(Photo by Flickr user Marisa McClellan, used under a Creative Commons license)
Andy Potash and his wife, Andrea Potash, are trying figure out how to create jobs for those who have spent time in prison or who have been homeless or who have fought addiction.
Or, as Andy Potash puts it, “people who need a second chance in life.”
"It's a new way of thinking of philanthropical giving."
Their latest strategy is to give out loans to early-stage businesses who employ those people and offer the businesses low interest rates on the condition of further job creation.
Wash Cycle Laundry, the Philly-based sustainable laundry service that’s now operating in three cities, is one of the first companies to get one of these loans through the Distinguished Social Ventures Foundation (DSVF), the New York City-based foundation founded by the Potashes.
Wash Cycle got a $450,000 loan with a five percent interest rate that will decrease as it hires people from what the company calls “vulnerable adult populations,” said Wash Cycle spokeswoman Leigh Goldenberg. If the company creates 500 jobs over the next five years, they’ll repay the loan at a one percent interest rate.
“It’s a new way of thinking of philanthropical giving,” Andy Potash said.
Wash Cycle has created nearly 50 jobs, spread between three cities, half of which are filled by people who have at one time faced addiction, incarceration, homelessness or welfare dependence, according to a press release. The management team is seven people, who work out of the company’s Center City office, and the rest are laundry and cycling staffers, Goldenberg said.
For Wash Cycle, the loan is a way to grow the business without losing equity.
While it has raised money from Investors’ Circle and Robin Hood Ventures, Wash Cycle has also been backed by Philly organizations like the Patricia Kind Family Foundation, the Untours Foundation and The Merchants Fund to the tune of $600,000, Goldenberg said. Most of that money has been in the form of loans, she said, but that number also includes prizes (like this $25,000 Blackstone Foundation one) and a grant from the Merchants Fund. Some foundations have also invested in Wash Cycle for equity through Investors’ Circle.
The foundation support has been instrumental, said Investors Circle investor John Moore, who also sits on the Wash Cycle board. The Patricia Kind Family Foundation and Untours Foundation were some of the company’s earliest backers and helped it get to a point where groups like Investors Circle and Robin Hood Ventures could invest, Moore said.
So far, DSVF has only made a loan of this nature to one other business: Pivot Project, a furniture company in Dobbs Ferry, N.Y., Andy Potash said. It hopes to make more, as well as partner with other foundations to spread the reach of these kinds of deals.