Why Should Philanthropy Invest in Small Businesses and Entrepreneurs?
Prepared by Dena Frith Moore
For all of our region’s residents to thrive, they must have stable and affordable housing, quality education, reliable and trusted health care, and the opportunity to achieve economic mobility. This economic mobility may come from securing a living wage job that can lead to a career with wage expansion, or it may come from wealth building created by homeownership or by owning a successful business.
For most donors and foundations, investing in small businesses and entrepreneurs has traditionally been viewed as distinct and separate from philanthropic work. However, the disproportionate struggle of small businesses, particularly those owned by Black and Latino/a founders, during the COVID-19 crisis illuminated the fact that there is meaningful disparity in the access that these businesses have to capital, to business networks, to banking relationships, and to support services.
In 2020, the Community Foundation made an impact investment in a local Community Development Financial Institution (CDFI), Virginia Community Capital, to help expand their Paycheck Protection Act (PPP) loan pool that was being offered to small businesses with a focus on those that did not have existing banking relationships. We also offered several educational sessions for small business owners and nonprofits regarding how to tap into the myriad of governmental aid programs. We began to see ways that thoughtfully executed philanthropy could begin to close some of these gaps in access and enhance the vibrancy and sustainability of these traditionally under-resourced small companies. If successful, we knew that these businesses would create pathways to wealth generation for business owners and job creation in their communities.
Similarly, we found that many entrepreneurs with “Main Street” business ideas or “side hustles” that could become small businesses were not tapping into the local entrepreneurial resources, as there was a belief that these resources were tailored toward high growth, high tech start-ups. We believed that philanthropic dollars could stimulate greater support to and engagement of these under-served entrepreneurs by the ecosystem.
Lastly, we began to think about where the entrepreneurial mindset starts. There have been several studies about the value of teaching and modelling entrepreneurial concepts to youth, regardless of whether they go on to own a business or not. An Aspen Institute study on youth entrepreneurship education puts it this way:
A New Resource: Fund for Entrepreneurial Growth
In 2021, the Community Foundation established the Fund for Entrepreneurial Growth to provide grants to nonprofits working in three areas: Entrepreneurial Programming for Youth, Support for Small Businesses, and Strengthening and Diversifying the Entrepreneurial Ecosystem.
The Community Foundation contributed $250,000 to this effort and other donors have added an additional $500,000+. We established an Advisory Committee comprised of individuals who have deep experience in the small business and entrepreneurial communities locally to assist us in creating our grant making strategy. In our first grant cycle, the Fund for Entrepreneurial Growth distributed $200,000 to eight organizations across all three focus areas.
2022 Grant Outcomes
Entrepreneurial Youth Programming:
- 650 Richmond and Petersburg public middle and high school students participated in two or more Youth Entrepreneurship Program initiatives; 95% expressed an interest in majoring in business and technology in college or becoming entrepreneurs after graduation.
- 141 upper elementary and middle school students from Richmond Public Schools have participated in the Founders Mark entrepreneur curriculum thus far with another 74 expected to participate prior to year-end.
- 61 Chesterfield County high school students enrolled in the Meadowbrook Academy for Developing Entrepreneurs, completed the VCU Entrepreneurship Academy, and earned marketable micro-credentials in subjects like digital literacy. Four student teams won seed money to start their businesses after a Shark Tank-style competition.
- 30 youth participated in an immersive summer experience working with a business owner for six weeks with an eye toward opening a similar business within their youth organization.
- 17 Black high school girls were able to participate in an Immersion Lab Entrepreneur Program during the summer. Topics covered included entrepreneur-led sessions on how to start a business, leadership, financial literacy, organization, goal setting, pitching, business planning, etc. All summer participants received grants to support their business ideas.
Small Business Support:
- 10 small businesses (9 Black-owned; 8 women-owned) who received a small business loan will also receive a cumulative 240 hours of coaching in Q3/Q4 2022 and early 2023.
- 9 businesses (all Black-owned; 8 women-owned) have been given grants to build out their business infrastructures thus far with a similar number of additional grants to be made prior to the end of the year.
- 422 individuals (80% women; 82% Black) were able to access an Entrepreneur Certificate Course at no cost through community partners who have strong relationships with traditionally under-resourced entrepreneurs and business owners.
The Community Foundation recognizes the following organizations as reputably making an impact:
Start Up Virginia | Jackson Ward Collective | LISC | Metropolitan Business League
Boys & Girls Club of Metro Richmond | Chesterfield County Education Foundation (Meadowbrook High School’s MADE program) | Girls for a Change | YMCA
The 2022 grant process is currently underway, and we hope to increase both the number of grantees and the amount of money granted to amplify the impact that the Fund for Entrepreneurial Growth can have on our region.
We are also engaged in several different regional efforts—in tandem with governmental agencies, educational institutions, nonprofits, and others--to better organize the entrepreneurial and small business ecosystems so that access to resources becomes easier and more streamlined for all businesses. The past few years has awakened the broader community to the need to create a more supportive local environment for small businesses and entrepreneurs.
Our goal in making these investments is simple: we want to stimulate, create, and facilitate economic mobility for all our residents by enhancing the chance of success for small businesses and entrepreneurs.
Ways to Support