Responsible Economy Roundtable
July 9, 2009

Overview

Roundtable Overview pdf

The July 9th Roundtable, held at the Mi Casa Resource Center in Denver, brought together a diverse group of sixty thought leaders from the private, public and nonprofit sectors. Richard Eidlin of The Progress Group noted that the Roundtable’s goal is to support the next generation of Denver’s low-income social entrepreneurs who come from underserved communities. These civic-minded people have the talent and vision, but lack the necessary resources to sustain and scale their ventures. The objective is to connect entrepreneurs and their good ideas to business leaders and civic organizations with resources. The new enterprises will generate revenue, while creating good jobs and integrating environmental and social goals into their financial strategy.

The assembled venture capitalists, social service directors, entrepreneurs, bankers and clergy engaged in a spirited discussion around this and other topics, including how to create a more ‘responsible’ economy within Denver. A responsible economy places equal value on generating profit, as it does on achieving social and environmental goals.

The first panel, “Defining the Responsible Economy” included Andre Pettigrew, Executive Director of Denver’s Office of Economic Development; Eric Lee, President of the Colorado Black Chamber of Commerce, Rabbi Levi Brackman and Reverend Ambrose Carroll of Green For All. Each spoke about the unique capacity of business to lift people out of poverty and create broadly shared economic prosperity.

• Andre Pettigrew noted that small businesses, which comprise nearly 80% of Denver’s employment, play a vital role in spurring innovation and economic resurgence.
• In response to 17% of the City’s residents living in poverty, Andre noted that Denver has launched the Economic Prosperity Taskforce, which will support new business ventures by low-income people as a means of reducing poverty.
• Rabbi Brackman said that unrealistic expectations for financial gain had characterized the past few years. Generating a quick and easy profit – at both the individual and corporate level - rather than producing a tangible good had become all too commonplace.
• Eric Lee noted, “… the collapse of some of the nation’s most prominent financial institutions suggests we need to reassess the fundamental values that our economy is built on.”
• Those values, added Reverend Carroll “must be informed by a sense of morality that infuse the economy with a sense of fair play and opportunity. Everyone’s bottom line should be to do good, while at the same time making money.” It’s entirely possible, noted the Reverend to “lift all boats while building the new energy economy”.
• While the central goal of a business is to make profit, Rabbi Brackman contended, this does not diminish its responsibility to also create value. The panelists agreed that the challenges facing the economy were too great for any one sector to tackle alone.

Following the panel discussion, the participants worked in small groups, coming up with a series of recommendations:

• Redefine profit so that it takes into account the needs of the broader economy.
• Promote values that ensure that low-income people are accounted for in the economy.
• Incorporate triple bottom line values and corporate social responsibility within a company’s DNA from the outset.
• Promote collaboration and thinking outside of traditional silos.
•  Create new metrics that encourage banks and financial institutions to invest in community-based businesses.

The second panel, “Business Strategies to Create Social and Community Prosperity” focused on strategies to direct capital and technical resources towards aspiring low income social entrepreneurs. The speakers included Rob Smith, Rocky Mountain Microfinance Institute (RMMFI), Ceyl Prinster, Colorado Enterprise Fund (CEF), Steve Murchie, Kieretsu Forum, Greg Berry, Business Catapult and Alberto Perlato of Solera National Bank.

• The panel represented a continuum of funding sources, ranging from a $1,000 loan from RMMFI for very early stage companies to $1 million+ loans from Solera National Bank for stable, mature companies. Available capital to support low-income businesses and business training programs is always tight noted Ceyl.
• Many aspiring low-income entrepreneurs lack the credit history necessary to obtain funding from commercial banks and thus rely on institutions like RMMFI and CEF. The panelists acknowledged the importance of collaborating with a recipient of CEF funding possibly presenting to the Kieretsu’s network of angel investors.
• CEF uses its capital to promote low-income businesses and a social justice agenda. Capital is not ‘values neutral’, noted Ceyl, adding, “responsible lending is about taking responsibility for the community’s needs”. By using capital in this way, CEF and other mission driven funders are working to create greater economic self-sufficiency. The benefits accrue to the broader economy.
• In explaining RMMFI’s work, Rob suggested that a new ‘scorecard’ needs to be created for determining who’s eligible to receive a loan or investment. In addition to financial metrics, this scorecard would also take into account a person’s commitment to community and ‘social business plan’.
• Ceyl Prinster and Steve Murchie noted that small businesspeople need not just financial capital, but also human capital, such as mentoring. Steve called for a clear set of metrics to measure performance of triple bottom line entrepreneurs, noting that unless a company was profitable, it was not truly sustainable.
• Greg Berry suggested that ‘patient capital’ or ‘slow money’ could help to ensure that real value is created in the economy and as well as support low-income entrepreneurs. These are investments made for a longer term, satisfied with money market rate returns and geared towards achieving a social goal. Greg argued that slow money could begin to change expectations about how the economy ‘should’ work and provide a different set of incentives for investors.

The third session, ‘Social Enterprises: A Powerful Response’ focused on the workings of social enterprise ventures. It showcased several of Denver’s leading non-profits. Moderated by Rebecca Saltman, the discussion centered on the emergence of hybrid business models, which blend the private sector pursuit of profit and operational efficiency with the mission driven, people based approach of nonprofits. The panel included Tamra Ryan, Women’s Bean Project, Matt Nathan, Ashoka Youth Ventures, Christine Marquez-Hudson, Mi Casa Resource Center and Rick Tallman, Renova Capital.

• Christine Marquez-Hudson described Mi Casa’s 13-week business training programs and growing interest in incorporating social and environmental principles into the curriculum.

The panel concluded with a series of recommendations:

• Nonprofits should learn from each other (best practices) and work more closely with private entrepreneurs to accelerate change
• Businesses (large and small) should become more mission driven while non-profits should become more business focused.
• Entrepreneurship is a challenging path, that while able to create self sufficiency for some is not a sure bet for everyone.

Following lunch, the participants divided into two groups. One considered specific strategies for supporting low-income social entrepreneurs (SE’s). The other discussed how to develop a set of triple bottom line metrics that would evaluate the success of new SE’s as well as existing firms.

The two groups offered a few recommendations, including:

• Develop hybrid business models, including an incubator for SE’s.
• Move beyond the narrow definition of profit or value and integrate the two.
• Incorporate social and environmental principles into existing small business development curriculum.
• Identify new private sector funding sources to support low-income SE’s.
• Create a more robust mentoring program for SE’s.
• At the next Roundtable showcase a number of low-income entrepreneurs.

Partial List of Attendees - July 9, 2009 Roundtable

The next Roundtable is scheduled for October 8th.

For more information, please contact:
Richard Eidlin, The Progress Group ~ 303-478-0131 ~ richard@proggrou