Extraordinary Times Call for Extraordinary Measures

Extraordinary times often present extraordinary learning opportunities. In the past few years Carolina Small Business Development Fund has offered a large array of pandemic loans and grants. For what purpose? The goal was simple, if ambitious: help small businesses survive by whatever means we can – but do it in a way that doesn’t hurt them in the long run. When community nonprofits set those kinds of ambitious goals, looking back to see if you accomplished them can be perilous.

When Brittany Bennett Weston at ResilNC approached me about this project, I wasn’t quite sure what we might find. What if those grants had no effect because the awards weren’t large enough or we weren't quick enough in deploying funds? Even worse, what if there were adverse impacts due to how the programs were structured or the terms of the loans? For most non-profits, the next question would also be: and why would we dare ask these questions when no funder asked or required it? But for CSBDF research is not a luxury, and evaluation is not compliance. Research and evaluation are the foundation of evidence-based development practice, and that means assessing what you do - even when no one is looking. So what did we find?

At a high level, financing is critical for disaster recovery, and so is grant aid. But these interventions are effective for different reasons. Loans with flexible terms are helpful when entrepreneurs need large amounts of working capital to pay for everyday expenses and payroll. For smaller critical needs (e.g. an upcoming office rent payment), grant aid is extremely effective. ?Loans and grants help build community trust, especially in historically marginalized places. Entrepreneurs who received CSBDF’s help felt invested in. And we mean "invested" in the truest sense of the word. Small businesses who received loans and grants told us they felt like CSBDF was there for them when no one else was. And for us, that pays dividends which do not show up on a balance sheet.

My colleague Melissa Terrell and I attended the launch of this report today at Tiffany Griffin's amazing Bright Black Creator Studio in Durham, NC. The discussion was inspiring, and I particularly was impressed by the closing remarks by Margaret A. Brunson, PhD, MPA of Illuminated Leadership Solutions. Dr. Brunson spoke on the difference between change and transformation - and that change is easy, but transformation is hard.

The CDFI industry has changed so much, the number of certified CDFIs has grown leaps and bounds. But if we want to stem the tide of disinvestment in the communities served by CSBDF, transformation is needed. Research is the start, and not the end, of transforming development policy. We’ve done the assessment and released the results. And we stand behind our analysis, which is why we released the data and invite anyone to fact check us.

We can’t be 100% certain of our results – any social science researcher who gives you that level of confidence should be viewed with suspicion. But we are confident the data show the promise of different forms of small business assistance. Grants worked, and I see no evidence why grants would not work even when we are not in "extraordinary times." I know, grants are not what CDFIs are "supposed to do." But why is that, again? We think its critical CDFIs move toward what works, and not simply continue with what we have always done.

At the same time, a development policy framework that works isn’t something we can do alone. The data suggest how grants and loans are effective in North Carolina. What about in other places? I don’t know. But I know there are innovators like Eugenia Vivanco Duran at RDF who are more than up to the challenge of finding out for the populations they serve. Our data can’t really test the optimal combination of loan and grant aid, so how do we find the right ratio? We can’t right now. But I know a growing number of researchers like Adrienne Smith at the Opportunity Finance Network , Nora Anzawi and Miles Zeller at AltCap who are interested in finding out.

But how are all these small nonprofits supposed to do all of this with little capacity and dwindling resources? Again, no easy answers here. Yet I know there is a growing number of scholars from disparate fields ( Natalie Prochaska, PhD , Teshanee Williams, PhD , maureen berner , Anita Brown-Graham , Michael Swack , Brett Theodos ) as well as research practitioners ( Mike Eggleston , Lance Loethen , Dr. Darlene Deberry , Tamra Thetford ) who are working on how to raise community development capacity. And all of this is supported by a growing alliance of private sector leaders ( Lillian Graning, CEcD , Chakema Clinton-Quintana ) and philanthropic funders ( Dogwood Health Trust ) who are willing to support what works, even when it challenges the status quo.

The pandemic’s extraordinary times called for extraordinary measures. CSBDF and many other CDFIs, CDCs, and grassroots community nonprofits rose to the occasion. Now that some time has passed, we stepped back and asked ourselves: did the extraordinary measures work? We think the answer is “with some caveats, yes.” But for small businesses, the extraordinary times of the COVID-19 pandemic will have a long tail. Now is not the time to go back to business as usual and discard what we know worked. For CSBDF, we think our comprehensive approach to COVID-19 aid was a good start. But the community needs more help, and that’s what CSBDF is here to do – will you join us? ?