Supporting - PBS
Supporting
Self-Employment May 1998
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A Menu of State & Local Initiatives that Support Microenterprise:
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Provide Management Support
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Expand Capital for Micro-Loans
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Support Marketing & Business Networks
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Strengthen Business Capacity
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Provide Personal Support
A E O
Association for Enterprise Opportunity
ACMP
Access to Credit Media Project
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Supporting Self-Employment:
A Menu of State & Local Initiatives
that support microenterprise
Table of Contents
Page
Summary of Menu i
I. Introduction
A. The Microenterprise Movement 1
B. Need for National & Local Visibility 1
C. How to Use this Menu 1
II. Menu of State & Local Initiatives
A. Goal: Provide Management Support for Micro-Programs 2
B. Goal: Expand Capital for Micro-Loans 4
C. Goal: Strengthen Marketing & Business Networks 6
D. Goal: Strengthen Business Capacity of Micro-Entrepreneurs 8
E. Goal: Provide Personal Support for Micro-Entrepreneurs 10
III. State & Local strategies
A. Strategic Planning 11
B. Funding Sources 13
C. State Networks & Intermediaries 14
iV. Resources
A. Source Documents for State & Local Initiatives 15
B. Technical Assistance Organizations 15
C. Readings & Reference Materials 15
V. Acknowledgments
A. Microenterprise Support Programs 17
B. National Visibility Partners 18
C. Funders 19
Endnotes 19
Fax-Back form for Resources
Summary of Menu:
State & Local Initiatives that
Support Microenterprise
Paradigm Program
A. Goal: Provide Management Support for Micro-Programs
1. State & Local Administration of the Federal C.D.B.G. Program San Francisco, CA
2. State Budget Support for Microenterprise Programs or Intermediaries Nebraska, Virginia
3. State & Local Application for a Federal E.T.A. Grant Michigan
4. State Administration of Welfare Reform
B. Goal: Expand Capital for Micro-Loans
1. State CDFI Programs New York
2. Risk Management Programs for Private Lenders Ohio
3. Secondary Market Programs California
4. State-Level Guidelines For Community Reinvestment New York
5. Linked Deposit Program Oklahoma
6. Bank Consortia
C. Goal: Strengthen Marketing & Business Networks
1. Internet Technology for Marketing or Business Operations Vermont
2. Buyer - Supplier Networks Pennsylvania
3. Production or Service Networks ACE-net/Ohio
4. State & Local Procurement of Microenterprise Goods & Services Iowa
D. Goal: Strengthen Business Capacity of Micro-Entrepreneurs
1. State & Local Administration of the Job Training Partnership Act Iowa
2. State Administration of Agricultural Extension Services Mississippi State U.
3. Conversion of Unemployment Insurance to Self-Employment Training New Jersey
4. Self- Employment Training Programs Ventura, CA
E. Goal: Provide Personal Support for Micro-entrepreneurs
1. Transportation & Child Care
2. Business Facilities
3. Individual Development Accounts New York
I. Introduction
A. The Microenterprise Movement
Between 1991 and 1995, microenterprises created 3.8 million jobs nationally, while corporations with 500 or more employees lost 3.1 million jobs.[i] “Microenterprise” includes people who create their own “self-employment” jobs, and they often hire others as well. Recent surveys define microenterprise as a business that has five or fewer employees and a low budget.
Since 1990, the number of microenterprise support programs has grown from a handful to over 500 organizations that work at the local, state and national level.[ii] Most of these organizations belong to a national network, the Association for Enterprise Opportunity (AEO). There are state-wide networks that are active or organizing in at least 19 states, which are interested in asking public officials to support the microenterprise movement as a strategy for job creation.
B. Need for National & Local Visibility
Microenterprise is sometimes overlooked as an economic development strategy because the enterprises it supports are small. In reality it is the fastest-growing job creation strategy in America. If the promise of microenterprise is to be realized, it is essential that policy-makers and community leaders have better access to information about the ways that they can promote microenterprise as a strategy to create new jobs.
To this end, AEO and several partners have joined in a national visibility campaign. One partner, the Access to Credit Media Project (ACMP), is producing a documentary on the microenterprise movement entitled, To Our Credit, which airs on the PBS television network in 1998. Another AEO partner, the Center for Policy Alternatives (CPA), is developing a visibility “took kit” that local microenterprise programs can use to communicate their mission and needs to local leaders. This report provides a menu of proven policy initiatives that state and local officials can use to support their home-grown microenterprise programs. It was produced by the Harrison Institute for Public Law at Georgetown University Law Center.
C. How to Use this Menu
Part II below identifies five critical needs of microenterprise development programs. Under each need, there is a menu of “paradigm programs” that provide models for replication by other state or local governments. Part III provides guidance on how to choose an initiative, how to pay for it, and where to go for network support. For each item on the menu, there are source documents and resource people ready to help you. Part IV shows you how to find these resources by phone, fax, email and Internet web-sites. If you are viewing the web-page version of this report, you can “click” on any symbol or underlined program for more detailed information.
II. Menu of State & Local Initiatives
This section presents a menu of 21 state and local initiatives to support microenterprise. They are organized under five policy goals, which reflect the paramount needs of the nonprofit programs (“micro-programs”) that support micro-entrepreneurs. In practice, many of these initiatives address multiple policy goals, not just the ones that they are listed under below. They are listed below under a single policy goal in order to illustrate how the initiative meets a concrete community need.
The decade of the 1990s is a crucial time in the evolution of microenterprise policy. As the examples below illustrate, there is now a solid body of experience at the state and local level. However, these programs are still the exception, not the rule. Most cities and states do not yet include microenterprise as part of their economic development strategies.
This menu is a work in progress; we are still looking for programs to fill some categories. If you know of a program that can serve as a model, please contact the Harrison Institute (see p. 18).
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A. Goal: Provide Management Support for Micro-Programs
“Microenterprise programs” are primarily run by non-profit organizations to promote self-employment through microenterprise development. Some of the core services that they provide include: (1) identifying and coordinating public and private funding sources available to microentrepreneurs; (2) aiding microentrepreneurs in obtaining business loans; (3) screening potential borrowers; and (4) providing business-related technical assistance.
Private nonprofit programs are a linchpin for the successful implementation of the public programs designed to aid microentrepreneurs. They are “leaner,” closer to the community and much more flexible than most public bureaucracies. If microenterprise programs are under-funded, there is a likelihood that public and private moneys designated for microenterprise will be inefficiently spent, that microenterprises will fail to reach their full potential for want of satisfactory technical assistance, or that policies developed to foster microenterprise will be under-utilized. Adequate funding for management of microenterprise programs is essential to the success of microenterprise development. The options for meeting this need include:
1. State Or Local Administration Of The Federal Community Development Block Grant (CDBG). The Federal Community Development Block Grant Program is designed so that states or localities are able to create economic development programs that meet federal standards. The state or locality may then fund the program with federal CDBG money.
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Paradigm Program: San Francisco SEED Program. The city and county of San Francisco have developed a microenterprise outreach and training program called Self-Employment and Enterprise Development. The program is implemented through a consortium of five community-based nonprofit agencies. Program funding combines CDBG and private funds, which support both training and general management expenses of the city and nonprofit agencies.
2. State Budget Support For Microenterprise Programs Or Nonprofit Intermediaries. Many states have appropriated funds to support non-profit intermediaries for microenterprise development. The intermediaries usually serve a three-part role: (1) combining public and private funds to increase the total amount available; (2) developing a strategy such as combining loans with training or support for business networks; and (3) maintaining public accountability for use of funds and compliance with state or federal program requirements.
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Paradigm Program: Nebraska Micro Business Development Act. Nebraska has enacted an innovative budget appropriation which utilizes leveraging techniques to increase the state’s initial investment by up to four fold. The leveraged funds are designated to provide operating support to community-based microenterprise programs. The Act appropriates $250,000 per year from the state budget and is administered by a state agency. The agency then has two choices: it may either directly award grants to community-based intermediaries, or it may contract with a statewide microenterprise organization to award grants to community-based intermediaries. If the agency chooses to contract with a statewide organization, that organization is required to match state money dollar-for-dollar. Grant recipient organizations are likewise required to provide non-state funds (federal, local, or private funds) in the ratio of 1:1 to the grant amount. Thus, the scheme turns the state’s initial investment of $250,000 into a potential $1,000,000 for microenterprise programs.
Paradigm Program: The Virginia Enterprise Initiative. The Virginia Dept. of Housing and Community Development has outlined legislatin that allows state money to be used both to leverage federal money and private re-sources. The initiative could leverage a potential $3 million investment by Virginia into $6 million for the microenterprise sector.
3. State or Local Application for a federal E.T.A. Grant. The federal Employment and Training Administration (part of the U.S. Department of Labor) administers a microenterprise grant program for which state and local governments may apply. The grant program is designed to encourage microenterprise policy development at the state and local level. Five microenterprise grants awarded in 1997 tallied over $1,240,000.
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Paradigm Program: Michigan Jobs Commission ETA Grant Award. The Michigan Jobs Commission created a project proposal and was awarded a 1997 ETA grant for $225,000 to fund Michigan economic development initiatives that promote microenterprise.
4. State Administration of Welfare Reform. The welfare reform act passed in 1996[iii] requires states to create criteria for using a federal block grant entitled Temporary Aid to Needy Families (TANF). TANF funds could be used in numerous ways to address microentrepreneurial needs. Funding for microenterprise intermediaries is one of the authorized uses of TANF.
Paradigm Program:
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B. Goal: Expand Capital for Micro-Loans
“Loan capital” is money that microentrepreneurs borrow to finance their enterprise. The principal is repaid by the entrepreneur, usually with interest, although sometimes at an interest rate that is less than prime rate.
Microentrepreneurs have difficulty getting commercial loans because micro-loans are too small to be profitable for most commercial banks. In addition, commercial lenders often believe that microenterprises are unsuitable lending risks due to the lack of collateral involved, or the borrower’s lack of business experience.
1. State CDFI Programs. CDFIs, or community development financial institutions, are dedicated to providing credit to individuals denied traditional lending. CDFIs were established under a federal Act.[iv] Qualifying CDFI lending institutions are eligible for competitively granted federal money, which they may then use for community development lending. A national network of CDFIs is in place. Because of their focus on “high-risk” lending, CDFIs are uniquely qualified to satisfy the credit needs of microentrepreneurs.
Potentially, states could support this network of CDFIs and utilize their expertise by appropriating money to increase the amount of loan capital available to CDFIs and providing avenues for technical support of CDFIs.
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Paradigm Program: New York CDFI Act. In recognition of the valuable role that CDFIs continue to play in assisting low-income individuals and communities access to credit, New York has established a “CDFI Fund.” The purpose of the fund is to provide technical and financial assistance to NM New York’s network of CDFIs. Recipient CDFIs are required to use Fund money for investments in needy communities. The fund is administered by a board of governors who determine how to invest the appropriated money so as to best support the existing networks of CDFIs.
2. Risk Management Programs for Private Lenders. States and localities may encourage commercial lenders to extend credit to microenterprises by mitigating the risk of default. Initiatives include forming government-backed risk pools, and loan guarantees.
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Paradigm Program: Ohio Mini-Loan Program. Ohio has created a loan guarantee program in which the state partially guarantees microenterprise loans.
3. Secondary Market Programs. Money which is made available for lending to microentrepreneurs is often organized in a “revolving loan” fund. In a revolving loan fund, money is made available for microlending. Borrowers’ interest and principal repayments are used to replenish the loan pool, causing the amount of money available for lending to gradually grow bigger. However, one significant drawback of a revolving loan fund is that potential entrepreneurs must often wait until outstanding loans are repaid before loan capital can be made available to them.
State and local policy-makers may extend the amount of capital available for microenterprise lending by developing secondary market programs. These programs begin by identifying outstanding microenterprise loans, which have graduated to a more “bankable” level. This means that the risk involved in the loan has been reduced, either by the success of the business or because the entrepreneur has established a history of repayment. Once these “bankable” microloans are identified they can be sold to traditional commercial lenders. The purchaser of the loan agreements assumes control of the outstanding loans, and the revenue generated may used to replenish the fund principle.
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Paradigm Program: California Secondary Market Initiative. California requires a state agency to solicit bids from financial institutions to buy packages of “bankable” microloans. Through this solicitation the agency is expected to create a secondary market for community and economic development lenders. The agency is also required to help identify outstanding loans that these lenders may sell.
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Paradigm Program:
4. State-Level Guidelines For Community Reinvestment. State or local policy-makers may develop guidelines for community reinvestment that particularly encourage investors to invest in state and local microenterprise loan funds.
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Paradigm Program:
5. Linked Deposit Programs. Policy makers may make commercial loans more feasible for microentrepreneurs by developing linked deposit programs with commercial lenders. State or local funds are deposited with commercial lenders at reduced rates of interest on deposits. In return, lenders extend credit to microentrepreneurs.
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Paradigm Program:
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Paradigm Program: Oklahoma State Linked Deposit Program. Oklahoma deposits state funds at a reduced rate, and commercial loans are made to “eligible small businesses” at 3% less than prime. Up to $200,0 00 is available in Oklahoma linked deposit lending.
6. Bank Consortia. Policy makers may encourage commercial lenders to extend credit to microentrepreneurs by encouraging banks to organize microenterprise lending consortia. Consortia arrangements allow lenders to reduce the risk of individual loss through cooperative agreements which spread higher-risk loans among several lenders.
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C. Goal: Strengthen Marketing & Business Networks
Small business networks connect microenterprises with one another and with the public. Some networks help microentrepreneurs identify and support one another through mutual patronage. Some networks aid microbusinesses by increasing their public exposure and marketing efforts for little or no cost. Networks utilize on-line databases, web-sites or books to market their members.
One of the most challenging aspects of microentrepreneurship in America is the complex and competitive nature of the United States market. Microentrepreneurs are forced to compete with larger, more established businesses for their market share. Small business networks help to even the playing field by allowing microentrepreneurs to support one another and by allowing consumers to identify and support microenterprises.
1. Internet Technology for Marketing or Business Operations. Because of the Internet’s unique and infinite ability to reach mass audiences at low expense, it is an ideal forum for marketing microenterprises. Policy-makers may aid in connecting microentrepreneurs to the Internet by sponsoring programs or sites dedicated to microbusinesses.
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Paradigm Program: Vermont “Smart-Site”. Vermont is using part of its Employment and Training Administration Grant to create “Market Research Centers” that will develop an on-line “smart-site” service dedicated to marketing microenterprises.
2. Buyer - Supplier Networks. Databases or simple listings of state or local small businesses help to identify and connect buyers and suppliers to one another at little or no cost. Microenterprise buyers and suppliers can mutually bolster their businesses through conscious patronage and thereby establish symbiotic relationships.
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Paradigm Program: Pennsylvania “M-net.” The Economic Development Council of Pennsylvania, a public-private partnership, sponsors “M-net,” a buyer-supplier on-line database to all Pennsylvania manufacturers.
3. Production or Service Networks. Production or service networks are comprised of small groups of microenterprise firms that combine forces to develop new products to meet emerging market needs. The network coordinator identifies both a potential market and network “partners” who are capable of filling it. The goal of production networks is to identify the human resources available in a particular community and unite those individuals with a particular product niche, which that community has yet to fill.
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Paradigm Program: ACE-net Food Venture Project. ACE-net, a nonprofit community development organization based in Appalachia, has organized a flexible manufacturing network that focuses on specialty foods in Southeastern Ohio. ACE-net introduced firm owners to promising market contacts. The microentrepreneurs then collaborated with the potential buyers to select and develop products.
4. State & Local Procurement of Microenterprise Goods & Services. State and local governments can support microenterprises as market participants by establishing policies to “prefer” microenterprise-produced goods and services when available.
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Paradigm Program: Iowa’s Targeted Small Businesses. Iowa’s Department of Economic Development administers a program designed to encourage the development of state-identified “targeted small businesses” (TSBs). The Iowa state government has adopted a policy of purchasing goods produced by TSBs. All departments, agencies, community colleges and public school districts have an established goal to purchase at least 10% of all goods and services from TSBs. In the 1995 fiscal year, Iowa governments spent $33,000,000 on TSB-produced goods.
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D. Goal: Strengthen Business Capacity of Micro-Entrepreneurs
Microentrepreneurial training and technical assistance programs are designed to teach microentrepreneurs to learn how to start and maintain a successful microbusiness. Programs also counsel clients in obtaining credit and repaying loans. Training and technical assistance programs often extend to both pre- and post-loan guidance.
Many potential microentrepreneurs have a great idea for a small business and the motivation to make that business a success, but virtually no business experience. Without business training, many would-be entrepreneurs could not advance beyond the initial planning stages. Without follow-up technical assistance, many microenterprise ventures could not reach their potential, and in many cases, could not repay their credit obligations.
1. State & Local Administration of the Job Training Partnership Act. The federal Job Training Partnership Act of 1982 makes federal money available to states to be used for training unemployed individuals. States may use JTPA funds to provide self-employment training for potential entrepreneurs.
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Paradigm Program: Iowa JTPA and Microenterprise Program. Iowa has begun to integrate its JTPA program with existing microenterprise training services throughout the state so as to make self-employment an option for its recipients.
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Paradigm Program:
2. State Administration of Agricultural Extension Service. There is at least one Land Grant University (LGU) in each state.[v] LGUs have an on-going obligation to service the needs of their communities through research and educational programs called Agricultural Extension Services. State policy-makers may use this resource by partnering with LGUs to develop a self-employment training curricula.
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Paradigm Program: MSU “Home-Based & Micro Business Briefs.” Mississippi State University Extension Service, in cooperation with the United States Small Business Administration, state and local governments and the private sector, offers “one-stop” management and technical assistance to home-based and micro businesses. The assistance is provided at 22 community sites throughout Mississippi.
3. Conversion of Unemployment Insurance to Self- Employment Training. The North American Free Trade Agreement (NAFTA) Implementation Act allows states to use Unemployment Insurance (UI) funds to establish voluntary employment training programs. The Act permits states to create programs in which eligible dislocated workers are offered the option of accepting entrepreneurial training and self-employment support in lieu of UI benefits.
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Paradigm Program: New Jersey SEA Program. New Jersey has enacted a UI waiver program that allows UI claimants to voluntarily waive their UI payments and instead receive benefits under the New Jersey Self-Employment Assistance and Entrepreneurial Training Program (SEA). SEA benefits include counseling and technical assistance in developing a business plan, financial assistance for entrepreneurial training courses, and weekly compensation.
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E. Goal: Provide Personal Support for Micro-entrepreneurs
State and local governments can foster microenterprise development by supporting microentrepreneurs. Often they are in need of transportation, child care or business-related personal items such as business wardrobes. Policy-makers can address these needs by providing subsidies either directly to entrepreneurs or through tax credit programs.
Fledgling microenterprises often have unique start-up costs. Individuals trying to start a business face challenges beyond obtaining loan capital, networking and business training. If microenterprises are to become viable sources of economic sustenance, states and localities must continue their commitment to fostering these enterprises through the vulnerable early stages of their development.
1. Transportation & Child Care.
Paradigm Program:
2. Business Facilities.
Paradigm Program:
3. State-Administered Individual Development Account Programs.[vi] TANF (welfare reform) funds may be used in conjunction with a state-designed individual development account (IDA) program. In an IDA program, the state creates a savings account for an individual beneficiary. The state encourages the beneficiary to contribute to the savings account by establishing a “matching” incentive. The state agrees to deposit money into the account in a ratio proportionate to the amount contributed by the beneficiary. The beneficiary may then elect to use the account funds for state-specified purposes such as start-up expenses related to a microenterprise venture.
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Paradigm Program: New York Individual Development Account Act. New York has developed a pilot IDA project that permits community development organizations to design an IDA program within specific state guidelines and submit their proposals to the state for approval. New York beneficiaries are permitted to use their IDA money for state-defined microenterprise expenses. TANF funds are also designated to compensate community development organizations for the cost of administering the programs.
III. State & Local Strategies
This section provide some ideas on how to design a state or local initiative to support micro-enterprise. A successful strategy is likely to: (1) meet the needs of local micro-programs at their current stage of development; (2) use available funding sources efficiently; and (3) take advantage of state networks or intermediaries in order to assure flexible implementation.
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A. Strategic Planning
If microenterprise development is going to continue to grow, it is essential that policy-makers and advocates make wise decisions as to which policies to support. When choosing among possible policy alternatives, it is helpful to consider the following factors:
1. What are the needs of your microenterprise community? A question implicit in this inquiry is, “what are the needs of your community?” The needs of every state and locally are unique. Some states’ microenterprises are primarily urban, others rural. Some states and localities have excess loan capital but no technical assistance. Others need loan capital to meet the demand for credit.
2. Would the policy maximize your potential funding sources? Many times a need may be met in one of several ways, some more fiscally efficient than others. For example, if federal money can be captured, it makes sense to do so and leave state budget appropriations when federal funding is not available. If state funds are sufficient, could the state appropriation be used to leverage federal or private money?
3. What is the most capable state network or intermediary organization to implement a policy? If no appropriate implementing structure is available, it is unlikely that an initiative will reach its full potential. Policy-makers should consider state networks and intermediaries as community development “infrastructure,” which have or could develop the capacity to implement state policies more efficiently and flexible than a state agency could.
4. Would a policy maximize your opportunities and minimize your obstacles? Finally, policy-makers and advocates must consider their political climate. It is important to understand the forces working both for and against one’s advocacy. It is also helpful to seek coalitions and allies.
One way to design a viable policy initiative is to analyze your options with a framework that compares your needs with the fiscal and political considerations. The following chart is an example of how to compare various options.
Framework for Designing a Policy Initiative
| | | | | | |
|Type of |Criteria for | | | | |
|Policy Component |Choosing Policy | | | | |
|(selected examples) |Components | | | | |
| | | | | | |
| |Program |Funding |Fiscal |Political |Political |
| |Needs |Sources |Agent |Opportn. |Obstacles |
| | | | | | |
|Provide Operating Support for | | | | | |
|Micro-Programs | | | | | |
| | | | | | |
|State appropriation | | | | | |
| | | | | | |
|CDBG funds | | | | | |
| | | | | | |
|TANF funds | | | | | |
| | | | | | |
|Expand Loan Capital for Entrepreneurs | | | | | |
| | | | | | |
|State CDFI program | | | | | |
| | | | | | |
|Unemployment benefits | | | | | |
| | | | | | |
|Risk management | | | | | |
| | | | | | |
|Create Small Business Networks | | | | | |
| | | | | | |
|Internet technology | | | | | |
| | | | | | |
|Buyer-supplier networks | | | | | |
| | | | | | |
|Manufacturing / service networks | | | | | |
| | | | | | |
|Increase Business Capacity of | | | | | |
|Entrepreneurs | | | | | |
| | | | | | |
|JTPA funds | | | | | |
| | | | | | |
|Agricultural extension | | | | | |
| | | | | | |
|Welfare reform | | | | | |
| | | | | | |
|Provide Personal Support for | | | | | |
|Micro-Entrepreneurs | | | | | |
| | | | | | |
|Transportation & child care | | | | | |
| | | | | | |
|Business facilities | | | | | |
| | | | | | |
|Individual development accts. | | | | | |
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B. Funding Sources
Some state and local initiatives have been successful because their planners carefully analyzed potential sources of existing funds that could be tapped to start the program. In the case of federal funds, the most likely sources are large block grants (such as CDBG and JTPA) or smaller demonstration programs for microenterprise (such as SBA or Department of Labor). While these are federal funds, the allocation of funds is planned and implemented by state agencies, usually on the basis of an annual plan that most states file in order to receive federal funds. The kind of framework shown above can also help to analyze which and how many federal sources are needed to meet state or local microenterprise needs.
Potential Federal Funding Sources
| | | | | | |
| |Block Grants or | | | | |
|Microenterprise |Demonstration | | | | |
|Needs |Programs | | | | |
| |(selected examples) | | | | |
| | | | | | |
| |HUD: |Labor: |Commrc: |Commrc: |HHS: |
| |CDGB |JTPA |CDFI |SBA |TANF |
| | | | | | |
|Provide management support. |_ |_ | |_ |_ |
| | | | | | |
|Expand capital for micro-loans. |_ | |_ |_ |_ |
| | | | | | |
|Support marketing & networks. |_ | | | | |
| | | | | | |
|Strengthen business capacity. |_ |_ | | |_ |
| | | | | | |
|Provide personal support. |_ | | | |_ |
A similar kind of analysis can help to identify state funding sources as well. Instead of block grants, the most likely sources of existing funds are agency budgets that are appropriated by the legislature. The following is an example of an agency-based framework.
Potential State Funding Sources
| | | | | | |
| |State Funding | | | | |
|Microenterprise |Sources | | | | |
|Needs | | | | | |
| | | | | | |
| |Economic |Labor: |Education: Adult |Telecom-munica-tio|Other |
| |Develop-ment |Job Training |or Continuing |ns | |
| | | |Education | | |
| | | | | | |
|Provide management support. | | | | | |
| | | | | | |
|Expand capital for micro-loans. | | | | | |
| | | | | | |
|Support marketing & networks. | | | | | |
| | | | | | |
|Strengthen business capacity. | | | | | |
| | | | | | |
|Provide personal support. | | | | | |
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C. State Networks and Intermediaries
For policies to succeed, they must be implemented by nonprofit-sector organizations and individuals with expertise and experience. It is also true that turf issues can emerge at the state level, which require sensitive management. Whether for reasons of politics or capacity, participation of state nonprofit networks is important for most successful state-level policies. State-wide microenterprise networks are now either active or organizing in 19 states. Several cities and states have delegated to the nonprofit sector the role of financial intermediary and broker or provider of technical assistance services to support microenterprise.
IV. Resources
1997 Directory of State Microenterprise Associations, includes contact information, contact persons and mission statement. Compiled by Barbara Anderson, Corporation for Enterprise Development. Available from CfED, 777 North Capitol St. NE - Suite 801, Washington, DC 20002, phone 202-408-9788, fax 202-408-9793.
1996 Directory of U.S. Microenterprise Programs, includes contact information, contact persons, mission statement, operating budget, sources of funding, target population, area served, services provided, accomplishments and future plans. Compiled by Peggy Clark, Self-Employment Learning Project of the Aspen Institute, Washington, DC. Available from AEO, 70 East Lake Street, Suite 1120, Chicago, IL 60601-5907, phone 312-357-0177, fax 312-357-0180, email aeochicago@.
AEO Exchange, a monthly newsletter on AEO activities, policy alerts and best practices in the field. Edited by Mary Lou Egan for AEO. Available from AEO.
AEO Policy Paper, provides a summary of the role that microenterprise plays in the U.S. economy, the case for public sector report of microenterprise development, principles to guide federal policy, and recommendations for federal policy, many of which would strengthen funding for programs administered at the state and local level. Prepared by AEO board members, notably Kate McKee and Ellen Golden, and policy advisor Alison Feighan of Rapoza Associates. Available from AEO.
Community Capital Builders, A Leadership Brief on Rural Intermediaries, explains what nonprofit intermediaries do, how they relate to state government programs, and how states can support intermediaries. Written by Robert Stumberg for the Center for Policy Alternatives. Available from CPA, 1875 Connecticut Ave., NW, Suite 710, Washington, DC 20009, phone 202-387-6030, fax 202-986-2539, email info@, web-site /.
Journal of Developmental Entrepreneurship, a semi-annual academic journal devoted to issues concerning microenterprise development. William Lewis Randolph, managing editor. Published by the School of Business and Entrepreneurship, Norfolk State University, 2401 Corprew Avenue, Norfolk VA 23504, phone 757-6883-2563, fax 757-683-2506, email wrandolph@vger.nsu.edu, web-site /nsu.edu/schools/business/jde/index.htm/.
Using the CDBG Program to Support Microenterprise Development, provides guidance on how cities and states can meet technical HUD requirements for use of block grant funds. Written by Joyce Klien for the Corporation for Enterprise Development, 1994. Available from CfED.
Realizing the Promise of Microenterprise Development in Welfare Reform, identifies the ways that microenterprise promotes self-sufficiency and makes policy recommendations for implementation of welfare reform. Written by Ray Boshara, Robert Friedman and Barbara Anderson, Corporation for Enterprise Development. Available from CfED and AEO.
The Practice of Microenterprise in the United States, documents the operational scope and economic impact of microenterprise programs. Written by Peggy Clark, Self-Employment Learning Project of the Aspen Institute, Washington, DC. Available from AEO.
V. Acknowledgments
This report was written by Meredith Render and edited by Robert Stumberg, both of the Harrison Institute for Public Law at Georgetown University Law Center. The Institute worked under contract with the Center for Policy Alternatives and the steady oversight of Delba Riddick (CPA). Several people deserve credit for their helpful comments on drafts, without which this report would be much less interesting or accurate. They include Jason Newman and Erin Boggs (Harrison Institute), Chris Benuzzi (AEO), Rob Rooy (ACMP) and the many AEO members and supporters who are listed in the following section.
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A. Microenterprise Support Programs
This report is based on the commitment and ideas of many microenterprise support programs. Our special thanks go to the following organizations and individuals who provided information on state and local initiatives.
Africa Fund Susie Johnson
California - CA Association for Microenterprise Opportunity
California - Ventura County
CDFI Coalition
Illinois - Women’s Self-Employment Project Sheri Moses
Iowa Department of Economic Development
Iowa - Institute for Social & Economic Development Jason Friedman
Kansas Center for Rural Initiatives Carol Peak
Massachusetts Association of CDCs Joe Kriesberg
Massachusetts Microenterprise Coalition Chris Sikes
Maine - Micronet and Coastal Enterprises Ellen Golden
Montana Microbusiness Lending Association Charles Hill
Ohio - ACE-net June Holly
Pennsylvania Microenterprise Coalition Jill Mahon
Pennsylvania - Mennonite Economic Development Associates Howard Good
Minnesota - Alliance for Minnesota Microenterprise Mary Matthews
Mississippi State University Extension Services Susan Cocciarelli
Missouri Association for Social Welfare Betsy Slosar
National Conference of State Legislatures
Nebraska Enterprise Opportunity Network Gene Severens
New York - Statewide Emerg. Network for Soc. & Econ. Security Lois Johnson
New York State Banking Department
Ohio Department of Development
Ohio Microenterprise Network Patricia Barnes
Oklahoma Treasury Department
Rhode Island Microenterprise Association Ken Proudfoot
Tennessee Network for Community Economic Development Michelle Flynn
Texas Microcredit Network Ed Mason
U.S. Department of Labor
U.S. Small Business Administration
Utah Microenterprise Loan Fund
Vermont - Technical Assistance Providers’ Association Carol Flint
Virginia Microenterprise Network Becky Christensen
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B. National Visibility Partners
The following organizations are partners in a national visibility campaign to promote microenterprise. The campaign includes production of To Our Credit, a public television documentary, presentations to national networks of nonprofit developers and public officials, self-help visibility efforts by local micro-support programs and their state-wide associations, and direct dissemination of this report to state and local public officials.
AEO
Association for Enterprise Opportunity. AEO is a member-based association of more than 500 organizations that are committed to microenterprise development. AEO provides its members with a forum, information and a voice to promote enterprise opportunity for people and communities with limited access to economic resources. AEO members include practitioners, advocates, public agencies, funders. Executive Director: Christine Benuzzi; AEO Chair: Mary Matthews. Contact AEO: 70 East Lake Street, Suite 1120, Chicago, IL 60601-5907, phone 312-357-0177, fax 312-357-0180, email aeochicago@.
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Center for Policy alternatives. CPA is the nation’s leading non-profit, non-partisan public policy and leadership development center that is devoted to community-based solutions to strengthen families and communities. CPA links elected leaders across the fifty states with private and non-profit sector leaders in the search for common ground, new ideas and resources to create solutions that work. President and CEO: Linda Tarr-Whelan; Chief Operating Officer, Delba Riddick. Contact CPA: 1875 Connecticut Ave., NW, Suite 710, Washington, DC 20009, phone 202-387-6030, fax 202-986-2539, email info@, web-site /.
ACMP
Access to Credit Media Project. ACMP creates visual media to foster a public awareness of the idea that fair access to credit for self-employment is a fundamental part of equal opportunity. ACMP’s flagship project is To Our Credit, a two-episode documentary that explores the issue of micro-credit through the lives of real people. It will air on the PBS television network during the autumn of 1998. Other ACMP projects include nonbroadcast videotapes and a tape clearinghouse. Principal: Rob Rooy. Contact ACMP: 7407 Hilltop Drive, Frederick MD 21702, phone 301-473-8797, fax 301-473-8695, email rer@, web-site /.
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C. Funders
This report was made possible by a grant by the Charles Stewart Mott Foundation. We wish to express our sincere appreciation to Jack Litzenberg for his support of this project and his leadership in the field of microenterprise in the United States. Additional funding was provided by Georgetown University Law Center.
If you have ideas for expanding this policy menu, please contact:
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The Harrison Institute for Public Law. The Harrison Institute is a part of Georgetown University Law Center that promotes political and economic democracy. The Institute serves community advocates, national networks and public officials who are developing a bottom-up strategy for responding to social, economic or environmental needs. Director: Jason Newman; Clinical Director/Policy: Robert Stumberg. Contact Harrison: 111 F St., NW, Suite 102, Washington, DC 20001-2095, phone 202-662-9600, fax 202-662-9613, email hinst@law.georgetown.edu, web-site /law.georgetown.edu/clinics/hi/.
Endnotes
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[i] Small Business Administration Report.
[ii] Research Division of the Massachusetts Dept. of Employment and Training.
[iii] The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996.
[iv] The federal Community Development Banking and Financial Institutions Act of 1993 provides a federal definition of “community development financial institutions” (CDFIs).
[v] The Morrill Acts of 1862 and 1890 established and funded Land Grant Universities (LGUs).
[vi] Section 404 (h) of PRWORA.
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