Socially conscious companies are increasingly focusing their CSR programs on underserved communities that lack proper access to markets and human capital. This is largely driven by the growing wealth gap and the powerful role that minority entrepreneurs are increasingly playing in economic growth. Although minority-owned firms are generally smaller in terms of almost all metrics of business size (e.g. employees and average revenues), the number of businesses owned by minorities is growing at a dramatic rate. There are currently an estimated 1.1 million businesses owned by people of color, and with proper resources they could produce an estimated 9 million jobs. Larger, more established corporations can play a crucial role in stimulating macroeconomic prosperity by focusing CSR efforts on growing small businesses within underserved communities. Below, we describe the three steps of creating and demonstrating tangible impacts on economic development and wealth equality:
- Define the Scope of Methods: The first step in the process is to determine the approaches you will take for generating impact. Use the barriers that underserved entrepreneurs face to guide this step. For example, a recent white paper by the Aspen Institute identified lower quality education and business skills as a major barrier to the growth of minority-owned businesses. Based on this information, skills-based mentoring is a powerful tool to transfer skills and knowledge on various business operations such as strategy, financial planning, and marketing.
- Track and Communicate Impacts: In this step, the goal is to be able to quantify the economic impacts of your CSR program. For example, the MicroMentor skills-based mentoring platform boasts an average of 3.24 jobs created and average revenue increases of $18,000 for each individual mentoring relationship with an entrepreneur. Tracking such data allows you to more precisely demonstrate the impact that your program has had on economic growth and job creation. Further, being able to categorize this data based on specific demographics will allow you to give proper context and show that your impacts are felt where they are most needed and most effective. This data can be used to tell a compelling story to your stakeholders about your tangible and meaningful results, for both individual entrepreneurs and the larger economy.
- Use the Results to Guide Strategy: This is where the adage “you cannot manage what you cannot measure” comes to fruition. Aggregated data such as total jobs created can be used as key metrics of large-scale accomplishments and as a baseline for continual improvement. It is crucial to have a demographic context for this data to ensure that your program has properly targeted and impacted communities that lack access to key business resources. From here, you can then zoom into individual achievements (e.g. an especially successful mentorship) and take notes on what made individual cases particularly effective.
As crucial as it is to have quantifiable metrics for your economic impacts, it is equally as important to include demographic context. Although aggregated data such as total jobs created and revenue increases can send a powerful message, when it comes to economic growth and equality, not all jobs are created equal. It is important to demonstrate that your impacts are reaching those who are most in need. Perhaps most importantly, these underserved demographics represent a significant opportunity for macroeconomic growth as their trends show considerable increases in total number of businesses, but stagnation in individual size. Therefore, by focusing on key demographics, you can both maximize the economic effectiveness of your CSR program and support the communities that are most in need of business resources.
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