This post originally appeared on the Community Foundation for Greater Atlanta blog.

June 24, 2020

By: Jonny Newburgh, Impact Investment Associate, GoATL Fund

Small businesses are hurting. Black-owned businesses face added challenges.

In good times, entrepreneurship is tough. The most recent Small Business Credit Survey, conducted by the Federal Reserve System in early 2020, found that in 2019 only 57% of small businesses enjoyed profits and 24% operated at a loss. When lockdowns began earlier this year, researchers found that the average small business had less than one month of cash on hand, leaving both small business owners and their employees – 47.5% of the private-sector workforce – at risk.

Clearly, the good times have ended. We are currently living in a global recession during a pandemic. Due to reduced revenues, many businesses are closing permanently and many others are reducing costs, including labor costs, in a bid for survival. Programs designed to offer financial relief, such as those in the federal CARES Act, have been unable to provide the needed support to prevent layoffs and avoid unemployment from reaching historic levels. Worse, federal programs not only overlooked rural, minority and women-owned businesses, but they also did not address pre-existing barriers to capital in communities of color.

Grantmaking for small businesses seeks to address inequities in accessing capital

Knowing the impacts of the dual economic and public health crises would impact the region unevenly, the Community Foundation worked with the United Way of Greater Atlanta to fund small business and nonprofit support organizations that work with and serve primarily non-White entrepreneurs and clients . In part, our support for small businesses is a recognition of the importance of business for social purpose, a point advocated by the Georgia Social Impact Collaborative (GSIC).

To date, the Greater Atlanta COVID-19 Response and Recovery Fund has granted $995,000, and donors have invested an additional $106,600 through the end of May to organizations in metro Atlanta that form the small business ecosystem. These organizations include the Center for Civic Innovation, which has long supported entrepreneurs leading civic enterprises that address inequities in Atlanta, and both of Georgia’s Small Business Administration (SBA) Women’s Business Centers – Access to Capital for Entrepreneurs (ACE) and The Edge.

ACE is also one of metro Atlanta’s leading small business Community Development Financial Institutions (CDFIs), a nonprofit loan fund that has invested over $70 million in metro area small businesses since 1999. ACE is the largest and most impactful small business CDFI in the region. With a mission to invest in disinvested communities, in 2019 ACE invested 45% of its funds in Black-owned businesses, 37% in women-owned businesses and 16% in Hispanic-owned businesses. Meanwhile, according to the U.S. Census, only 6% of small businesses in metro Atlanta are Black-owned, 22% are women-owned and 4% are Hispanic-owned.

As local governments announced lockdowns, ACE began surveying its clients to determine market needs. In just 12 weeks, it provided $8.5M in emergency loan capital, including Paycheck Protection Program loans, for 300 businesses and business advisory support to hundreds more.

Our impact investments provide low-cost, flexible capital to support an equitable recovery

The Community Foundation developed the GoATL Fund, the region’s first impact investment fund, to address these disparities and support wealth building through entrepreneurship in the same communities that ACE works with. CDFIs like ACE need grants to fund technical assistance programs and to provide equity in their loan funds, but they also need investors – like GoATL – to provide capital for relending for longer term social outcomes.

Since June 2018, GoATL has invested $1.25 million in ACE. ACE has used our investment to fund SBA Capital Advantage Program (CAP) loans and to fund loans for economic relief and recovery, such as Paycheck Protection Program (PPP) loans.

In 2019, ACE funded more than 90 loans, 49% of which financed Black-owned businesses. These loans, in turn, retained or created 831 jobs.

As governments across the metro area announced lockdowns due to the pandemic, ACE began working with local governments, development authorities and investment partners to develop new financing tools, increase available capital and offer greater flexibility to borrowers until the economy recovers.

But capital markets are racist, and they require anti-racist innovations

Having recently committed to a strategic plan that advances equity of opportunity , the Community Foundation also recognized that CDFIs cannot fill every gap in the market – and that an inequitable recovery is no recovery at all.

That’s why the Greater Atlanta COVID-19 Response and Recovery Fund granted $250,000 to the Atlanta Wealth Building Initiative (AWBI), which has long been working on alternative models of investment, such as character-based lending. AWBI was  also quick to offer grants to small businesses in Southwest, Southeast and Northwest Atlanta to ensure that small businesses, especially those owned by people of color, do not fail as a result of COVID-19.

Pictured: Takes a Village Transportation, ACE loan recipient

The Georgia Social Impact Collaborative’s Steering Committee is committed to addressing racism and racial inequities internally and in our work in the community to accelerate the social impact ecosystem across Georgia.

We must do and be better. We commit to listening, learning, and reflecting individually and as a group, by taking counsel with our partners and friends, and by accessing resources and expertise on racial justice and inclusive capital. We believe that racial equity will not come about without intentional action to address significant inequities in investment capital and network access, while also confronting bias, reimagining power dynamics and changing narratives.

Our hope is that others within the social impact ecosystem will join us in this work by contributing leadership, participation and equitable access to resources. 

We remain committed to inspiring more mission-driven capital to sustain an economy in which everyone has the opportunity to thrive.

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How can a campus achieve aggressive reductions in energy use, and reduce its carbon footprint, through efficiency upgrades? Agnes Scott College initiated the college’s Green Revolving Fund (GRF) in 2011 as a practical solution to this common challenge shared by colleges and universities that have committed to a goal of climate neutrality.

By 2015 Agnes Scott’s GRF had become a model for meeting this sustainability challenge, especially for schools with 5,000 or fewer students, by revolving more than $1 million to support energy capture and efficiency as well as water fixture retrofits campus wide. Now, five years after that first major goal was met, the Agnes Scott GRF has invested in efficiency retrofits totaling close to $2 million, including direct support for several large scale, innovative projects. Most notably, 10% of the college’s 1 million square feet of building space gained geothermal heat and air conditioning with support from the GRF. In addition, this fund has proven not only to be an incredibly effective tool to finance efficiency projects, it has also been a key element in advancing two other campus sustainability objectives: engaging our students in research to solve “real world” sustainability challenges, and creating a campus culture that supports the goal of advancing climate neutrality initiatives.

The basic concept of a green revolving fund is to establish a pool of financial resources dedicated to investing in energy and water efficiency upgrades that will generate utility cost savings. The money saved through these projects is then recycled back into the fund for future projects, resulting in a sustainable funding source for climate neutrality efforts. At Agnes Scott the GRF was designed to strengthen the college’s institutional capacity for building upgrades while ensuring that the campus will be more energy efficient. It was also designed to be managed by the campus community rather than by one department. 

Agnes Scott is a liberal arts college for women founded in 1889 and located in Decatur. The enrollment for the 2019-2020 school year was just over 1,000 students. The college’s mission statement is to educate women “to think deeply, live honorably and engage the intellectual and social challenges of their times.”  The approach that the college has taken to the GRF reflects this mission.

Sustainability and climate action are viewed by the leadership of the college as important components of Agnes Scott’s mission. In 2007 Agnes Scott was a charter signatory of Second Nature’s Carbon Commitment and in 2015 the college added a commitment to complete a Climate Resilience Plan with the surrounding community of Decatur. The college also participated as one of the first colleges to join the Billion Dollar Green Challenge, committing  to invest $1 million toward its GRF within the first three years after startup. 

Soon after signing the climate commitment, the college completed its first greenhouse gas inventory and drafted a Climate Action Plan (CAP) with a goal of climate neutrality by 2037. At the same time the Board of Trustees passed a resolution that all major renovation and new construction projects on campus would be required to achieve at least LEED Silver status. Since then three renovation projects have been completed:  The Anna Young Alumnae House (LEED Silver), Campbell Hall (LEED Gold), and Rebekah Scott Hall (LEED Platinum). The Campbell Hall and Rebekah Hall renovations benefited directly from GRF support and now operate on 100% geothermal HVAC.

The GRF has been a major driver in helping Agnes Scott College reduce its energy and water consumption and in the college’s efforts to achieve climate neutrality. Results include:

  • As of the 2017-2018 school year the college has reduced its emissions overall by close to 30% and emissions per full-time student by 39%.
  • Projects funded thus far funded by the GRF save the college an estimated total of $1 million in avoided water and energy expenses. 
  • Six individual student internships have brought students from different academic departments to the Center. These are often students that may not have had a sustainability focus previously. 
  • Moreover, the educational objective of the GRF has given many more students the opportunity to engage in environmental and sustainability issues and to wrestle with trying to create the right balance of environment, economics and equity as they make decisions. Students participating in the GRF Committee have made valuable contributions to proposal discussions, and have influenced the decision-making process with inventive solutions. 

At Agnes Scott the innovation investment of the GRF is truly seen as a tool for college improvement. It builds trust. The improvements from GRF projects, while not always flashy, have made the Center for Sustainability better at showing that climate mitigation takes a community approach and involves projects ranging from lighting upgrades to solar panels.

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Susan Kidd is the Executive Director of the Center for Sustainability at Agnes Scott College. In addition to the attention that the GRF has received, Agnes Scott’s overall sustainability profile has increased recently. The college received its STARS Gold rating in 2018 from the Association for the Advancement of Sustainability in Higher Education (AASHE) and then in 2019 received recognition for data accuracy in the Sustainable Campus Index that was released by AASHE. In 2020 Agnes Scott was ranked 13th in The Princeton Review Guide to Green Colleges. This marked the first time Agnes Scott has been ranked in the top tier, and is the only college with fewer than 5,000 in the top 15. Agnes Scott also earned a top performer award for energy conservation from the Atlanta Better Buildings Challenge in 2019.