community center, which is sponsored by Hull House.
“What we learned from our experience is that all communities have resources; it’s a question of putting them to use,” says Horn. “A lot of people around here can cook. They need training, of course, because cooking for a day-care center is not like cooking for your family. At the day-care center, we have to follow all sorts of Health Department regulations about salts, fats, and grease. But people can learn those regulations.
“Through our catering service we do buffet dinners for as many as 500 people. That’s a lot different than a six-person family meal. Again, people learn. The key is to upgrade people. To let them see that they can change their lives so they can have control. Is it easy? Not always. But if you keep pushing–and if you have assistance from people like Tom Carlson and CWED–you can make it work.”
Art accompanying story in printed newspaper (not available in this archive): photo/Kathy Richland.