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Raleigh Partnership Shows the Potential of Investing in Black-Led Institutions

A new partnership engages students and faculty at one of the nation's oldest HBCUs and small businesses.

A gathering held as part of the first Black Entrepreneurship Week, hosted by Shaw University and the Carolina Small Business Development Fund. (Credit: Troy Thomas of Thomas Photography)

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Raleigh’s economy is growing, and it’s growing fast. In 2016, Raleigh and its surrounding Wake County counted 30 new and 50 expanding companies, adding 4,362 jobs and $291 million in investment. Another 807 new jobs materialized in October-November 2017 alone. Forbes named Raleigh the number two best place for businesses and careers in 2017.

But that growth isn’t felt equally. According to the most recent Census Bureau estimates, unemployment among Raleigh’s black workers is around 10 percent, more than twice that of the 4 percent unemployment among white non-Hispanic workers. The median income among Raleigh’s white households is $70,433, compared with $42,603 for black households. Those disparities are felt most acutely in southeast Raleigh, where the area’s black population is concentrated.

“In southeast Raleigh, there has been the sentiment among the African American community that they have been left out of the economic growth of the Raleigh area,” says Dr. Paulette Dillard, interim president of Raleigh’s Shaw University, the oldest historically black college or university in the south, which celebrated its 150th birthday two years ago.

Shaw University is a metaphorical and physical bridge between the region’s rapid growth and its black communities. On one side of campus is downtown Raleigh, with its state capital offices, high-rises, booming restaurants and centers of arts and entertainment. On the other side is southeast Raleigh.

“Sometimes that creates a juggling act, but a good one,” Dillard says. “The way we describe it is, when you’re standing in the gap, you’re constantly trying to bridge the gap.”

Lately, that bridge has become even more visible, with the creation of a new Innovation and Entrepreneurship Center, in partnership with the Carolina Small Business Development Fund, a statewide community development financial institution based in Raleigh and specializing in small business lending. Located a block away from Shaw University on the downtown side, the center celebrates its first anniversary next month.

The grand opening of the Innovation and Entrepreneurship Center, last February.  (Credit: Jason Hampden)

“We think that center over time will have an economic impact in the region,” says Lenwood Long Sr., president and CEO of Carolina Small Business Development Fund. “We’re trying to engage students as well as faculty to help small businesses in the southeast corridor, which is neglected, and trying to build capacity around new technologies and find ways we can enhance business expansion for business owners from that area.”

It starts with getting people in the door. In its first year, the Innovation and Entrepreneurship Center hosted 20 educational workshops and 14 networking events, as well as a leadership series. All told, it served some 1,300 people, helping them incubate businesses or business ideas through those events and one-on-one support. The university supplies faculty for the workshops, in addition to paying part of the operations, and in the fall they’ll be adding courses for students that take place inside the center.

As a way to show commitment to the space and hopefully build ties to future borrowers, the Carolina Small Business Development Fund moved its own business development team, a staff of three, into the center on a permanent basis. That team works alongside the center’s executive director and interns drawn from Shaw University’s student base. With years of experience in the business world under her own belt, Dillard is keen to have an opportunity for students to see the good, the bad, and the ugly of the startup and small business worlds.

“As Shaw students intern at the center, we want them to be able to see an incubator at work and see business ideas get off the ground. Some launch and do well and some crash and burn,” says Dillard.

Partnerships between two black-led institutions like this might seem obvious, but they’re vastly undervalued, according to Dr. Andre Perry, who joined the Brookings Institution last year to study the role of black cities and black institutions in uplifting black people and black communities.

“When you look at the federal awards given to black institutions, you see [for example] University of Michigan getting more federal dollars and grants than all historically black colleges and universities combined,” Perry says. “You’ll hear federal agencies and other funders say things like, ‘Well, they don’t have the capacity.’ Well you never develop the capacity if you never trust black institutions.”

Like banks or venture capitalists or even governments of majority-black cities, funders of higher education in both the public and private sectors tend to prefer to white institutions, even when it comes to addressing the needs of black communities. In Maryland, the state’s historically black colleges and universities have been fighting in court for years, charging the state with funding white institutions to start programs similar to programs that the black institutions were already running, thereby unfairly taking students away from the historically black institutions that did not receive state funding. Last November, a federal judge ruled in favor of Maryland’s historically black institutions.

“Black institutions are treated like black people,” says Perry. Even if they do get funding, he continues, “for black institutions, if you’re not wildly successful, you get nothing the next go around, which is ridiculous. I almost want HBCUs to be treated like an average university, in the sense that they’re given the the room to fail and keep going.”

That unfair treatment extends to the perceptions of the financial stability of historically black colleges are universities, according to Perry.

“We tend to blame the school and not look beyond at the equity issues that are clearly at play. These institutions are struggling because many of the communities they take on are struggling and neglected,” he says. “The answer really is expanding Pell Grants or other non-debt support for low-income students.”

Like the Shaw University-Carolina Small Business Development Fund partnership, historically black colleges and universities are already doing some of the work to have a positive impact on the bottom lines of black households in their cities, Perry says, but the impact of that work could be even greater with more funding. His early research into majority-black cities has shown that majority-black cities with a historically black college or university tend to perform better than those without such an institution when it comes to the median income of black households. It’s an ecosystem effect, he says.

“People who work at historically black colleges and universities are generally more connected to black communities, so when you’re investing in one you’re investing in the other,” Perry explains.

For their Innovation and Entrepreneurship Center, Shaw University and Carolina Small Business Development Fund initially supported the endeavor out of their own reserve dollars.

“We felt strong enough, and our board agreed, that we would do some self-funding,” Long says. “Between Shaw and us, it was probably over $100,000 just to get it running, between staffing, equipment, furniture, build out.”

Since then, others have come on board, including a major bank who provided funding for a micro-loan pool dedicated to business owners from southeast Raleigh, and an energy company provided a grant for some shared equipment. The Annie E. Casey Foundation will be providing a $50,000 grant to support the center’s operations. Both Dillard and Long hope the center can eventually attract enough ongoing sponsorship and annual grant dollars to run itself without tapping into their organizations’ reserves.

They also hope the center can help connect its students as well as non-student entrepreneurs from the southeast Raleigh community to the booming biotech, pharmaceutical, software and other fast-growing sectors in North Carolina’s famous “Research Triangle” region.

“As these small businesses grow, and hopefully hire people from southeast Raleigh, they can also be a part of increasing the wealth in communities of color,” Long says. “If we can sustain that, I think we’ll be on a path toward narrowing the employment gap and the wealth gap. I may be misguided in that, but I’m thinking if we can create sustainable entrepreneurship in communities of color, I think we’ll be onto both.”

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Oscar is Next City's senior economic justice correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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Tags: jobssmall businessraleigh

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