Two Silicon Valley entrepreneurs have launched a B-Corp called HandUp to help the homeless. Learn about this revolutionary move.
Not everyone can pull themselves up by their bootstraps.
Most businesses get a little help through loans or venture capital. Now, individuals have access to one of the same funding sources as businesses.
Enter HandUp, a system to directly help those in need along the lines of a Kickstarter for the homeless.
The growth of the high-tech industry in the Bay area has created a high demand for housing, which in turn has caused real estate values and rents to skyrocket. The Los Angeles Times reports:
As startups have poured into San Francisco in recent years and younger employees of companies like Apple and Google have chosen to live here and make the long commute to Silicon Valley, the pressure has proved too great on what remains a small city geographically, just 7 by 7 miles.
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Solving the problem is not just a matter of figuring out a way to provide greater access to affordable housing for the less well-off. As the National Low-Income Housing Coalition points out, low and minimum wages not only are insufficient to keep pace not only with rising rents but also result in less money to spend on other daily necessities such as food, clothing and medical care.
Those already struggling to keep up are in an even more precarious position when gentrification hits their neighborhoods. All of this contributes to the fact that 6,686 people are living in the streets of San Francisco, 3.8 percent more that in 2013, according to the San Francisco Gate. The situation is further exacerbated by a population that is also proportionately sicker and older that it has ever been.
While the city recently obtained funds to renovate its public housing units and the tech industry is looking to do its part by lending its expertise to such services as Link-SF, a mobile app to locate and connect social facilities for the homeless, HandUp promises to link donors directly to the needs of a specific person, and to fund those needs, all while making a profit.
HandUp started as a mobile app developed by co-founders Zac Witte and Rose Broome to address the concern of many people in the tech community who “want to give to individual homeless people…However, they fear their cash would not be spent on clothing, food, and other essentials but would instead feed a drug or alcohol addiction.”
What they did was to ask people in need to register for help. The registration creates a card with basic information, such as the person’s name and neighborhood as well as what any potential donations might be used for. Most importantly, the card provides information for people to donate via a secure SMS system through a smartphone.
That donation can only be redeemed at community services partners such as Project Homeless Connect for housing support, food, medical care, bus fare, pharmacy gift cards and other basic living essentials.
The program became so popular, Project Homeless Connect quickly became overwhelmed. Consequently, HandUp expanded to partner with other community services providers to manage redemptions, according to TechCrunch. One example is partnering with the South Oakland Shelter to provide transportation services to some 300 homeless people.
It has also raised some $940,000 in Silicon Valley investment funding as a benefit corporation (or B-corp)—a for-profit organization dedicated to a social cause or general public benefit. Google (which not coincidentally bears the brunt of criticism for gentrification pushing out long-time natives in the area) has also provided matching funds for donations and has been joined by other high-tech companies such as Twitter, Box, Zendesk and Keen IO as corporate donors.
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Join the Crowd
HandUp has since gone beyond a mobile app with a website that looks to raise funds for individual members who post their needs, in much the same way as investors raise money for their project on Kickstarter, Indiegogo or other crowdfunding sites. Those interested in donating can browse member profiles that contain not only pictures and personal details, but also a fundraising goal for a specific need.
These needs can range from dental work to rent, car repairs and housing needs. Both the members and their stated needs are vetted and verified by a local community service organization. Donors can also pledge a fixed monthly amount to local nonprofit partners as well add “tips” that go to HandUp itself. One hundred percent of all donations go to their intended recipients.
Making a Profit on a Social Cause?
One thing particularly interesting about HandUp’s approach is it is a for-profit company in a sector traditionally reserved to nonprofits (which is why contributions are not tax deductible though there are efforts underway to extend deductibility to B-corp donations). Broome explains the decision to structure HandUp as a B-corp had nothing to do with the idea of making a buck off the less fortunate. Instead, she explains:
Both my co-founder Zac and I had previously worked at for-profits with local missions (and) were familiar with using the nonprofit model to get tech startups off the ground, while the process for nonprofits was much less clear. Nonprofit early stage funding is more limited and restrictive, not allowing for the same flexibility to expand rapidly and iterate based on product feedback that most tech startups benefit from. On the other hand, for-profit startups often have highly scalable business models and more early stage funding options like incubators and angel investors. We wanted this flexibility to grow without being locked into one direction.
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She also points to a TedTalk by Michael Porter as providing further inspiration for going the B-corp route. Porter argues that the profits businesses make towards solving a social problem—be it providing services to the homeless or improving access to water—can be applied to better and expanded solutions.