We all knew that November was going to be a tumultuous month (if you hadn't heard, there's an election today). When the polls close and the dust settles, the country could be set on one of a number of starkly different paths. Perhaps because of this uncertainty, President Obama took the opportunity to lift up one of the few truly bipartisan issues by declaring November National Entrepreneurship Month.
On the listicle of “8 Things Every Politician Wants to Talk About,” small businesses are sure to rank at the top near babies and firefighters. And there’s little question why. Entrepreneurs seed innovation, create jobs, and build wealth in communities, factors that make them just as interesting to the growing class of impact investors.
Let’s take a moment to consider the potential roles and opportunities that foundations can embrace in a nation that champions entrepreneurship.
At the Council’s recent Endowments and Finance Summit, Jean Case was one of several speakers to cite a sobering set of statistics – just 3% of venture capital financing in the United States each year goes to women led enterprises and just 1% goes to African American owned enterprises. Furthermore, the vast majority of funds flow to enterprises in coastal hubs – San Francisco, New York, and Boston taking the lion’s share.
That’s part of the impetus behind the Case Foundation’s Faces of Founders campaign, which is looking to change the narrative of how we talk about entrepreneurs in American culture.
With more and more foundations looking to invest for impact – increasingly by supporting start-ups and social enterprises – how do we react to this startling lack of diversity?
The numbers are obviously disappointing, but here’s the thing, that also means there’s a potentially massive pool of underutilized entrepreneurial talent eager to get to work. We have already seen statistics about the material value of diversity in corporate boardrooms and c-suites. A foundation investor that acts with intentionality to find and attract a diverse portfolio of entrepreneurs has the chance to make the same or better financial returns while having a tangible impact on our society.
What’s more, the benefits to a community can go far beyond jobs created and tax base raised. The Southwest Initiative Foundation acted to include newly arrived immigrants in its small business lending, investing in outreach and education. The upfront outlay of time and effort yields opportunities to invest in folks like the Hang family of Willmar, Minnesota.
Members of a growing population of Korean descent in the community of 19,000, the family and their neighbors had no access to a Korean grocery. With support from the foundation and local economic development agencies, they could use a small business loan to meet a growing demand, put down roots, and help ensure that every member of the community could envision their piece of the American Dream.
As a foundation, your unicorn investments might not come with billion dollar IPOs, but the benefits can still be great. Let’s take the opportunity to make sure every community has a chance to participate in National Entrepreneurship Month.
John Cochrane is Associate Director, Social Innovation, at the Council on Foundations.