Harlem Children's Zone and the Implementation of the Hybrid Venture Model

Around this time two years ago, many Americans woke up feeling uncertain about their financial secutiry. A major economic crisis in country lead to the bankruptcy of behemoth financial firms, like Lehman Brothers. Lehman Brothers, a firm that had large "socially responsible" investments in non-profit organizations across the country. One notable beneficiary being the Harlem Children's Zone (HCZ). HCZ, founded by a social innovator with the "unreasonable" idea that he could end generational poverty through providing a pipeline of holistic educational services for one the most devastated communities in the country. In order to do this HCZ was heavily reliant on outside funding. As an employee of the HCZ, the news of Lehman Brothers was a real concern for me. Not only was the future of my job at stake but of the programs that relied on funding from Lehman Brothers. We inevitably experience set backs, with HCZ having to lay off 10% of its staff. A difficult decision, but was necessary to buffer the impact on the loss to program funding. Unfortunate as it was, to lay off staff, especially for those who came from the community which the organization served, HCZ fared far better than many other organizations in similar positions. But why? Geoffrey Canada, HCZ President and CEO, believed in scale through "leveraging resources" from private, public, and philanthropic sources (as well as some equity investments to help build an endowment for future generations of HCZ clients). Canada's ability to diversify resources empowered HCZ to be more resilient during times of financial crisis. But could he have done more? I recall a time, in 2007, when Canada spoke to an audience of over 80 college students, who were about to begin a 4-week paid winter internship. He spoke about a missed opportunity to invest in the cheap real estate in Harlem in the early 90's. He was working to expand the organization and at the time he couldn't foresee the kind of gentrification that Harlem is experiencing today. To Canada, this venture would have ensured that Harlem "natives" wouldn't be pushed out by the rising housing costs that come along with gentrification. Maybe he was right, or maybe he was lucky to have missed out. At the time, I thought it was a novel idea, an income generating investment that was aligned with the organization's mission--can't go wrong! However, as hindsight is 20/20, the impending housing market bust, would have been a major crisis to overcome for HCZ, but would it have been worth it?