Rhett Buttle, Founder and Principal, Public Private Strategies
Deborah Bae, Senior Program Officer, Robert Wood Johnson Foundation
Shuma Panse, Senior Program Officer, Robert Wood Johnson Foundation
Leaders in health philanthropy increasingly recognize the role of business in advancing health objectives. Yet to date, most efforts to engage business have focused on large companies. By contrast, the role of small business (defined as a business with fewer than 100 employees) in creating healthy communities has generally not been explored. Over the last year, Public Private Strategies (PPS) conducted research funded by the Robert Wood Johnson Foundation to better understand opportunities for philanthropy to engage small business in advancing a “Culture of Health” and to uncover ways to effectively and efficiently engage small business. As part of this work, PPS conducted more than 90 interviews with small business leaders across the country.
Here are five conclusions from that research:
- Small business, big impact: Nearly 100 million people generate their livelihoods from small businesses, as either owners or employees. These businesses are located throughout the country, representing more than 90 percent of all businesses in every state. What’s more, 43% of small businesses in the United States are located in low-wealth communities, creating jobs and income in those underserved areas.
Business owners themselves represent a cross-section of the U.S. population. The majority of business owners today are white, but the business startup rate is highest among black and Latinx entrepreneurs, and women are starting businesses at twice the rate of men. Millennials and boomers both represent sizable segments of small business owners, and Millennials are more likely than other generations to work at a small business. The diversity of small business owners reflects the ability to reach a broad segment of the population through engagement with these leaders.
- Small business builds wealth to advance health: Substantial evidence shows that both wealth and income influence the health of individuals, and inequities in these areas have repeatedly been linked with poorer average health outcomes at the national level. Business ownership is a driver of wealth creation and is a proven path to addressing the racial wealth gap. On average, business-owning households hold more than twice the wealth of their wage-earning peers. The wealth-creation impact is more pronounced for business owners of color—Latinx business owners hold roughly four times as much wealth as non-business owners. Similarly, black business owners are, on average, more than seven times wealthier than their wage-earning peers. And while on average white adults hold thirteen times the net assets of their black peers, this racial wealth gap narrows by more than 75 percent when comparing business owners by race.
- In small we trust: Small business is the second most trusted institution in the United States, trusted far more than large business, making small business leaders powerful ambassadors for improving health. This sense of trust creates an imperative both to understand authentic perspectives of small business owners and to harness that credibility to support policies that promote health.
Many of the stakeholders we interviewed, especially those who focus their work on advocacy, referred to the strong “moral authority” small business leaders convey on most issues. This was true for issues closely aligned with the direct interests of small business as well as broader issues of equity and inclusion where the “voice of small business” contributed to policy momentum.
Support from small business can strengthen the case for policy proposals that advance healthy communities. By empowering small business owners to engage as spokespeople or lead community efforts to promote health, the public trust placed in small business owners can be turned into action.
- Engagement model must be tailored: Unlike large businesses where the act of a single employer can affect more than a million employees, the universe of small businesses is extremely fragmented. Reaching business owners directly can be challenging. The sheer number of them creates a challenge to capture enough inputs so that perspectives are representative and sample sizes are robust. Moreover, small business owners are stretched thin and pressed for time. Business owners typically carefully choose where and how to engage, with an eye toward prioritizing activities that advance the business and address their pain points. In spite of these challenges, foundations such as the Ewing Marion Kauffman Foundation and the Goldman Sachs Foundation are engaging small businesses to uncover priorities and promote policies by tapping into existing trust-based relationships.
- Moving to Impact: The size, scope, and impact of small business requires stakeholders to rethink the current engagement model with “business” to include small business. By virtue of their number, distribution, and trusted position, small businesses can contribute to advancing health, equity, and healthy communities. However, absent purposeful action, the opportunity to harness their power will be missed. Engaging small business in advancing health objectives will likely require foundations to consider collaborations that move beyond the usual suspects to include some nontraditional partners such as chambers of commerce, business incubators, or community development finance institutions.
We also see significant opportunities for health funders to join forces with funders focused on racial equity and community economic development. We saw that many foundations are interested in supporting small business but they do not all approach the problem from the same perspective. Scaling up high-impact projects will likely require dialogue to translate language into common understanding, develop a shared framework, and identify shared priorities to give everyone equal opportunities. This research has highlighted the opportunity to invest in solutions that listen to and engage small business effectively and efficiently so that small business can be a more powerful partner in creating a more equitable and healthy society.
By virtue of their number, distribution, and trusted position, small businesses can contribute to advancing healthy communities and health equity. However, absent purposeful action, the opportunity to harness their power will be missed. Therefore, we recommend philanthropy engage by thoughtfully investing in the many organizations that comprise small business support systems and coordinating efforts across diverse issue areas like health, community development, and entrepreneurship to support shared objectives of advancing health, equity and inclusive economic development. Our nation’s philanthropic leaders are well positioned to accelerate the influence that small business can have to improve health and equity to ensure that everyone, no matter who they are or where they live, have the opportunity for a healthy life.
Check out the report, Small Business, Big Impact: Philanthropy’s Untapped Opportunity to Advance Health and Equity.
References
Association for Enterprise Opportunity, The Big Picture: A Larger View of the Small Business Market: Tapping the Power of Big Data Analytics, 2016.
America’s SBDC, America’s Voice on Small Business: Generational Views of Entrepreneurship and Small Business, 2017.