Presidential Summit on Entrepreneurship: Access to Capital Recap
In his June 4th, 2009 address in Cairo, President Obama announced that the U.S. would host a Summit on Entrepreneurship to identify how we can deepen ties between business leaders, foundations, and entrepreneurs in the United States and Muslim communities around the world. Yesterday and today, entrepreneurs, financiers, and leaders from around the world gathered to deliver on that vision on the first day of the Presidential Summit on Entrepreneurship.
As part of the event, I participated in a ” discussion on the importance of capital for both business and social entrepreneurs and the role of government in creating an environment in which entrepreneurs can succeed.
There was some question about the importance or role of social entrepreneurs in the economy and as Domestic Policy Advisor, I can assure you that the Administration regards both business and social entrepreneurs as critical to the US economy. The federal government is focused on creating jobs and supporting small business, and we are actively engaged to ensure that small business owners have the tools they need to succeed. Similarly, we are also focused on social entrepreneurs who are not just ‘do gooders’, but also an economic force – the sector contributes $600 billion to the US economy and accounts for about 10% of jobs. They train the next generation workforce, ensure that families are healthy to work and help low-income families find pathways out of poverty when they don’t have access to jobs, job training or an education.
Social entrepreneurs, similar to business entrepreneurs, need a policy environment that encourages innovation and results; an entrepreneurial support ecosystem that helps leaders develop strategies and build the organization for scaling up; and an education system that gives them the necessary skills to meet the challenges of the 21st century.
But in some ways, the hurdles that social entrepreneurs face to getting capital are even tougher to surmount than their business counterparts.
First, social entrepreneurs measure their returns not in profit, but in impact, a much trickier thing to quantify. And often that impact is to society and does not accrue to the organization generating it. For instance, if a nonprofit successfully takes a community’s middle school students from dramatic underperformance to on par with their statewide peers, the results have a tremendous value for the community that does not necessarily translate to the organization’s bottom line. Just look at the work Geoff Canada has done at the Harlem Children’s Zone in New York.
President Obama recognizes that social entrepreneurs take risks and fill gaps that government and the private sector do not address. They are an integral part of our economic future. That is why he created the Office of Social Innovation and Civic Participation housed in the Domestic Policy Council. One of the Office’s three mission areas is to increase investment for innovative solutions that demonstrate results.
But to do this, we have to find innovative ways to not only get capital to social entrepreneurs but to create a viable marketplace for investors who want to have an impact to be able to find, support, and scale what works. We are beginning that work here, through things like the Social Innovation Fund at the Corporation for National and Community Service and the Investing in Innovation Fund at the Department of Education.
We also know that we have much to learn from our global neighbors. Mohammed Yunus’ work to get microfinance to the poor is now being replicated in Omaha and New York. And, Text4Baby is delivering critical pre-natal information to pregnant women in the U.S. but has its roots in mobile technology delivering information in sub-Saharan Africa. Good ideas are flowing around the globe.
As we go forward, together, in the President’s framework of a new beginning based on mutual interest and mutual respect, we aim to continue learning, sharing, and building upon the work that begins at this week’s Summit.
Melody Barnes is an Assistant to the President and Director of the Domestic Policy Council.