Saturday, April 11, 2009

A group of nonprofit organizations in the District that have helped thousands of small businesses grow say they are being given the cold shoulder by the city at a time when entrepreneurs need their help the most.

Eight nonprofits under contract with the D.C. Department of Housing and Community Development to provide training and technical assistance to local and minority-owned businesses were told earlier this month that the city had eliminated $1 million in grants as part of a cost-cutting move to address the city’s $800 million budget shortfall.

The $1 million cut, which took effect on March 31, includes about half of the $2 million the city earmarked for Neighborhood-Based Activities grants in fiscal 2009.

“It says to me that small businesses just aren’t a priority in this city,” said Manuel Hidalgo, executive director of the Latino Economic Development Corporation, one of the recipients of the grants.

Mr. Hidalgo said that even though the budget is in crisis, helping expanding small businesses should not take a back seat.

“The return is so much greater than the investment. A million dollars is truly tiny considering the impact small business has in creating jobs,” he said.

According to the U.S. Department of Commerce, small businesses created all net job growth in the District between 2004 and 2005, and in 2006 businesses of less than 500 employees accounted for 93 percent of all D.C. employers.

Some programs offered by the nonprofits under the grants include training courses on business management, tax preparation, product marketing and social networking. The classes are free to attend, and are taught in both English and Spanish.

Technical assistance on an individual basis is also provided to help prospective owners navigate government bureaucracy when trying to obtain business licenses and set up shop in areas dominated by large retail chains.

City officials say that in a perfect world all of their programs would be fully funded, but the reality is that times are tough.

“It’s afflicted all of our programs. Obviously, small business is a very important area of economic development, but we took a beating this fiscal year,” said housing department spokeswoman Angelita Colon-Francia. “We hope this current restraint is only temporary.”

Advocates for the nonprofits say the results of their grant, which in fiscal 2008 assisted over 3,000 local businesses, should speak for themselves.

Donna F. Grigsby, executive director of the Washington Area Community Investment Fund, said that throughout the past two years the grant has allowed her organization to assist over 700 businesses, resulting in the creation of more than 400 jobs.

“The better question is not what will we lose but what will the city lose as a result of the cut?” Ms. Grigsby asked.

In the midst of one of the worst recessions in a quarter-century, demand for free information and free tutelage is high.

“It’s a snowball effect: The worse the economy gets, the more information people want to help their business. At the same time, that’s when city funds dry up. It’s a bad situation all around,” said Andre Byers, director of business development of the Development Corporation of Columbia Heights.

Delores Ford, a licensed child care provider who attends a class offered by the Latino Economic Development Corporation on how to use tax preparation software, said the tutelage provided by the group has been “invaluable.”

“I’ve been exposed to so much information, and it’s information that’s not in my community,” said Ms. Ford, who provides round-the-clock child care out of her home in the Riggs Park neighborhood of Northeast. “They provide me with the skills to keep my business organized, and without it I and many others would be devastated.”

Mr. Byers said he often sees people who need assistance because they have expertise but no business knowledge.

“We have clients who come in with these lofty ideas for their business, but they haven’t done a shred of research. That’s where we come in,” he said. “Without the grant, all of that training, that technical expertise these owners now have - all of that will be lost.”

Four D.C. lawmakers - council members Michael A. Brown, at-large independent; Kwame R. Brown, at-large Democrat; Marion Barry, Ward 8 Democrat; and Jim Graham, Ward 1 Democrat - came to the nonprofits’ defense last week, requesting in a letter to Neil O. Albert, deputy mayor for planning and economic development, that city officials reconsider the funding cut.

Mr. Graham said the city cannot afford to cut support to local business owners.

“We don’t have enough initiative for small businesses in this city,” he said. “I understand because of the shortfall a lot is being lost here, but these programs are very important.”

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