DEPAUL INDUSTRIES DePaul Industries 2

I. EXECUTIVE SUMMARY People with disabilities are employed at less than half the rate of people without disabilities and, distressingly, participate in the workforce at less than one third the rate of people without disabilities. These facts pose a significant social problem. Beyond the economic and personal toll taken on individuals and families, there is a significant fiscal burden placed on local, state, and national governments. DePaul Industries, a 501(c)3 organization headquartered in Portland, Oregon, is an established and growing integrated social enterprise working to create employment opportunities for people with disabilities in order to close this employment gap. DePaul works with private and public customers to solve their business problems by leveraging an overlooked and undervalued workforce, operating on the premise that providing services in demand is the most effective way of eliminating barriers to employment. In its 41-year history, DePaul Industries has evolved into a full-fledged entrepreneurial organization with revenue and employment growth purposefully interconnected. Over the past five years, it has increased its annual revenue from $20.9 million to $36.0 million and increased hours worked by people with disabilities from 622,500 to nearly one million. Its Staffing, Security, and Packaging business divisions operate in four states in eight locations and serve diverse customers like Frito-Lay, Starbucks, Port of Portland, Con Agra, and the U.S. Army. These divisions generate more than 97% of revenue and employ more than 2,000 people with disabilities each year. DePaul’s model has been proven in practice. Beyond direct employees, each year, hundreds of DePaul employees go on to work for DePaul customers—over 700 in the past two years. Customers work with and hire DePaul’s employees because of their skills, work ethic, and track record of success—not simply to fulfill a diversity quota. DePaul provides practical training and real jobs in the business world, where the vast majority of jobs are available. With the contingent labor market to double its volume over the next decade, DePaul is perfectly positioned to fulfill its social mission in the commercial marketplace. Having honed its entrepreneurial focus over the past five years and focused on changing the national landscape of employment for people with disabilities, DePaul is poised for tremendous growth. By building upon business currently in its pipeline and by scaling its proven model, DePaul plans to grow revenue by $40 million and grow hours worked by people with disabilities by 950,000 over the next five years. During this period, DePaul will leverage its relationships with existing customers, strategic partnerships with associations and organizations, and stature as a disability employer to scale impact and allow for replication of its demand-driven model. To reach its ambitious growth goals, DePaul Industries seeks $3.5 million in growth capital in the form of both grants and debt in order to allow DePaul to expand and reinforce its infrastructure. This growth capital will contribute to enhancing information technology and human capital, allowing for replication strategy, improving impact measurement, and bolstering working capital standings. With this investment of growth capital, DePaul Industries will significantly advance its ability to close the gap of unemployment between people with disabilities and people without disabilities.

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VI. DEPAUL INDUSTRIES: THE ORGANIZATION THE BUSINESS ADVANTAGE THE DISABILITY ADVANTAGE DePaul Industries solves its customers’ outsourcing needs through Staffing, Security, and Contract Packaging & Manufacturing—business divisions which earn the vast majority of its revenue and provide employment opportunities for the vast majority of its employees. Its focus is on responding to demand from the private sector, ensuring that as earned revenue increases, the employment of people with disabilities increases.

Having one or more disabilities greatly impacts an individual’s ability to obtain successful employment. According to the National Council on Disability, barriers to employment include employer misconceptions about accommodations that may be required, education or training gaps, and the need for flexible work assignments. 3 In fact, given the opportunity and often with only modest accommodations, people with disabilities have consistently proven themselves to be among the most dedicated and successful employees within the marketplace. Several studies have demonstrated that hiring people with disabilities maintains or even increases performance standards, creates value, and reduces employee turnover—sometimes to as much as one-fifth of the rate of non-disabled peers. 4 This is a key advantage that DePaul Industries maintains over its competitors—disability is seen and leveraged as a strategic advantage, rather than an impediment, to business success.

In contrast to most other nonprofit organizations focused on disability employment, this methodology allows DePaul Industries to employ the maximum number of people with disabilities while leveraging the skills of those individuals to drive bottom-line success for its customers. Moreover, a growing sense of social responsibility in 21st century companies is driving a trend to employ disadvantaged workers in far greater numbers—and DePaul is able to facilitate exactly that.

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CATEGORICAL DISABILITIES DEPAUL INDUSTRIES EMPLOYEES WITH DISABILITIES (2012)

Hearing 2.95% MR/Developmental 3.61% Learning 11.95% Physical 55.90% Mental 14.53% Recovery 8.92% Vision 2.14%

3 Empowerment for Americans with Disabilities: Breaking Barriers to Careers and Full Employment; National Council on Disability (2007) 4 Exploring the Bottom Line: A Study of the Costs and Benefits of Workers with Disabilities; DePaul University (2007); http://www.barrierfreecareers.net/topics/depend.html

STAFFING SERVICES DePaul Industries’ Temporary Staffing division provides efficient, reliable and thoroughly trained workers to help businesses of all kinds deal with unanticipated work increasespeak season staffing needs. Temporary Staffing Services is DePaul’s largest business unit and employs individuals variety of disabilities, leveraging specialized training that specifically responds to customer demand. Staffing has a clerical and light industrial focus—specifically in food packagiand contract manufacturing, which has grown in conjunction with DePaul’s Packaging division—but also includes positions as diverse as CNC Machine Operators, Landscape Architects, Office Specialists, Call Center AssociaForklift Drivers, Production Line Operators, and War

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Methodologies: Using specialized training for its employees provides DePaul with a competitive advantage in the staffing industry. A notable example is the Heart of the Workforce (HOW) program, a demand-based workforce development program designed to provide a training boost to any industry with a large number of entry-level workers, is DePaul’s most prominent and successful example of this. To date, DePaul has developed the HOW curriculum for the food processing, hospitality, restaurant & food service, and metalworking industries—and has the ability to develop the curriculum for any industry, particularly those with high labor needs. The HOW Program provides benefits to customers by capitalizing on and leveraging the relationship between DePaul Packaging and DePaul Staffing, bringing a work-ready, flexible, skilled workforce to its customers. Prominent Customers: Precision Cast Parts Corporation, Reser’s Fine Foods, Port of Portland, Columbia Distributing Company, RainSweet, Inc.

PACKAGING SERVICES

DePaul’s Packaging operation provides contract packaging & manufacturing solutions to customers including some of the world’s largest food and consumer goods manufacturers, who require that jobs be completed on time and correctly—in other words, market standards. DePaul meets and exceeds their demands by employing a fully-trained workforce of people with disabilities, who utilize state-of-the-art equipment to keep track of daily progress. DePaul’s abilities include food dry fill, stand-up pouch filling and sealing, club store packaging, display pallet assembly, kit assembly, shrink banding and wrapping, collating, procurement and sourcing, and electronics assembly and testing—and continue to evolve with customer need. DePaul leverages a powerful knowledge of the industry with an array of flexible options on how to get the job done.

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Methodologies: The ‘Our Place or Yours’ program offers DePaul’s customers the option of using outsourced temporary or seasonal workers at DePaul’s facility, or at their own. Whether due to economic constraints or concern for inventory control, this accommodation gives DePaul’s customers the ability to outsource what makes sense for them. Our Place or Yours allows the customer to focus on their core business while being assured that their outsourced packaging and manufacturing work is done by trained, competent workers.

Prominent Customers: Pepsico/Frito-Lay, Starbucks Coffee Company, ConAgra Foods, Sharp Microelectronics America, U.S. Foods, Pacific Foods Traeger Pellet Grills, LLC.

SECURITY SERVICES

DePaul’s Security division delivers highly-trained unarmed security personnel to private and public customers to protect people and property from theft, intrusion, or other unlawful acts. By offering custom-tailored security solutions, including a specialized Fire Watch subdivision for fire protection, DePaul security customers have access to an efficient and reliable force 24/7. DePaul security officers protect settings as diverse as courthouses, hospitals, schools, parking lots, financial institutions, construction sites, industrial and welding sites, shopping centers, and public and private businesses. Setting DePaul Security apart is a customer-service focus and officer training that is significantly higher than state requirements and other staffing agencies, with a turnover rate much lower than the industry average.

Methodologies: DePaul’s in-house officer training program has a course exceeding state requirements for the Department of Public Safety Standards & Training (DPSST) unarmed Security Professional certification. Its training team has extensive security and law enforcement experience, guaranteeing that DePaul Security Officers exhibit the professionalism and customer-service orientation its customers require.

Prominent Customers: City of Portland, OR; Multnomah County, OR; United States Coast Guard; Washington County, OR; Oregon Department of Transportation; Rosboro LLC; McKenzie-Willamette Medical Center; City of Eugene, OR

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GENERATING DEMAND

In addition to the methodologies outlined above that drive its business divisions, DePaul also leverages the following demand creators to generate future expansion and growth:

Strategic Partnerships assist with identifying business demands and leveraging current methodologies, both nationally and internationally. Strategic partnerships—including those with existing partners: NISH, Alternative Staffing Alliance, Northwest Food Processors Association (NWFPA), Foundation 4 Strategic Sourcing (F4SS), and others—will facilitate DePaul’s reach into new market clusters, help to drive the creation of additional scalable methodologies, and may develop new consulting opportunities.

Consulting Opportunities allow DePaul to promote its unique business model of employing people with disabilities to other organizations, with the intention of generating opportunities for its business divisions and/or to create additional employment opportunities for people with disabilities. Consulting opportunities may lead to replication of DePaul’s business model by other organizations in new markets.

Corporate Shared Values are the basis of DePaul’s integrated model. With more and more companies embracing Corporate Social Responsibility as a part of their business, DePaul is set apart from other outsourcing companies as the perfect intersection of business success and social good. Partnering with DePaul Industries allows companies to enhance their shared social values and set themselves apart from their competitors, while still meeting their bottom line.

DePaul IndustriesRevenue by Business Division

FY 2012

Staffing57%

Collaborative fees0%

Packaging20%

Fundraising2%

Security19%

Others2%

DePaul IndustriesRevenue by Business Division

FY 2015

Staffing53%

Collaborative fees1%

Packaging31%

Fundraising1%

Security12%

Others2%

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VII. THE PROBLEM People with disabilities have been referred to as the world’s largest minority population.1 They are certainly the most underutilized workforce in the United States: Across the country, the rate of unemployment for people with disabilities is twice that of people without disabilities.

But the situation is actually worse than that: Of the total number of working-age people with disabilities in the U.S., only one-third are even participating in the workforce—i.e. either having a job or actively looking for one. By way of contrast, three-quarters of working-age people without disabilities are participating in the workforce.

The net impact of these statistics tell us that nationwide, approximately 6.4 million jobs will need to be filled by people with disabilities in order to close the existing employment gap between people with disabilities and people without disabilities.

1 As referenced by the United Nations Council on Disabilities: http://www.un.org/disabilities/convention/facts.shtml

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VIII. DEPAUL’S EMPLOYMENT SOLUTION There are thousands of organizations that employ people with disabilities, but none that approach employment quite like DePaul Industries. Traditionally, nonprofits employing people with disabilities have utilized an “in-house” strategy—that is, running either sheltered workshops or supported employment enclaves and creating jobs for people with disabilities within those organizations. This approach is limited by the number of jobs available for people with disabilities within these organizations and by their capacity to grow. Additionally, certain state and federal government contracts are ‘set aside’ for organizations that employ a percentage threshold of people with disabilities. While these contracts often allow nonprofits to establish business in a particular geographic area or industry, they are too often relied on as an end in and of themselves, and do not solve the larger problem of lack of employment for people with disabilities. Further, they rely upon highly volatile and unpredictable government funding. While important, there is simply not the capacity within the government sector make a material impact on the problem. In contrast, DePaul Industries’ outsourcing model leverages the growth potential of its commercial clients’ businesses, where the vast majority of jobs reside. Beneficially, this staffing model has been used in the commercial sector for years as an onboarding tool for new hires: From 2009-2011 in the years following the “Great Recession,” U.S. staffing firms created more new jobs than any other industry, accounting for 91% of nonfarm job growth.2 DePaul Industries uses this model to solve legitimate business problems for its customers, while simultaneously employing the maximum number of people with disabilities possible within those customers’ companies. Even beyond the recession, the contingent labor force is expected to constitute half of the new source of workers to whom employers will turn—resulting in approximately 15% to 25% of the total workforce being contingent by 2020, up from 10% currently.3 While it is important to work to continue efforts to create jobs for people with disabilities within the nonprofit and governmental sectors, neither of these sectors either individually or together have the numerical capacity to create the total of 6.4 million jobs needed to close the gap. The only sector with the realistic capacity to create those jobs is the commercial sector. Accordingly, DePaul Industries has developed and demonstrated a solution that utilizes all three but makes maximum use of the commercial sector and the growing contingent labor market for addressing this national problem.

2 Leading U.S. Job Growth in American Staffing Association’s Staffing Success Magazine Special Issue (2011) 3 Staffing Industry Analysts Review: The Future of Staffing: Where Will You Be? (January 2011)

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With widespread adoption of this model by social enterprises across the U.S., this employment approach has the potential to catalyze sweeping change in both the way we think about disability employment and the way that disability employment can improve the bottom line. In its fullest evolution, people with disabilities will be recognized, valued, and employed at rates equal to people without disabilities across society.

Figures from Bureau of Labor Statistics’ Persons with a Disability: Labor Force Characteristics 2011 Report & the National Center for Charitable Statistics (NCCS)

DePaul Industries’ methodologies for employing people with disabilities does include employing individuals in-house, leveraging set-aside opportunities and follow-along funding for supported employment, and developing opportunities within the public sector. Still, DePaul Industries believes that leveraging private business via the contingent labor market is the most effective method to reach the largest population of people with disabilities—in fact, set-aside opportunities are leveraged as a competitive advantage and pathway to private business opportunities, and DePaul’s success in obtaining set-aside contracts is enhanced by its track record of meeting the demands of the private marketplace. Through this model, DePaul Industries and associated organizations can harness the creativity and growth potential of businesses of all kinds—by allowing businesses to harness the creativity and growth potential of people with disabilities. The combination of DePaul’s internal growth and the replication of this model by others will be the key to realizing this scenario.

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ECONOMIC BENEFITS TO SOCIETY The economic contributions to society when a person with disabilities is employed are tremendous. A 2012 report by The Philanthropic Collaborative measured the impact that $527,000 in grant contributions had on DePaul Industries’ economic output to society. The analysis, conducted using an IMPLAN model and representing results from only this portion of contributions, found that DePaul’s work contributes $295.97 million in economic transactions, adds $194.80 million to Gross Domestic Product, and is responsible for almost 4,000 jobs and $165 million in annual payroll. For each $1 of foundation giving, DePaul generates a total of $33 in economic activity. 4 DePaul’s earned revenue structure and efficiency focus ensures its ability to considerably leverage contributions for the greatest impact on society.

Transactions GDPTotal

Compensation Jobs Indirect Taxes

Short-term direct $27,244,768 $26,992,865 $25,449,295 710 $20,424

Medium-term direct $84,561,945 $55,656,435 $47,026,030 1,130 $2,235,236

Long-term direct $95,356,688 $94,475,026 $89,072,533 2,486 $275,720

Long-term total $295,966,808 $194,797,523 $164,591,105 3,954 $7,823,326

Economic Impacts of DePaul Industries

“DePaul Industries is an extraordinary entrepreneurial not-for-profit organization in our community. Its demand-driven employment model has made a huge impact for thousands of people with disabilities and, as they scale their efforts, is steadily closing the gap of employment between people with and without disabilities.”

- Jeff Cogen Multnomah County Chairman

According to a 2004 study of Qualified Rehabilitation Facilities in the state of Oregon—organizations like DePaul Industries that qualify for state set-aside contracts to employ people with disabilities—the net public benefit per individual employed is $4,858. This takes into account two key facets of economic benefit: both the removal of public support and addition of money paid back into society through increased incidence of taxpayer status. Today, accounting for inflation and other adjustments, the net public benefit per individual with disabilities employed is in excess of $8,000. 5

4 Economic Impacts of 2010 Foundation Grantmaking on the U.S. Economy by The Philanthropic Collaborative (December 2012) 5 The Products of Individuals with Disabilities Law: Creating Jobs for Oregonians with Disabilities by Oregon Rehabilitation Association (2004)

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