The Kellogg Foundation’s financial pledge to the Association for Enterprise Opportunity will expand efforts to nurture new business owners in the black community. The two groups pinpointed the challenges faced by black business owners in a report last year.
An association that supports small-scale businesses just got a donation that could prove a big shot in the arm for black entrepreneurship.
The Association for Enterprise Opportunity, a group that focuses on microloans and microbusinesses, announced last week that it received a $1.15 million grant from the W.K. Kellogg Foundation, which will allow the group to develop products and services for black business owners.
The move comes months after AEO put together research, funded by the foundation, that highlighted the potential and pitfalls that black entrepreneurs face. The report [PDF], titled The Tapestry of Black Business Ownership in America: Untapped Opportunities for Success, pointed out that there were nearly 2.6 million black-owned businesses in the U.S., and while they support nearly 3.6 million American jobs, they often don’t thrive in the same ways that businesses owned by other racial or ethnic groups do.
“Some have suggested this reality stems from a cultural context that includes lack of interest in self-employment, but AEO’s research dispels this myth and confirms that the entrepreneurial spirit remains robust in the black community,” the report’s executive summary stated. “In fact, black business owners are similar to other business owners in terms of vision, passion, and a desire for economic independence.”
AEO’s research makes the case that black Americans struggle to launch new businesses because of a lack of intergenerational wealth, a struggle to access credit, and a lack of trust, which leads to less support for such businesses.
The report notes that black entrepreneurs who do find the support to build their own businesses tend to do better overall than their peers.
The research informed the Kellogg Foundation’s grant to AEO, which the association plans to use to help support new business models in the black community, according to the group’s president and CEO, Connie Evans.
“The median net worth of a black business owner is 12 times that of a black non-business owner. Imagine what would happen to the wealth gap if black business owners had access to products and services that worked for them instead of against them,” Evans said in a news release. “Our goal with this generous grant is to collaborate with industry partners to develop solutions for black business owners, and we are grateful to the Kellogg Foundation for this momentous opportunity.”
AEO says it will work with service providers, community development financial institutions, and others to figure out the best strategies to help business owners.
Kellogg Foundation Vice President for Program Strategy Carla Thompson Payton said AEO is well-positioned to make a difference on this issue.
“AEO has the trusted relationships and track record for managing data-driven innovation projects essential to a collaboration of this kind, and we look forward to seeing the impact of this new program on underserved communities,” Payton said in the release.