As Pacific Community Ventures grew its investments in businesses across California, we also saw that California’s economy was rocky. In 2005, fewer than half of the jobs in California provided full-time, year-round wages sufficient to support an adequate standard of living. With unemployment, underemployment, and poverty increasingly concentrated in pockets of California’s cities, the need for good jobs in these underserved areas is apparent.
PCV measures Social Return on Investment represent the indirect benefits to workers of PCV’s direct capital and resource investments in qualified small businesses. In addition, PCV capitalizes on its unique relationship with companies to deliver services directly to employees in our portfolio. These Workforce Development Programs directly assist the employees of PCV portfolio companies in their efforts to build valuable assets and achieve economic self-sufficiency.
In partnership with Lenders for Community Development (LCD) and the Assets for All Alliance, PCV helps portfolio company employees gain financial knowledge and build assets though our Individual Development Account (IDA) program. In this matched savings program, participants complete a financial literacy training course while saving up to $2,000 over two to three years toward a specific asset goal (first home purchase, retirement, or post-secondary education for themselves or their dependents). Each dollar participants save is matched two-to-one by PCV and LCD from philanthropic sources, resulting in up to $6,000 in total savings. PCV has opened 33 IDA accounts for employees at three portfolio companies since the program’s inception in late 2004, and will expand the program to additional employees and portfolio companies in 2006, to achieve the program goal of opening 100 accounts in three years.
PCV also works with our portfolio businesses to develop wealth building programs for portfolio company employees. When possible, PCV’s investment term sheets include requirements that a percentage of company equity be set aside for non-management employees (e.g. factory or warehouse personnel). PCV also works with its financed and advised portfolio businesses to structure stock option or phantom stock programs. These equity sharing programs allow portfolio company employees to share in the “culture of ownership,” and participate in the company upside they are helping to create. When distributions occur, PCV organizes workshops to educate employees on the asset building and investment opportunities available to them.