At ResilNC, we emphasize the role of entrepreneurship as a crucial avenue for Black people and other historically marginalized groups to bolster their economic status and create generational wealth. Echoing the findings of our 2021 report, Black entrepreneurs typically accumulate nearly 12 times more wealth than their non-business-owning counterparts. However, systemic racism introduces a spectrum of challenges, including restricted access to essential amenities like secure housing, childcare, healthcare, and financial services. These barriers make the pursuit of entrepreneurship a challenging prospect for many. While 20% of Black Americans venture into business, only a meager 4% successfully advance beyond the startup phase. Addressing basic necessities is fundamental to unleashing innovative ideas and the self-assurance needed to meet the rigors of entrepreneurship, such as securing funding and product development.
With the support of NC Idea, our project embarked on a mission to investigate these systemic barriers and develop an ESO Equity Scorecard. This initiative is designed to help entrepreneurs critically assess their service providers and to offer a benchmark for service providers to evaluate the equity of their products and services. This report details our preliminary findings and lays out the framework for the ESO Scorecard. We acknowledge that our work is not yet complete. Greater representation of rural communities is needed, and we aim to continue expanding our network of partnerships and working groups among ESOs to deepen these critical conversations. This report is envisioned as the first step towards fostering more equitable and effective support for Black-owned businesses.
Executive Summary
Jim Casselberry
CEO AND CO-FOUNDER
AT KNOWN HOLDINGS, LLC
“I understood that there was no one around that looked like me and so I felt a responsibility to groom the next generation of managers—to share my network, resources. Because it’s the strengths and nuances of a person that are what allow you to be successful.”
Our Collaborative Process
At ResilNC, we value the power of storytelling and the collection of qualitative data from community leaders like yourself. These narratives are instrumental in deepening our understanding of the varied experiences within our entrepreneurial sector, encompassing the obstacles encountered, triumphs celebrated, and wisdom gleaned. To initiate this process, we hosted two pivotal convenings in strategic locations across the state. These gatherings were integral to the creation of the ESO Equity Scorecard, offering a platform for ecosystem partners and entrepreneurs to engage, share experiences, insights, and stories, and cultivate a culture of collaborative learning.
1st Convening Durham, NC May 2023
Keeping Score: Black Entrepreneurial Advancement, A RESILNC Research Initiative
The Durham convening successfully gathered a dynamic group of representatives from 10 cross-industry partners, spanning the Banking, Government, and Nonprofit sectors. This gathering of diverse industry voices was instrumental in informing our approach and fostering comprehensive discussions about supporting Black entrepreneurship.
Our Guiding Questions
Question #1
What Is The Most Significant False Narrative Preventing Black People From Having Deep Familial Discussions About Capital—Regardless Of Their Economic Scale And Experience With Money?
Question #1(A)
How Does This Affect Generational Wealth
Attainment? What Role Does Lacking Discussions Throughout Adolescent
Development Play In Entrepreneurs Having A Developed Personal Finance Perspective When Starting A Business?
Question #2
In 2022 North Carolina Was Recognized As The Best In Business. Is NC Providing Proportionate Opportunities For Black Businesses To Scale, Asset Map, And Participate In Long-Term Economic Growth Strategies For The State?
Question #2(A)
In 2022 North Carolina Was Recognized As The Best In Business. Is NC Providing Proportionate Opportunities For Black Businesses To Scale, Asset Map, And Participate In Long-Term Economic Growth Strategies For The State?
Question #3
How Is The Local And National Political Ecosystem Aiding Sustainable Growth For Businesses Owned By People Of Color?
Question #3(A)
Do You Have Any Concerns About The Horizon Of COVID Relief Loans That Weren’t Forgivable Impacting People Of Color In The Future?
Question #4
In What Ways Has Your Career Progressed Or Indirectly Created Value For Black Wealth Attainment?
Question #4(A)
Has That Work Improved Opportunities For Entrepreneurs?
Question #5
Does Your Professional Peer Group Include Professionals That Operate In The Expanse Of Finance Or A Singular Sector?
For Example, Venture Capital, Private Equity, Debt, Restructured Finance Etc.?
Question #5(A)
Why Do You Think Responsiveness Has Left More To Be Desired? Was There A Hurdle They Couldn’t Cover?
Question #6
What Is The Role Of Privately Owned Capital Activated To Address The Racial Wealth Gap? Are The Current Efforts That You Are Aware Of Enough?
Question #6(A)
If Not, What Are The Capital Innovations Gaps Are You Desiring To See Addressed—That Can Only Be Solved/Redesigned Through Private Capital?
Question #7
Do You Have Expectations Of Black Partners That Haven’t Been Met, Or Effort You’ve Put Forth That Hasn’t Been Matched?
Question #7(A)
Why Do You Think Responsiveness Has Left More To Be Desired? Was There A Hurdle They Couldn’t Cover?
Education and Financial Literacy
“I was handling payroll for my family’s business and managing the books by the age of 14. It’s crucial to engage with people at their level."
Jim Casselberry
CEO AND CO-FOUNDER
AT KNOWN HOLDINGS, LLC
A pivotal discussion emerged regarding strategies to close the financial knowledge gap. It was noted that financial literacy and awareness vary significantly among families. This inconsistency is further compounded by a deep-seated mistrust of financial institutions, rooted in a history of discriminatory practices like redlining and the devastating impact of subprime lending crises. The proposed solutions were as diverse as the issues themselves. One perspective emphasized that the responsibility for financial education should be shouldered by schools. Another view proposed that this duty lies with financial institutions themselves, especially those offering products to consumers. Also, the significance of open financial conversations within families was underlined to normalize discussions about money, removing the taboo surrounding these vital topics.
For ESOs, we propose a central guiding question:
Does your initiative, organization, or business facilitate or necessitate transferring financial knowledge and best practices within families?
To delve deeper, we ask further:
1
How transparent are you with your services and offerings?
2
Have you engaged in educating the community you aim to serve before initiating engagement, especially with underrepresented groups?
3
In what ways does your use of industry-specific jargon create barriers to understanding, and how can this be mitigated?
“In many Black families, certain topics, like finances, often go undiscussed. This lack of openness is why we sometimes only learn about grandma’s finances after she passes. There’s a pressing need for more openness in these discussions.”
Chakema Clinton-Quintana
VP DIRECTOR OF CHANNEL,
LIVE OAK BANK
Access to Capital
“No Coaching Without Capital”
Napoleon Wallace,
FOUNDER, ACTIVEST
The current landscape of entrepreneurial opportunities, such as accelerators and grants, often focuses on providing mentorship and in-kind services like marketing support but frequently falls short of offering direct access to capital.
Access to capital is a cornerstone for starting and scaling a business, and without it, even the best mentorship or services may not be sufficient for a business to thrive. This gap in funding can perpetuate the cycle of economic disparity as entrepreneurs without capital struggle to translate their ideas and skills into sustainable business ventures.
For ESOs, we propose a central guiding question:
Are the opportunities provided too early and mid-stage entrepreneurs holistic?
To delve deeper, we ask further:
1
Does the support cover a wide array of needs such as financial assistance, mentorship, networking opportunities, legal advice, and marketing guidance?
2
How well-rounded are the services offered in preparing entrepreneurs for all aspects of business management?
3
Are the services adaptable to the unique needs of different entrepreneurs? How does the support system tailor its approach to cater to diverse business models, industries, and individual entrepreneurial backgrounds?
“Over 90% of black businesses have one to five employees. These businesses need a relationship with the financial institution. PPP created the opportunity for those relationships to be mandated and built.”
Jim Sills
PRESIDENT AND CEO
AT M&F BANK, BOARD MEMBER
2nd Convening Greensboro, NC March 2024
Keeping Score: Black Entrepreneurial Advancement, A RESILNC Research Initiative
We continued our exploration of themes presented in our first convening by bringing together a vibrant mix of individuals from six different cross-industry partners, covering the Banking, Government, and Nonprofit sectors. This assembly of varied industry perspectives played a crucial role in adding additional context and new perspectives as we create the ESO scorecard.
Our Guiding Questions
How has your organization proactively educated and engaged with the community, particularly underrepresented groups, prior to formal initiatives? Can you share examples of such pre-engagement educational efforts?
How does your organization customize its services to meet the unique needs of diverse entrepreneurs, across different business models and industries? Could you share examples of this adaptability in action?
Could you describe the metrics or indicators your organization employs to assess its impact on entrepreneurs from diverse backgrounds? How do these measures help in refining your strategies?
From your perspective, what are the most significant barriers to supporting entrepreneurs from diverse communities effectively? How (if at all) has your organization addressed these challenges?
In what ways does your organization ensure the support offered to early and mid-stage entrepreneurs is holistic? Could you provide examples of how different needs are addressed comprehensively?
What gaps have you identified in the ecosystem for supporting diverse entrepreneurs? How might these gaps be filled, in your view?
Culturally Responsive Communication/Reframing Narratives
Culturally responsive communication and reframing narratives are essential in building trust and creating inclusive spaces for marginalized communities. The journey begins the moment an entrepreneur interacts with an Entrepreneur Support Organization (ESO), where initial encounters can either present barriers or pathways to the resources needed. Organizations must critically examine their internal perceptions of the diverse populations they aim to serve. This involves acknowledging historical and systemic barriers that have prevented these communities from accessing essential resources and advocating for a structured approach that respects individual readiness rather than presuming it uniformly across all.
For ESOs, we propose a central guiding question:
Do you authentically engage and empower marginalized communities by embedding culturally responsive communication and inclusive practices into every aspect of our organization, from the first point of contact to the delivery of tailored resources and beyond?
To delve deeper, we ask further:
1
How do you evaluate and adapt your internal narratives to better understand and address the systemic barriers faced by the diverse populations we serve?
2
In what ways can you enhance your recruitment and retention strategies to ensure your staff reflects the cultural, linguistic, and experiential diversity of the communities you aim to support?
3
What mechanisms can you implement to continuously assess and improve the accessibility and relevance of your resources, ensuring they are effectively decoded and delivered to meet the unique needs of each individual within these communities?
Recruiting and retaining staff from within these communities, who share personal experiences, cultural understandings, and language skills, is crucial in minimizing both real and perceived barriers. Bridging language and cultural divides is particularly vital for small business owners, ensuring that resources are not just available but accessible and comprehensible. Creating an environment that accommodates language and cultural differences through accessible information and communication channels empowers small business owners to succeed, transcending linguistic or cultural barriers.
Incentivizing Engagement Using Internal Levers
Incentivizing engagement within the financial sector, particularly among Entrepreneur Support Organizations (ESOs), is often driven by compliance, specifically adherence to the Community Reinvestment Act (CRA). The CRA was established to encourage banks to meet the credit needs of the communities they serve, especially low- and moderate-income (LMI) neighborhoods. For banks to receive CRA credit, their loans, investments, and services must primarily aim to enhance the conditions for LMI families or individuals and contribute to the stabilization or revitalization of their neighborhoods. The CRA’s goal was to reinforce existing laws that require banks to adequately serve the banking needs of all community members.
However, in some ESOs, while incentives are linked to CRA compliance, there exists a misalignment between these incentives and the broader goals of community development. Performance-based compensation tied to CRA, or community engagement activities often does not align with traditional bonus structures. Instead of cash bonuses, employees might earn benefits such as additional vacation time or equipment upgrades, which do not directly reward the tangible impact of their community engagement efforts. This disconnect suggests a potential avenue for systemic change within the banking industry by linking a more significant portion of performance compensation to community impact, as outlined by CRA guidelines.
For ESOs, we propose a central guiding question:
Does your organization incentivize community engagement and CRA compliance in ways that ensure meaningful impact, going beyond mere compliance?
To delve deeper, we ask further:
1
How does your organization align its incentive structures to motivate employees at all levels to prioritize and achieve meaningful community development goals beyond mere CRA compliance?
2
In what ways can performance evaluations and compensation packages be restructured to more effectively reflect and reward the real impact of community engagement efforts on low- and moderate-income neighborhoods?
3
What mechanisms are in place to ensure that the incentives offered for CRA compliance and community engagement initiatives are both equitable and effective in fostering long-term commitment to community development among staff?
Impact Assessment
Understanding the long-term impact of ESOs is critical in ensuring the effectiveness and sustainability of their initiatives. Currently, many ESOs struggle with quantifying and qualifying the lasting effects of their engagement with entrepreneurs and communities. The challenge lies in identifying the right metrics that capture both immediate outcomes and long-term transformations. While some organizations employ traditional metrics such as job creation, revenue growth, and survival rates of supported businesses, there is an increasing need to incorporate broader impact measures. These include the enhancement of entrepreneurial ecosystems, community well-being, and the advancement of equity and inclusion. Recognizing this gap, ESOs must refine their approach to impact assessment to encompass a holistic view of success, moving beyond conventional economic indicators to more nuanced measures of social and community impact.
For ESOs, we propose a central guiding question:
How can you effectively measure the long-term impact of your engagement on entrepreneurs and communities to ensure it is meaningful, sustainable, and aligned with your broader goals of equity and inclusion?
To delve deeper, we ask further:
1
What innovative metrics or indicators can you develop to better capture the social and community-level impacts of our programs, beyond traditional economic outcomes?
2
How can you incorporate the perspectives and feedback of the entrepreneurs and communities we serve into our impact assessment processes to ensure they reflect diverse views and experiences?
3
In what ways can you leverage technology and data analytics to track and analyze the long-term effects of our engagement on both individual entrepreneurs and the broader ecosystem?
This scorecard represents the initial step in an ongoing journey of reflection, assessment, and growth for ESOs committed to supporting diverse entrepreneurs and dismantling the systemic inequities they face. As a tool for beginning this evaluative work, it is meant to inspire a proactive approach to enhancing organizational impact and inclusivity. We encourage ESOs to view this scorecard as a foundational element of their strategic planning, to be revisited and adapted in alignment with their evolving understanding of the needs of disenfranchised entrepreneurs and the dynamic challenges they encounter. Let this be the catalyst for deepening your organization’s impact and fostering a more inclusive, equitable entrepreneurial ecosystem.
Just The Beginning
ESO Scorecard
To empower Entrepreneur Support Organizations (ESOs) in their mission to provide comprehensive, culturally appropriate, and impactful support, this scorecard is designed as a strategic tool for self-assessment and improvement, particularly in the context of serving diverse entrepreneurs and businesses in communities that have been historically disenfranchised. The intention behind this scorecard is to enable ESOs to critically evaluate their practices across essential areas that influence their effectiveness and outreach, ensuring that support is not only comprehensive but also deeply attuned to the unique challenges and barriers faced by these communities.
Utilizing the Scorecard:
This scorecard should be utilized by ESOs as a reflective tool to measure how well their initiatives align with the needs of diverse entrepreneurs and the goal of dismantling systemic barriers in historically disenfranchised communities. The levels outlined in the scorecard, ranging from 1 (basic implementation) to 4 (advanced implementation), provide a roadmap for ESOs to enhance their support mechanisms progressively. Discovering your organization primarily at Level 1 across the criteria signals an opportunity for growth. It indicates the need for a foundational approach to be expanded upon to achieve a more meaningful, equitable impact. The guiding questions accompanying each section are crafted to help identify specific areas for improvement and are crucial for strategizing advancements in providing culturally responsive, impactful support.
Next Steps:
Being at Level 1 in any area is not an endpoint but rather the start of a critical path toward improvement. It serves as a call to action for ESOs to deepen their commitment to serving diverse entrepreneurs effectively and to cultivating environments where historically disenfranchised business leaders can thrive. The scorecard offers a framework for ongoing development, urging organizations to refine their strategies and practices continuously to meet and exceed the unique needs of the communities they serve.
This report was inspired by the mission of ResilNC to create a more prosperous, and equitable economy. We extend gratitude to Napoleon Wallace, Wilson Lester, and Talib Graves-Manns Inaugural ResilNC Fellows as well as Aspen Institute Wealth Innovation Fellows whose invaluable contributions and insights significantly enriched this report. Special thank you to Brittany Bennett Weston, a thought leader at BennettWeston Consulting, LLC. Her innovative approach and dedication helped lay the groundwork for this research.
The research was generously funded by NCIDEA, and we are deeply grateful for their support. Special thanks to Thom Ruhe, Ben Redding, and Andrea Cook for their unwavering assistance and encouragement throughout this project.
Scorecard Report