Spring Break
Social Enterprise Perspectives: Making a Difference in the Mile-High City
Brooke Borgen (OG), Contributing Writer
Issue date: 11/14/05 Section: News
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Organization: Denver Mayor's Office
Location: Denver, Colorado
The convergence of the private, public, and nonprofit sectors is a hot topic in today's world of social enterprise as a means to begin solving complicated social and business problems. I had the opportunity to see this trend first-hand this past summer during my internship as a Social Enterprise Fellow in the Denver Mayor's Office.
I wanted an internship position that could blend my four years of nonprofit work prior to business school, with the skills learned during my first year at HBS. I was also intrigued by the new mayor in my hometown, John Hickenlooper, who was selected as one of the country's top five mayors by Time Magazine in less than two years of holding office. He was voted into the position after a successful 25-year career as an entrepreneur in Denver and is an illustration of the sector convergence I wanted to explore. Mayor Hickenlooper was immediately trusted by the business community, and he charged his staff with leveraging the power and leadership of the private and nonprofit sectors to better the city on all accounts.
I quickly understood the difference between the theoretical benefits of public-private partnerships and the reality of their practicality and effectiveness. For example, last spring the Mayor's Office, in partnership with the quasi-public Colorado Housing and Finance Authority (CHFA) and a local nonprofit community development financial institution (CDFI), was awarded a $40 million allocation of a New Markets Tax Credit from the Federal Treasury. This program was created by Congress in December 2000 to encourage private investment in low-income communities by giving federal tax credits to investors equal to 39% of their capital over a seven-year period. By 2007, Congress will have stimulated $15 billion in low-income community development through this six-year program.
The mechanics of utilizing the tax credits automatically create interdependent relationships within the public, nonprofit, and private sectors. Once Denver received its allocation from the federal government, we were allowed to "sell" the tax credits to commercial banks and lenders in exchange for an equity investment. The process of choosing our investors for the $40 million was highly competitive. Over a dozen institutions such as GMAC, Wells Fargo, First Bank and other lenders with a Colorado presence had already committed to invest during the application process and were now positioning themselves to be one of the chosen two or three.
Location: Denver, Colorado
The convergence of the private, public, and nonprofit sectors is a hot topic in today's world of social enterprise as a means to begin solving complicated social and business problems. I had the opportunity to see this trend first-hand this past summer during my internship as a Social Enterprise Fellow in the Denver Mayor's Office.
I wanted an internship position that could blend my four years of nonprofit work prior to business school, with the skills learned during my first year at HBS. I was also intrigued by the new mayor in my hometown, John Hickenlooper, who was selected as one of the country's top five mayors by Time Magazine in less than two years of holding office. He was voted into the position after a successful 25-year career as an entrepreneur in Denver and is an illustration of the sector convergence I wanted to explore. Mayor Hickenlooper was immediately trusted by the business community, and he charged his staff with leveraging the power and leadership of the private and nonprofit sectors to better the city on all accounts.
I quickly understood the difference between the theoretical benefits of public-private partnerships and the reality of their practicality and effectiveness. For example, last spring the Mayor's Office, in partnership with the quasi-public Colorado Housing and Finance Authority (CHFA) and a local nonprofit community development financial institution (CDFI), was awarded a $40 million allocation of a New Markets Tax Credit from the Federal Treasury. This program was created by Congress in December 2000 to encourage private investment in low-income communities by giving federal tax credits to investors equal to 39% of their capital over a seven-year period. By 2007, Congress will have stimulated $15 billion in low-income community development through this six-year program.
The mechanics of utilizing the tax credits automatically create interdependent relationships within the public, nonprofit, and private sectors. Once Denver received its allocation from the federal government, we were allowed to "sell" the tax credits to commercial banks and lenders in exchange for an equity investment. The process of choosing our investors for the $40 million was highly competitive. Over a dozen institutions such as GMAC, Wells Fargo, First Bank and other lenders with a Colorado presence had already committed to invest during the application process and were now positioning themselves to be one of the chosen two or three.
