A Love Letter to Entrepreneurship Support Organizations

This post by Natalie Self, Program Officer at the Ewing Marion Kauffman Foundation, originally appeared on Kauffman’s Currents blog.

It was raining in Minneapolis. Unseasonably cold even for the Great White North; it mirrored the chill of Waltham, Massachusetts, two years earlier. Entrepreneurship support organizations (ESOs) – 115 staff members – representing organizations funded by the Kauffman Foundation as best practices in removing barriers to entrepreneurship across the United States gathered for two days of learning and community building.

I walked into the convening as a program officer, which in some ways felt like a world away from how I walked into the last convening in November 2017. Then, I was there in the capacity of a grantee, representing the St. Louis Equity in Entrepreneurship Collective, which had been awarded funding at the end of 2016. But from both convenings, I walked out feeling almost exactly the same: entrepreneurship support organizations are critical to our American economy, and they are sorely under-supported.

The role of the ESO

Entrepreneurship support organizations, broadly defined, are groups that support, train, and sometimes fund entrepreneurs. They are based in local colleges and universities, government agencies, independent for- and nonprofit organizations, and sometimes in other public-serving institutions such as libraries or healthcare facilities. Their job is to help current or aspiring entrepreneurs move closer to starting or growing a viable business.

With entrepreneurship being responsible for most net new jobs in the United States, business starts and growth are not optional for our communities. As traditional economic development continues to chase headquarters, entrepreneurship matters. For our communities that have been systemically left behind by corporations and local government, entrepreneurship has been the easiest option – and no one calls entrepreneurship easy.

We’ve learned so much from the ESOs that we work with – many of those lessons will be featured in a forthcoming report. One key lesson is that the most effective ESOs provide resources around the whole entrepreneur. Not just in the areas of opportunity, funding, and know-how, but support, as well, creating spaces where entrepreneurs feel safe enough to take risks and be vulnerable. Our best entrepreneur support organization leaders, nationally, are also willing to take on the extra work of building an organizational infrastructure to support entrepreneurs. They are building businesses and building the infrastructure to help others do the same. This is a huge lift.

Direct funding for entrepreneurial support

The job of an ESO is complex because entrepreneurs need more than just knowledge or relationships to be successful. Add in the resource-constrained environment ESOs operate in, and it feels untenable sometimes. Sure, funding is tight for all organizations with a charitable or social benefit purpose, but for some context – the 2019 Inclusion Open request for proposals received 777 applications from 42 states and two territories. As I think about the pool of applicants in aggregate, the thing that strikes me the most is how many of them were strong, local programs who served the needs of their towns. They were doing foundational entrepreneurship support, and in the absence of adequate local funding resources, they turned to a national foundation for support.

Organizations that operate in every city and town in America are being asked to do a lot with very little. As a result, funders and local governments have created an environment where our entrepreneurship support organizations are themselves facing many of the same issues as those they serve. As they talk to participants about variable cash flow, they are thinking about the numerous grants they are juggling. When they advise on customer discovery, they are deciding which of their programs will deliver the most impact. While connecting entrepreneurs to reputable bookkeepers, they are trying to set up their own back office functions. The lack of consistent funding keeps ESOs from focusing directly on the reason they do the work – directly supporting entrepreneurs. Local funding is critical to ensuring that communities can grow their own entrepreneurs.

A program officer’s view

I wish we could fund everyone – but no funder can. In the absence of that, I offer my perspective on what one program officer wishes more ESOs knew about the process of funding, particularly grant funding.

• Have you listened to entrepreneurs to hear what their challenges are?
• Do you have a solution to help them with those challenges in a way that takes into account who they are and where they come from?
• What have you learned from that?

1. RFPs are not a meritocracy. We get many requests for feedback on proposals that don’t receive funding. At the end of the day, what they want to know is some combination of, "Why aren’t we good enough?" and, "How do I get money next time?"
   
   My response is deeply unsatisfying. The reality is that grantmaking, even when we publish rubrics, is not a pure meritocracy. We have to fund quality projects that fit our theories of change, risk tolerance, and mechanisms for learning. We also have to consider what we have learned from past grants and apply that when making new grants.
2. Conversely, not getting funding doesn’t mean your program isn’t quality. I applied for more grants than I can count in my career and every time I got a "no," I questioned my program, my theory of change, and my qualifications to do the work. Looking back, that is a false equivalency; knowing that would have allowed me to focus that energy on the work at hand.
3. A program officer is a process facilitator to bring a list of opportunities to a large organization. No one person is responsible for making a funding decision. Program officers make funding recommendations with the input of a team of program, finance, legal, and evaluation staff.
   
   This ensures we reduce bias in our decisions. I also hope it relieves applicants of the pressure to build a relationship with me. Time is much better spent doing impactful work.
4. Bonus point: Proposals written by a "professional" grant writer are no more competitive than those that are not. We work hard to ask clear, specific questions that allow for both qualitative and quantitative answers. At the end of the day, I want to understand three things:
5. It’s not exactly that simple, but some of the proposals that have garnered the most support internally have been written by someone who has never written a grant before because they favored authenticity over fluff.

As for the 50 organizations who have received Inclusion Open grants since 2015, they have collectively served 12,242 entrepreneurs. Of those served, 69% grew their businesses’ revenue, and while not every entrepreneur needs or wants to raise capital, 31% did. The impact all ESOs have on removing barriers for entrepreneurs, especially from communities that have been systemically left behind, is immeasurable.

I believe our grantees are among the best ESOs in the country. But I know they’re not the only ones – and I hope those ESOs and their local funders, know that too.