Bain Capital, the Boston private-equity titan, has invested in dozens of for-profit companies over the years. But now Bain’s partners are making a different type of investment, with their $4 million commitment to inner cities across the country through the Boston-based GreenLight Fund.
Bain plans to announce the donation on Tuesday.
GreenLight, a nonprofit, acts a bit like a venture capital firm by backing social entrepreneurs and helping them replicate and expand their community-focused organizations across the country.
It will be the largest corporate gift, by far, in GreenLight’s 16-year history. Bain co-managing partner John Connaughton is joining GreenLight’s board as a result.
Here’s one reason GreenLight operates like a VC firm: It was cofounded by venture capitalist John Simon, who currently splits his time between GreenLight and his day job as managing director at Sigma Prime Ventures. For Simon, the Bain gift is an important validation of the GreenLight model, and will allow GreenLight to essentially double its impact in Boston and expand to 20 cities nationally, from 10.
“This is a very important, transformational strategic gift . . . a very important milestone for us,” Simon said. “We’ve now reached this inflection point.”
Margaret Hall, GreenLight’s chief executive, and Simon started GreenLight in 2004 after Simon noticed social entrepreneurs with promising business models that had difficulty expanding beyond their home cities.
Simon and Hall set out to create what he dubs a “community-driven Swiss Army knife” — a tool that could address an array of poverty-related issues, with a particular focus on children and families, that Boston was facing at the time. To do so, GreenLight worked with community advisers to pick one issue each year, such as improving high school graduation rates, and then set out to find the best-in-class nonprofits around the country that could solve the problem. GreenLight would then go about securing the funds and volunteer support to import the best one to Boston.
Eventually, in 2012, GreenLight began expanding its approach to include other cities where these nonprofit concepts could be used, starting with Philadelphia and San Francisco. So far, GreenLight has established locally run operations in 10 cities, with two more set to join within the next two years. Simon estimates that GreenLight has secured commitments from donors totaling $75 million across its national footprint, including about $9 million in Boston.
GreenLight has a 10-person national staff, but the vast majority of funds raised go directly to programs that GreenLight is importing into cities. Money raised for a particular city’s programs, Simon said, stays in that city.
“What we’ve done in Boston over the last 16 years has built such a track record of success,” Simon said. “There’s a limitless appetite for this in cities.”
One example is the Becoming a Man program, from the Chicago nonprofit Youth Guidance. GreenLight led the charge to bring a BAM chapter to Boston in 2017, with the assistance and encouragement of city officials. The BAM program offers counseling to teens in urban schools, particularly Black and brown students, with goals of curbing violence and reducing dropout rates.
Shawn Brown, executive director of the BAM Boston program, said it served nearly 600 students in Greater Boston during the 2019-2020 school year. GreenLight committed to raising $600,000 for the program over five years, Brown said, as well as providing mentorship and advice.
“Not only did they bring the program here, but they were involved in making sure the program was successful,” Brown said.
Successes like that attracted the attention of Connaughton and some of his colleagues in Bain’s management. Connaughton said Bain’s staff will provide advice to these nonprofits, as well as fund-raising help.
Bain also has a controlling stake in some 75 portfolio companies, which will be encouraged to help in their respective home cities.
The $4 million commitment will be split evenly over four years: Half will go to support the GreenLight-backed programs in Boston — there are 12 now, with several more expected — and half will be used to accelerate GreenLight’s national expansion.
“From our standpoint, it’s another model that can really match up with our national footprint,” Connaughton said. “The stronger we make the national organization, the stronger it will make Boston, as well.”
Paul Grogan, the departing head of the Boston Foundation, said his organization teamed up with GreenLight at its inception, by providing financial support in 2004. Grogan said he saw the promise of building a system that could not only import good urban-focused nonprofit strategies from other cities, but also export the concepts that are being developed here. He also praised Simon for his ability to overcome the reluctance that many nonprofits have to an out-of-state player entering their turf.
GreenLight’s efforts are more important than ever, Grogan said, because of the COVID-19 pandemic and the inequities raised by the Black Lives Matter protests.
“It’s been more successful than anyone could have forecast,” Grogan said. “There’s a whole generation of people who are looking at these quasi-business solutions [to social problems]. I put GreenLight on the leading edge of that.”