Keeping Hope in Business

San Jose charity looks to for-profit ventures to improve job prospects for mentally disabled clients

When Phyllis Sotomayor lost her job at a day-care center two years ago, she faced a challenge familiar to

many mentally disabled workers: how to overcome a lack of training opportunities and a job outlook dominated by jobs she didn’t want, such as cleaning offices and working on an assembly line.

With her prospects limited, Ms. Sotomayor and her family turned to Hope Services, a 55-year-old San Jose charity that serves mentally disabled people in several northern and central California cities.

Hope Services enrolled Ms. Sotomayor, 51, in job-counseling and preparation classes, and provided her with training she would need to work at a dog-care business the charity was about to open.

After less than two months that included lessons in dog handling and — at Ms. Sotomayor’s request — instruction in how to bathe and groom dogs, she was caring for as many as 15 pooches per day at You Lucky Dogz, a cavernous space in a light industrial park here next to a levee.

Ms. Sotomayor feeds the dogs, bathes them, “scoops the poop,” as she puts it, and breaks up the odd fight between hounds.

“I know the dogs, so I’m not afraid of that at all,” says Ms. Sotomayor, whose calming demeanor is lauded by her Hope Services supervisors.

Jobs Hard to Come By

Hope Services moved in earnest into the for-profit realm three years ago to give some of its 1,200 work-ready clients more job choices and to get away from the “sheltered workshop” approach, in which mentally disabled adults perform similar and repetitive tasks together under the same roof.

Taking a cue from the success of the 16-year-old, for-profit restaurant the charity runs with disabled workers at the Children’s Discovery Museum of San Jose, the charity has formed You Lucky Dogz and a document-shredding business.

A dearth of entry-level jobs for mentally disabled adults has led many organizations that serve such people to find new approaches to providing career opportunities.

In California, a low unemployment rate and high number of illegal immigrants seeking work have made finding jobs difficult for mentally disabled people.

What’s more, as companies have been sending more jobs overseas, people with developmental disabilities are particularly vulnerable to losing jobs once they find them. For-profit ventures that create jobs with staying power can change that equation, charity leaders believe.

“We can create sustainable employment, even during hard economic times,” says Joe Campbell, chief executive of Hope Services. “We’re seeing a lot of this among organizations like ours, especially since the 2002 recession.”

In recent years Hope Services has also found stable work for its clients through contracts with businesses such as local computer-parts recyclers, electronics manufacturers, and vintners.

One goal has been to create a diversity of opportunities for disabled workers.

“Choice has become a real element for developmentally disabled clients,” says Jan Cohen, director of new business ventures at Hope Services. “Now we actually do career development instead of merely placing people in jobs. We give clients tours of work sites. We try to create situations where people can see possibilities for themselves.”

By moving developmentally disabled workers away from charity-run workshops, Hope Services has trained people who have eventually found jobs in outside businesses.

“We’re trying to find areas of work that are tickets to future employment,” says Lori Arnberg, director of commercial operations at Hope Services. “We’re most successful when we lose our best-trained people.”

Benefits of Business

Hope Services still regularly oversees about 450 of its clients who work at Home Depot stores, Tyco International assembly plants, local wineries, and other companies. It supervises another 670 workers at nine sites that offer a variety of jobs, including filling boxes of chocolate, labeling wine bottles, mailing and putting together newsletters, and dismantling computers and separating their parts.

By entering into contracts with companies to provide such services, the charity earns money that it channels into its programs to serve mentally disabled people.

But the charity is also putting energy into starting its own for-profit businesses.

Its goal is to make sure that jobs are available over the long haul — which it cannot easily guarantee through its contract work with companies. In addition, Hope Services believes that by starting its own companies, it will eliminate the costliness of retraining people several times over, Ms. Cohen says.

The charity, which serves 3,000 mentally disabled people a year, offers numerous programs, including counseling, health care for infants, speech training, group housing, and services for elderly clients.

Income from its business operations contribute $7-million each year to Hope Services’ annual budget of $36-million. (The majority of the budget is paid for by contracts the charity maintains with the State of California, both for services provided by working clients and for services Hope performs for developmentally disabled people.)

Ms. Cohen says she would like to see the income from the businesses, which employ 18 developmentally disabled people, buttress the charity’s coffers, but it has been slow going.

The Kids’ Cafe at the Children’s Discovery Museum of San Jose regularly makes money.

But the newer ventures provide specific challenges. You Lucky Dogz needs a steady supply of dogs — about 30 per day — to make money, and so far it only regularly has about half of that.

“We have to open every day whether we have two or 200 dogs,” says Ms. Cohen.

“It has yet to turn a profit — but it will,” she says. The operation has hired four developmentally disabled adults so far.

The document-shredding operation, formed three years ago, has garnered a large federal agency as a client (one Ms. Cohen says she cannot identify for security reasons), as well as banks, employment agencies, health clinics, and high-tech companies.

Ms. Cohen says the charity has gotten much more aggressive with customers about scheduling regular pickups and adjusting its prices upward.

“It’s worth persevering to break even in shredding because people can’t send their paper overseas and because we can find work for some of our lowest-functioning people there,” she says.

Although none of the businesses Hope Services has started is a high-volume moneymaker, profit is not the only goal, which means the charity can afford to be patient with its new enterprises.

“It always helps to have a secondary or tertiary objective,” says Mr. Campbell. “You can bring your staff and your board along if you can say, ‘Yeah, this is costing us money right now, but look at the jobs we’ve created.’”

Currently, the charity balances losses from some of its businesses with profits from other operations, adds Ms. Cohen.

A ‘Scavenger Hunt’

Finding long-term work for Hope Services clients in the rapidly churning Silicon Valley economy is often difficult.

“The trick is finding niches that involve work our people can do and that won’t go away,” says Ms. Cohen, a longtime marketing specialist and consultant.

Ms. Cohen says she is on a perpetual “scavenger hunt” to find new opportunities. She visits people who run businesses similar to ones her group wants to start. She also projects how much income a business can count on years from now and whether it will be worth the wait to see if it will be profitable.

Last year, when Hope Services looked to form a business that would hire clients to scan documents so they could be recorded digitally, Ms. Cohen and other leaders at the charity thought they had found another opportunity.

“It had worked well for a group in Phoenix, but we looked deeper and found that we’d have to put a lot of money into equipment and training,” Ms. Cohen says. “Then, it would close in two years” because of a lack of business.

“We’ve had businesses peter out in the past,” she adds. “A little research on the front end would have saved us a lot of aggravation.”

Seeking Expertise

One of the most valuable lessons the charity has learned is to hire someone from within the industry it is venturing into to run the business — and not someone from the charity. Five years ago, Vicki Yoshihara, a restaurateur, was hired to run the Kids’ Cafe at the Children’s Discovery Museum of San Jose.

“It’s easier for Vicki to learn how to work with our clients than it is for somebody who knows our clients but doesn’t understand the restaurant business,” says Ms. Cohen.

Adds Mr. Campbell: “We love our social workers and guys like me who have philosophy degrees, but you need people who understand a business and how to get it up and running.”

Although the profitability of the dog day care and shredding businesses have yet to be proved, observers say Hope Services is on the right track.

“They’re doing exactly what they should be doing for their clients,” says Jim McClurg, interim president at the Social Enterprise Alliance, an organization that encourages charities to find ways to earn money so they don’t have to rely exclusively on donations or government aid.

During his 25 years as executive director of Northwest Center, a charity for developmentally disabled people in Seattle, Mr. McClurg helped lead the organization away from the “feast or famine” cycle of dealing with businesses that come and go and toward opening its own enterprises, including a laundry and a document-shredding entity.

“What Hope is doing is the wave of the future,” says Mr. McClurg. “You have to do things like document shredding to make sure your clients have things they can do.”

In addition to starting its own businesses, Hope Services looks for companies it can sign contracts with to use the services of a work force that Ms. Arnberg calls “highly-skilled, committed, but hidden.”

“I tell companies that we’ll do things that can’t be done by machine, and there’s a huge need for that,” Ms. Cohen says.

When J. Lohr, a winery in nearby Paso Robles, approached Ms. Cohen last year and asked for help in hand-labeling wines for its export business, she applied and got a federal wine license (which allows Hope Services to work with the wine), then asked two retired Silicon Valley engineers who volunteer for the charity to develop a template that Hope Services workers could use to make sure labels are centered correctly on each bottle.

Now, a team of six clients and their job coach perform the job on site at the winery, and another eight Hope Services clients work full-time labeling wines elsewhere.

Another winery, Clos LaChance, in San Martin, Calif., began sending cases of wine to a Hope Services facility where specialty labels for companies or hotel and restaurant chains are affixed, after being approached by Ms. Cohen.

“Their ability to turn things around quickly is amazing,” says Paige Lutter, project manager at Clos LaChance.

Because the workers are doing jobs for several clients, “they can put 15 to 20 people on something, whereas I could only do two to three people here at the winery. And the quality of work has been outstanding.”

For Ms. Cohen, the biggest payoff is in the level of satisfaction the nonprofit organization’s clients get from their employment.

Ms. Sotomayor, at You Lucky Dogz, says she enjoys her current work now even more than the children’s day-care position she held for 20 years before being laid off.

“I like the dogs better than the kids,” she says. “They’re easier to play with — and they don’t talk back.”