Harvard Case - Local Initiatives Support Corp.
"Local Initiatives Support Corp." Harvard business case study is written by James E. Austin, Kim Slack. It deals with the challenges in the field of Social Enterprise. The case study is 21 page(s) long and it was first published on : Jan 30, 2001
At Fern Fort University, we recommend LISC intensify its efforts to leverage its social impact capital by actively engaging in impact investing and social enterprise development. This involves expanding its portfolio of investments in social enterprises and nonprofit organizations that directly address community development challenges, while simultaneously building a robust ecosystem of support for these ventures. This approach will enable LISC to scale its impact and achieve greater social returns on its investments.
2. Background
LISC is a national nonprofit organization dedicated to creating opportunities for low-income communities. It utilizes a unique hybrid model that combines philanthropy, investment, and policy advocacy to address poverty and promote economic development. The case study focuses on LISC's efforts to expand its impact and develop new strategies for addressing complex social challenges.
The main protagonists in the case study are:
- John P. Jackson, LISC's President and CEO, who is seeking to redefine LISC's role in the evolving landscape of social impact.
- LISC's Board of Directors, who are tasked with overseeing the organization's strategic direction and ensuring its financial sustainability.
- LISC's staff, who are responsible for implementing the organization's programs and building relationships with community partners.
3. Analysis of the Case Study
LISC faces several key challenges:
- Scaling its impact: LISC's current model, while effective, is limited in its ability to reach a larger scale.
- Evolving social landscape: The need for social innovation and impact-driven solutions is increasing, requiring LISC to adapt its approach.
- Competition for resources: LISC must compete with other organizations for funding and investment capital.
To address these challenges, LISC can leverage the following frameworks:
- Triple Bottom Line: LISC should focus on measuring and reporting on its social, environmental, and financial performance to demonstrate the value of its investments.
- Stakeholder Theory: LISC should engage with a diverse range of stakeholders, including community members, investors, government agencies, and other nonprofits, to ensure its initiatives are aligned with their needs.
- Social Impact Measurement: LISC should utilize rigorous impact evaluation methods to demonstrate the effectiveness of its programs and track its progress towards achieving its goals.
4. Recommendations
1. Expand Impact Investing:
- Develop a dedicated impact investing portfolio focused on social enterprises and nonprofit organizations with strong social impact potential.
- Utilize a blended finance approach that combines philanthropic capital with impact investments to maximize returns and leverage resources.
- Develop a robust impact measurement framework to track the social and financial performance of its investments.
2. Foster Social Enterprise Development:
- Establish a social enterprise incubator to provide mentorship, training, and resources to early-stage social enterprises.
- Partner with other organizations to create a social enterprise ecosystem that supports entrepreneurship and innovation.
- Promote social enterprise legal structures such as Benefit Corporations to attract investors and align with LISC's mission.
3. Enhance Community Engagement:
- Develop a comprehensive community engagement strategy that involves residents in decision-making processes and tailors programs to local needs.
- Utilize technology to connect with communities and facilitate access to resources.
- Promote diversity and inclusion in all aspects of LISC's operations.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: LISC's expertise in community development and financial services makes it well-positioned to leverage impact investing and social enterprise development.
- External customers and internal clients: These recommendations address the needs of low-income communities, investors, and LISC's staff.
- Competitors: By embracing social enterprise development and impact investing, LISC can differentiate itself from other organizations and attract a wider range of resources.
- Attractiveness - quantitative measures: LISC can utilize social return on investment (SROI) and other impact measurement tools to demonstrate the financial viability of its investments.
6. Conclusion
By embracing impact investing and social enterprise development, LISC can scale its impact, achieve greater social returns, and remain a leader in the field of community development. This approach will enable LISC to address complex social challenges and create lasting positive change in low-income communities.
7. Discussion
Other alternatives not selected include:
- Focusing solely on philanthropy: This approach would limit LISC's ability to scale its impact and leverage its resources effectively.
- Adopting a purely commercial approach: This would compromise LISC's mission-driven focus and potentially lead to unintended negative consequences for communities.
Key assumptions of the recommendations include:
- Availability of impact investment capital: LISC must secure sufficient capital to fund its impact investing portfolio.
- Community support for social enterprises: LISC must build strong relationships with communities to ensure social enterprises are accepted and supported.
- Government policy support: LISC must advocate for policies that promote social enterprise development and impact investing.
8. Next Steps
- Develop a detailed implementation plan outlining the specific steps required to implement the recommendations.
- Secure funding for the impact investing portfolio and social enterprise incubator.
- Build partnerships with other organizations to create a robust social enterprise ecosystem.
- Conduct ongoing impact evaluation to measure the effectiveness of the initiatives.
Timeline:
- Year 1: Develop and launch the impact investing portfolio and social enterprise incubator.
- Year 2: Expand the portfolio and incubator, build partnerships, and conduct initial impact evaluation.
- Year 3: Scale the initiatives, refine impact measurement, and advocate for policy changes.
By implementing these recommendations, LISC can transform itself into a leading force in social impact investing and create a lasting legacy of positive change in low-income communities.
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Case Description
Local Initiatives Support Corp. (LISC) is a $74 million nonprofit social enterprise that combats poverty by helping community development organizations build affordable housing and create economic development opportunities through public-private partnerships. Poses a dilemma for the CEO: whether to grow geographically or programmatically. Presents the history of the organization and the many challenges facing urban and rural community groups, such as how to improve educational opportunities for their citizens. Also describes how LISC funds its operations, including the syndication of low-income housing tax credits, foundations, and private partnerships.
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