Recap: Big Ideas for Job Creation
By Sean Luechtefeld on 12/02/2013 @ 04:45 PM
EDITOR'S NOTE: Last Monday, the Aspen Institute hosted "Big Ideas for Job Creation," an event at which CFED's Ida Rademacher was a featured speaker. In case you missed it, Aspen sent along this recap of the event. If you were there, use the comments below to share your takeaways!
Aspen Institute: Microenterprise and Job Creation
Just in time for Small Business Saturday, the Economic Opportunities Program hosted an event at the Aspen Institute's headquarters highlighting the role that microbusiness plays in creating jobs, and identifying policies to further catalyze the growth and expansion of these small firms. Don Graves, Deputy Assistant Secretary for Small Business, Housing and Community Development, U.S. Department of the Treasury; and Executive Director of the President's Council on Jobs and Competitiveness, set the stage for the event with his opening remarks. Joyce Klein, the Director of EOP's FIELD program, then facilitated a conversation among Elaine Edgcomb (FIELD), Beth Kregor (Institute for Justice Entrepreneurship Clinic), Ida Rademacher (CFED), Connie Evans (Association for Enterprise Opportunity), and Christy McFarland (National League of Cities).
Key highlights from the event include:
- Microbusinesses are responsible for an estimated 41 million jobs in the U.S., including direct, indirect, and induced employment effects.
- Both our federal tax code and local business licensing requirements inhibit many microbusinesses from formalizing and growing.
- There are opportunities to better leverage existing policies--including the Community Development Block Grant program, state Capital Access Programs, and the Workforce Investment Act--to support microbusiness formation and growth.
As panelist Connie Evans noted, "Part of the policy challenge lies in data that helps policy makers to understand the role that microbusinesses play in our economy. They need to understand the labor market and economic trends of the 21st century, and realize that microbusinesses are and will increasingly be a key source of employment."
The event was funded by the Annie E. Casey Foundation as part of its Big Ideas for Job Creation initiative. The event was covered live by CSPAN, and live-streamed on www.aspeninstitute.org. To view a recorded version of the event, visit the Aspen Institute's web site. Copies of the research papers that formed the core of the discussion can be downloaded at www.bigideasforjobs.org/the-ideas.
VITA Programs Show Increased Accuracy Rate on Volunteer-Prepared Returns
By Kim Pate on 11/19/2013 @ 10:00 AM
EDITOR'S NOTE: Our friends at NCTC sent us the press release below, which shows good news for Volunteer Income Tax Assistance (VITA) sites and their volunteers' training.
CHICAGO, IL – The accuracy rate for volunteer-prepared tax returns during the 2013 tax-filing season increased two percentage points from the previous year, according to a report released Tuesday by the Treasury Inspector General for Tax Administration (TIGTA). The findings of TIGTA’s annual report reflect the commitment of volunteers and the Internal Revenue Service (IRS) to provide quality tax-preparation services for low- and moderate-income taxpayers, according to the National Community Tax Coalition (NCTC).
“Volunteer Income Tax Assistance programs aim for the highest degree of quality and accuracy for every family we serve,” said NCTC President and CEO Jackie Lynn Coleman. “We are always looking for opportunities to improve our efforts, so we take very seriously the kind of feedback that TIGTA provides – feedback that we can put to good use.”
NCTC, a coalition of organizations offering free Volunteer Income Tax Assistance (VITA) for underserved, low- and moderate-income families, is the nation’s third largest tax preparer. The organization works closely with the IRS and members of the community tax preparation field to evaluate and act appropriately upon the findings of TIGTA’s reports on free tax preparation programs such as VITA.
In its report on the 2013 tax-filing season, TIGTA noted its latest audit findings are based on reviews of 39 volunteer-prepared returns from locations across the country – taken from the 2.9 million tax returns filed by all volunteer programs. Over half of those returns were prepared accurately– an accuracy rate two percentage points higher than last year’s. TIGTA notes the limitation of the sample size by describing it as “non-statistical,” meaning that the “results cannot be used to project to the population of tax returns prepared at VITA sites.”
The recommendation issued by TIGTA to address the report’s concerns was to ensure that volunteer tax preparers, quality reviewers, and site coordinators complete intake/interview and quality review training annually. NCTC welcomed this recommendation by the Inspector General, which was also agreed to by the IRS.
The IRS also measures the accuracy of volunteer tax preparation programs and completed a more in-depth and statistically sound review of 339 tax returns to find a 91 percent accuracy rate for volunteer-prepared returns in the 2013 tax season. That internal review was conducted during the tax season and the report, known as the Quality Statistical Sample (QSS) report, was released by the IRS Stakeholder Partnerships, Education, and Communication (SPEC) in August.
“VITA programs across the country have implemented the strongest training and quality control standards to date and continually strive to increase the quality of the services offered,” Coleman noted. “Their tax-preparation volunteers undergo intense training, sometimes taking up to 40 hours, and must pass an annual, comprehensive exam before preparing a single tax return. “
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The National Community Tax Coalition is the nation's largest, most comprehensive membership organization for community-based organizations offering free tax and financial services to low-income working families. The coalition’s network of more than 2,800 members, across the country, is dedicated to strengthening economies, building communities, and improving lives through tax assistance and asset building activities that produce financial security, protect families, and promote economic justice.
Big Ideas for Jobs Event: Entrepreneurship as a Job Creation Strategy
By Katherine Lucas McKay on 11/18/2013 @ 09:45 AM
Next week, CFED’s Chief Program Officer, Ida Rademacher, will join leaders in the microbusiness field at an event highlighting opportunities for policymakers at the federal, state and local levels to support entrepreneurship as a job creation strategy. The event, hosted by FIELD at the Aspen Institute, will feature contributors to the Big Ideas for Jobs initiative, a project that highlights practical, sustainable and scalable strategies for creating career-oriented jobs that are accessible for low-skilled workers.
CFED’s contributed a paper to the Big Ideas for Jobs initiative in 2011, highlighting opportunities to leverage the tax code to spur self-employment. At this event, we will offer a preview of our forthcoming proposal, which is updated to reflect recent policy developments and new research on the challenges that low- and moderate-income entrepreneurs face today.
Rademacher will be joined by presenters Elaine Edgcomb, Strategic Adviser to FIELD, and Elizabeth Kregor, Director of the Institute for Justice Clinic on Entrepreneurship at the University of Chicago. Additional microbusiness experts will join a roundtable discussion moderated by Joyce Klein, Director of FIELD. Discussion will focus on the role that microbusinesses play in creating jobs for LMI business owners and workers, describe progress that has been made toward achieving the Big Ideas for Jobs proposals on entrepreneurship, identify what policymakers and advocates can do next.
The event will take place at the Aspen Institute’s Washington, DC, offices on November 25 at noon EST. Please join us!
RSVP here to attend Big Ideas for Jobs: Entrepreneurship as Job Creation Strategy.
Spotlight on Innovation in Entrepreneurship: Microloan Management System
By Heidi Pickman, Guest Contributor on 09/23/2013 @ 03:00 PM
From 2004 to 2010, the microbusiness sector was responsible for over 90% of all jobs created in the US. Microbusinesses (1-4 employees) created a net of 5.5 million jobs, while large businesses (those with greater than 500 employees) lost 1.8 million jobs during the same period.
Despite their crucial role in the economy, only 0.10% of potential microbusiness borrowers are being served. In California, CAMEO’s microlenders struggle to achieve scale. Microlending is expensive for many lenders to sustain and as a result, some of CAMEO’s lenders have left the microloan market. With funding tighter than ever before and increasing need, microlenders have to deliver the same services as economically as possible. Our 28 member lenders made 1,500 microloans in 2012.
Many challenges exist that lead to inefficiencies and high costs of microlending:
- Finding eligible borrowers is difficult.
- Staff spend time on ineligible inquiries and building the pipeline of borrowers.
- Microbusiness owners need extensive business technical assistance before, during and after the loan.
- Microloans often undergo the same ‘traditional’ underwriting process that is used for large loans (i.e., a very extensive process).
CAMEO, as the effective small business CDFI coalition for California, supports the growth and sustainability of microlending by expanding resources and helping to decrease the cost of providing services. We decided to offer Accion Texas’ Microloan Management System (MMS) platform to members as a way to lower costs of microloans.
Accion Texas’s MMS streamlines the cost of underwriting and frees lenders to focus on recruitment and support. The loan turnaround is much faster. Accion’s automated review system allows instant feedback on borrower capacity and history, and underwriting takes three days instead of three weeks.
CAMEO believes that our member CDFIs will benefit in the following ways:
- Improved loan quality through a standardized process that strengthens the lenders’ portfolio
- CDFI’s can focus on spheres of excellence (e.g., business assistance)
- Cost of screening, assessment and underwriting per loan decreases dramatically
- Lender volume expands by 70-300% and thus increases revenues
- Staff can concentrate on loan/deal development
For this project, CAMEO has bundled smaller lenders together in one license, allowing them to post a limited number of applications for a reduced price. As they scale, they graduate to a full license. CAMEO guides lenders through a complicated, multi-agency on-boarding process, then provides ongoing support (e.g., staff training, peer network calls, one-on-one, technology assistance). We are working with four members for the pilot: California Capital, CDC Small Business Development, TMC Development Working Solutions and Women’s Economic Ventures.
Systems change always presents difficult challenges. Organizational behavior and processes and ingrained staff habits are not easy to change. Roles and duties may need to change. Staff may not be used to the algorithm and may need to learn to trust new system. And the incentives to change are not clear.
This leads many organizations to implement MMS partially, which in turn leads to multiple systems and duplicated efforts and masks the benefits of streamlining, speed and consistency.
To work properly, MMS needs executive leadership and systems change. It requires ‘big picture’ thinking about roles and processes. A few DOs and DON’Ts…
DO: Allow access to be open to everyone. Rely on Auto Review for assessment.
DON’T: Make clients jump through hoops before trying Auto Review.
DO: Use MMS for all loans under $50,000.
DON’T: Run two systems or duplicate activity.
DO: Reassign staff and loan committee duties to new ones, such as building the pipeline.
CAMEO believes that in this fast-paced world, we change or become obsolete! Our role is to help our members adopt essential new technology that will help them compete and increase their lending capacity, serve more microentrepreneurs who will create jobs, and build strong, healthy and stable communities.
CFED’s Kim Pate Testifies Before U.S. House of Representatives
By Ezra Levin on 09/19/2013 @ 05:00 PM
On Thursday, CFED’s Chief External Relations Officer Kim Pate testified before the House Small Business Committee’s Subcommittee on Economic Growth, Tax and Capital Access. The topic of the subcommittee’s hearing was “Private Sector Initiatives to Educate Small Business Owners and Entrepreneurs.” Click here to download Kim’s full written testimony.
In her testimony, Kim highlighted the importance of “microbusinesses”—those with fewer than five employees. While individually small in size, microbusinesses account for 90% of all businesses in the country. Taken together, these microentrepreneurs are responsible for creating millions of businesses and even more jobs. On average, these ventures create 2.9 full and part-time jobs each.
Not only are microbusinesses an important influence on the macro economy, they also offer a real opportunity for low- and moderate-income individuals and families to attain economic self-sufficiency and stability. Microbusinesses that survive, grow and become profitable, enhance household income and reduce families’ reliance on public assistance.
Kim also discussed the importance of tax time for microbusinesses. In 2005, CFED launched the Self-Employment Tax Initiative (SETI) with the goals of building assets for low-income households, creating jobs and increasing tax revenue by bringing the self-employed into the tax system. Through this effort, CFED has partnered with Volunteer Income Tax Assistance (VITA) programs, which provide free tax support to low- and moderate-income taxpayers. In short, VITA works and works well—a National Community Tax Coalition (NCTC) report found that VITA programs helped more than 3 million taxpayers claim $2.2 billion in tax refunds while saving the federal government $5.5 million in reduced processing costs.
Building on the success of SETI, CFED joined NCTC and the IRS to launch the Schedule C VITA Initiative, which aims to test new ways to expand support for microentrepreneurs through the VITA program. Also inspired by SETI, Representative Judy Chu (CA-27) introduced the Entrepreneur Startup Growth Act last Congress, which would have added much-needed additional tax assistance support for small entrepreneurs.
CFED looks forward to working with the Subcommittee and Congress as a whole to move forward on these and other opportunities to expand economic opportunity, create jobs and support the most powerful little engines for economic growth in the country—microentrepreneurs.
Come Join Us at March Forward, NCTC's 2013 National Conference!
By Lauren Williams on 07/23/2013 @ 04:15 PM
The National Community Tax Coalition (NCTC) will be hosting its 9th National Conference September 11-13 in New Orleans! The Conference, titled March Forward, is the premiere conference for the community tax preparation and asset-building fields. More than 600 attendees are expected to come together to learn, network and celebrate as a field!
This year’s conference centers on advancing, sustaining and growing the community tax preparation, asset building and policy and advocacy field. This event is very timely, especially with the significant shifts going on in our overall economic, social, and financial landscape. It is essential that the VITA field takes advantage of the opportunities to move forward by introducing innovations, promising practices, practical policies, and applied research that will sustain working families – particularly through the critical supports our programs provide them.
This year’s conference will also offer several new Training Institutes. These Institutes are designed to provide conference attendees, an in-depth training focused on tax preparation, advocacy, and higher education assistance as they relate to community VITA programs. Another first this year - in collaboration with practitioners and partners from around the nation, we will provide direct service to local New Orleans residents the week of the conference by helping them get financially fit. Conference participants and other local cohorts have already signed up as volunteers and have the opportunity to serve hundreds of residents in providing skills in budget planning, credit report education, FAFSA preparation, savings planning, and tax preparation services during a fun-filled educational and impactful one-day event.
As always, the NCTC Conference remains the best place to get the practical knowledge you need to take your organization to the next level. By learning from a healthy mix of practitioners, policy experts, researchers, and other innovative leaders, the opportunities to make your organization more effective are virtually endless. Whether you are new to the field or a distinguished veteran, attendees have constantly walked away amazed at how much they’ve learned in such a short time.
The NCTC Conference is an excellent opportunity to learn to improve your program and serve your clients at a higher level! To learn more and register visit the March Forward Conference platform!
Making the Policy Case for Microenterprise
By Kim Pate on 07/18/2013 @ 02:00 PM
CFED has been making the case for public investment in microenterprise for more than 30 years. As we’ve communicated with federal, state and local policymakers, our ability to advocate effectively depends, in part, on data that show that these investments are a cost-effective way to create the outcomes that constituents care about.
Our need for robust data is one of the reasons that we’ve partnered with FIELD for several years to promote the U.S. Microenterprise Census – the annual survey of microenterprise programs across the country. The Census is the only tool that we have to be able to speak to the scale and effectiveness of the work that microenterprise programs do. It is through the Census that we are able to share important findings, such as the following, with policymakers:
- The microenterprise industry continues to grow. FIELD estimates that U.S. programs served more than 361,000 people and made more than $175 million loans in 2011.
- Microenterprise programs benefit from federal investments. At 29%, federal funds comprise the largest source of operating revenues for these programs.
- Program costs are reasonable, suggesting that investing in microbusiness programs is a cost-effective strategy. The median cost per individual served by a microenterprise program was $1,049; the median cost per client served was $2,725.
- Even in an economy that is still struggling to recover from the Great Recession, microenterprise lenders are managing risk successfully: in 2011, the industry microloan loss rate was 7% and the percent of the portfolio at risk was 9%.
FIELD’s ability to generate these critical statistics ultimately depends on whether practitioners across the country share their data through the Census. As researchers and as policy advocates, we at CFED understand the costs and challenges of reporting data. But we know the benefits as well, especially in the current political and budgetary contexts. With FIELD’s microTracker data portal, there are other benefits to reporting data – contributing microenterprise organizations have their data displayed on an online profile that increases their visibility to users including funders and the media, and can also access data on the industry as a whole, and on peer groups, that can help them to analyze and benchmark their own performance.
If you’re a microenterprise practitioner who has yet to report, we urge you do to so today via the online survey. Or, check out the microTracker site to learn more about key industry statistics that FIELD has collected over the years.
7 Strategies for Launching an Online Business With Limited Resources
By Brian Spero, Guest Contributor on 07/17/2013 @ 04:00 PM
For those searching for methods to fill income gaps and build a sustainable financial future, starting a business on the internet is an increasingly viable option. Armed with a well-conceived plan and an entrepreneurial spirit, just about anyone can launch an online venture. And while there are times a leap of faith is called for on the path to success, operating intelligently and efficiently can help reduce risks and potential implications associated with establishing a new business.
Whether you or your clients have a promising concept, product or skill to build an online business around, consider these seven economical strategies for tilting the odds of success:
- Maintain a Source of Income
When Money Crashers publisher Andrew Schrage went into business for himself by purchasing a small personal finance blog, he put his heart and soul into making it as profitable as possible. And, just to make sure he remained financially stable, he held on to his day job.
Following the dream of owning a business doesn't have to be the dramatic, all-or-nothing proposition it is so often portrayed to be. The beauty of starting an online business is that it can be done without an investment in a physical location, and with total control over the hours and resources an individual decides to allocate. It takes patience to build a thriving online presence, whether attracting an audience to a blog or gaining exposure for new products, so even a part-time source of income can be indispensable for keeping an online business financially afloat until the revenues start rolling in.
- Consider the Strength in Numbers
Another wise thing Schrage did when he started Money Crashers was to form a business partnership with Gyutae Park, a like-minded individual who shared his vision of growing a thriving online community focused on financially responsible living. Having a business partner or multiple partners while building an online company not only can provide the moral support and inspiration to see a venture to profitability, but also to help shoulder the necessary investment of time and resources. When choosing the right collaborator, it's important to identify an individual who shares and understands the vision, possesses a complementary skill set, and is equally driven and accountable.
- Utilize Low-Cost Tech Solutions
For nearly every big-ticket tech item available on the internet - whether it's a designer website, project management platform or business accounting software suite - there's a solution to be had for either free or at a nominal monthly expense. Before pulling the trigger on any sizable monetary outlay, due diligence should be performed to identify the availability of a suitable low-cost alternative. In the space of a day, with zero financial investment, it's possible to acquire a fully functional website with free hosting through SquareSpace, consolidate phone lines with a business number from Google Voice (including everything from conferencing capabilities to free domestic long-distance) and start managing invoicing and payments with Freshbooks cloud accounting.
- Capitalize on Free Marketing Opportunities
Advertising online has quickly become big business, with billions of dollars spent annually in the US alone, but it's also ripe with free and low-cost methods of promotion. Beyond employing basic SEO best practices to start driving traffic directly to a website, a social media marketing strategy is a powerful tool for connecting to an audience of qualified leads and strengthening client and customer relationships. From setting up Google+ and LinkedIn business profiles, to building an active Facebook and Twitter following, social media is a cost-effective, sustainable and scalable vehicle for driving an online business.
- Seek Investment and Funding
If additional capital is necessary to get the wheels turning on a new venture - and the likelihood or inclination to take out a loan is low at best - there are many places to turn both locally and online to procure the support needed. While countless personal businesses have been helped along with investments from friends, family and members of the community, there also exist public programs for grants and financing specifically tabbed for small business development. The Loans and Grants Search Tool on the U.S. Small Business Administration website is a helpful way to identify programs available for specific businesses, while soliciting financial support on a website such as GoFundMe has provided the means behind a number of inspiring startup success stories.
- Consider Relocation
When real opportunity calls, it's necessary to answer in a clear and convincing voice, demonstrating the drive and desire to do whatever it takes to get over the hump. An online startup can be run out of a home or remote location - but the less spent on rent, a mortgage or living expenses, the more resources available to put toward building the business. Taking a page out of the playbook of larger corporations that strategically change physical locations in order to reduce overhead and maximize profitability, relocating to a less expensive neighborhood or region can supply the extra time and flexibility necessary to allow a prosperous plan to develop.
- Operate Economically
While some startup costs are ultimately unavoidable, taking a comprehensive approach to responsible spending helps to keep expenses to a minimum. From opting to purchase used or refurbished essentials such as computers and mobile devices, to utilizing a community-based online forum such as Freecycle to score free items such as business furniture and supplies, a lean online business can break ground without breaking the bank. Bartering services, taking on interns or offering a stake in the company as compensation can help minimize payroll, while a free online job posting board such as oDesk is an effective source for helping small businesses connect with freelance employees willing to work on their terms.
For individuals hunting for new financial opportunities, operating an online business is a realistic means of independent job creation and increased personal incoming. By taking a lean approach to building an Internet business, an entrepreneur with limited capital can reduce financial risks while making a run at the American Dream.
What other tips can you suggest to those who wish to launch a small business with limited funds?
Brian Spero is a business owner and contributing team member of the personal finance resource, Money Crashers.
CFED Launches the Enterprise Needs Survey on Entrepreneurs’ Financial Strengths & Vulnerabilities
By Kasey Wiedrich on 07/03/2013 @ 01:30 PM
Have you ever wondered what makes some entrepreneurs succeed and others fail? At CFED, we ask ourselves this question all the time (really, enterprise is our middle name), but with a particular interest in understanding how financial access and capability affect entrepreneurs’ odds at success or failure. Instead of just wondering, we decided to do something about it: today, we’re launching a survey to get at businesses’ financial strengths and vulnerabilities, and we need your help.
We need as many respondents as possible, so we’re looking for small business owners to take this 5-minute Enterprise Needs Survey, available in both English and Spanish, online and accessible on mobile devices, between now and July 22. Here’s how you can help:
- If you own a business with fewer than 10 employees and less than $2 million in annual revenue, you can take the survey by clicking here. Business owners who take the survey will be entered in a drawing to win a $100 MasterCard rewards card, which you can use for online purchases wherever MasterCard is accepted.
- If you are with an organization that works with small business owners, you can help us distribute the online survey by emailing a link to the survey to businesses in your network or sending the link out through social media channels. If you’d like to help disseminate the survey, please contact me at firstname.lastname@example.org.
- If you just want to help us spread the word about the survey via social media, please link to [https://www.facebook.com/EnterpriseNeedsQuiz] on Facebook or let your followers on Twitter know about the survey by using #eneeds so we can keep track of activity and inserting this [http://bit.ly/13ooM1U] to the survey in your Tweet.
This survey is the first stage in research we are conducting this summer with EA Consultants, and with the support of MasterCard Worldwide, on the financial challenges low- and moderate-income entrepreneurs face and the financial product and service needs they have that are currently unmet in the marketplace. Next, we’ll conduct more in-depth phone surveys with business owners in Minneapolis and Miami. We hope that the findings from this study will contribute to the existing body of knowledge about the financial capability of the self-employed and the types of financial products, services and policies that can improve microbusiness owners’ success.
Questions? Email me at email@example.com.
Small Business Week Story: Meet the Curriers
By Veronica Weis on 06/20/2013 @ 11:00 AM
EDITOR'S NOTE: As part of Small Business Week on The Inclusive Economy, we're making the case for policies that benefit self-employed Americans by telling their stories of success. This last story features the Curriers, a couple in the Twin Cities area who worked with our partners at AccountAbility Minnesota.
The Curriers had debt, but not enough to qualify for a lower interest rate and consolidation. So when they found out that they qualified for tax breaks as small business owners, they were delighted.
“Ron and I have always been in the middle of things,” Stefanie said. “Having our taxes done here has saved us a lot of money and time. “
To get her taxes prepared, the Curriers went to AccountAbility Minnesota (AAM) – a community-based nonprofit that provides free tax assistance to lower income individuals and families to build their assets and give them financial security. CFED’s Self-Employment Tax Initiative (SETI) program provides the funding to train tax professionals in self-employment services and also support AAM’s innovative pilot to provide video tax preparation and the development of Webinars on retirement planning for the self‐employed.
Stefanie loved working with Accountability Minnesota because every time she called with a question, a tax adviser quickly provided her an answer! The additional money they received from working with AAM on their taxes allowed them to expand their economic opportunity.
“The money we received back last year helped us to pay down our debt. This year we plan on paying off more debt so next year (hopefully) we will be in a position to buy a home!”
Small Business Week Story: Meet Natasha
By Veronica Weis on 06/19/2013 @ 01:30 PM
EDITOR'S NOTE: Many thanks to our friends at EBALDC for sharing this tax-time story.
As part of Small Business Week on The Inclusive Economy, we're making the case for policies that benefit self-employed Americans by telling their stories of success. This second story features Natasha, a Woman's Initiative for Self-Employment graduate.
“I’m a Woman’s Initiative for Self Employment graduate; I graduated last year. They told me about [EBALDC] and that was how I first met you. It was free, which was amazing for a small business owner, since the bottom line. In every other place you go you have to spend hundreds of dollars. Here, not only you get this more personalized service but you don’t have to pay for it. For a small business owner, it makes a huge difference. I decided to save half of my refund. [I learned] not to expense my gas and I should learn to track my mileage instead, which I’m working on. The moment I got my taxes done I put it on my facebook, and I tweeted about. Duh, it’s awesome! This is the first time I have ever committed some of the refund to savings and doing something with it. Usually my tax refund would disappear within a couple of weeks.
The whole commitment of saving half of my refund… I found out about it, got a letter, and then you called me. I think it’s great. People need that one special extra push to save. It’s hard to save, and it’s great this program is in place because it helps as lot of people.”
Does your organization help entrepreneurs like Natasha? If so, send us an email so we can share your success stories during National Small Business Week and beyond!
Small Business Week Story: Meet Entrepreneurs Oscar and Zaida
By Veronica Weis on 06/18/2013 @ 06:30 PM
EDITOR'S NOTE: Many thanks to our friends at EBALDC for sharing this tax-time story.
As part of Small Business Week on The Inclusive Economy, we're making the case for policies that benefit self-employed Americans by telling their stories of success. The first story features Oscar and Zaida, a couple who owns a small catering business and has helped other entrepreneurs in the past with free tax services in their community.
From EBALDC Staff:
We first met Oscar in 2011 when he and his wife came in as clients to file taxes for their new catering business. Oscar was so interested in our free VITA tax service that he came back the following year as a volunteer! He's now been helping other people with their taxes for 2 years and says that he does it because he loves to keep learning. He also works full time, has children, runs the catering business on the side, and comes in to volunteer 1-2 times a week.
Oscar has been an amazing addition to our team, after being featured in a video (included below) we made regarding our tax site he has kept coming back for free tax preparation and has catered our volunteer appreciation event the past few years and has also volunteered to learn and prepare income tax returns himself. He told us that next year he will bring us his daughter, who is a high school student, to volunteer as well.
From Oscar and Zaida in 2011:
"My name is Zaida and I’m here to do my taxes. My name is Oscar and we are here to do our business and personal taxes. This is our first time here. We went to a CEO Women’s workshop and we learned about the program you guys have. Our business is catering – food, Mexican and Italian food. I know how to cook Mexican, Italian food, and I like it a lot so I combine it all. We just started it last year, so we’re still struggling. CEO Women helped me a lot to have confidence. This is our first year filing taxes, and we’re really scared. Before we had someone help us do our taxes, but when I went to class I received more knowledge and I better find out the right information. It’s way different to do personal taxes than to do business class. We heard about [EBALDC’s] workshop so we went, and learned about the great opportunity for us.
We will reinvest our refund in our business to get more customers and more money. If we went to a regular accountant, we would probably pay at least $200-300. I heard from someone else that business taxes can be really expensive, and since we’re struggling with everything, I told Oscar, ‘Call Leo’ (Leo is one of our tax preparers). It was a really good opportunity."
Three Steps to Kick Off National Small Business Week
Today is the first day of National Small Business Week (NSBW), a series of events sponsored by the U.S. Small Business Administration to highlight the impact of entrepreneurs, owners of small businesses and other self-employed professionals.
For years, CFED has supported NSBW because of our commitment to the low-income entrepreneurs who start and grow businesses that fuel the U.S. economy. This year, we’re offering three ideas for ways to support the efforts of microentrepreneurs.
- Entrepreneur Stories
One of the ways we can make the case for policies that benefit self-employed Americans is by telling their stories of success. This week on The Inclusive Economy, we’ll offer three such stories, so check back daily! (Have a story you want to share? Email Veronica!)
- SETI Resource Bank
Ideal for practitioners, the SETI Resource Bank offers a range of tools to help you make the most out of the time you spend supporting your clients. The Resource Bank also includes outreach tools for VITA sites and other tax preparation services.
- Twitter Recommendations
Throughout the week, make sure you’re following us on Twitter (@cfednews), where we’ll connect you with some people and organizations to follow who provide valuable resources. For example, you can start following Sam’s Club (@samsclub) today, as they offer a ton of helpful tips for their network of millions of owners of small businesses. (Pro tip: When Tweeting, make sure to use hashtag #microbiz and #SBW2013.)
Is your organization participating in NSBW? Tell us how below!
Millennials Will Reinvent Charity
By John Bare, Guest Contributor on 06/13/2013 @ 02:30 PM
EDITOR'S NOTE: The following story originally appeared on CNNOpinion and is well worth the read for our friends in the micro and IDA fields. You can read the original post here.
My niece Sarah is one of the do-gooders with an entrepreneurial bent who's blurring nonprofit and for-profit activities.
Through micro-lending, Individual Development Accounts, creative marketing and a novel kind of stock offering, these disruptors are re-imagining charitable giving and re-purposing investment tools.
Now we need policies and financial instruments to catch up to the movement.
Sarah is one of more than 900,000 Kiva lenders who have made more than $440 million in loans to entrepreneurs in 68 countries. Kiva is a nonprofit organization that facilitates micro-loans. Amounts as small as $25 can help someone -- usually a woman -- start or expand a business. The effects can be life changing.
Starting with the $1,000 Kiva fund I gave her as a high school graduation gift, Sarah found time during college to make 30 loans totaling $1,700 to entrepreneurs in 17 countries, from Bolivia to Uganda.
As folks repay the loans, Sarah keeps making new loans and helping more people change their lives. A funding pool that replenishes itself gives Kiva an edge over typical charities. With most cash donations, when the receiving organization spends the money, it's gone for good.
There's a catch: Sarah can loan money to a grocer in Ghana, a farmer in Uganda and a weaver in India -- but she has not been able to loan money to entrepreneurs in the United States.
Because of technical and policy issues with the U.S. Securities and Exchange Commission, it's easier to help entrepreneurs in another country than in our own backyard.
The bright folks at Kiva are creating a work-around. Kiva Zip is an experiment in "person-to-person lending."
Using Kiva Zip, Tommy in West Helena, Arkansas, sought a loan to expand his barbecue and catfish restaurant. Tracy in Pittsburgh is seeking a loan to move her home hair salon into a commercial space. She expects expansion to create three or four jobs.
Kiva Zip comes along as Grameen America is bringing its micro-lending model to more U.S. cities.
Thirty years after Nobel Laureate Muhammad Yunus created Grameen Bank, which has extended micro-finance to 8 million people in Bangladesh, Grameen America now has branches in New York, Los Angeles, Oakland, Omaha, Indianapolis and Charlotte.
Some of the business-charity hybrids are counterintuitive. While many nonprofit groups ask local businesses for donations, the reverse is uncommon. Yet Ross Baird emerged from the University of Oxford in 2009 with just that notion. He created a nonprofit organization, Village Capital, that raises rounds of capital to invest in startup companies.
One foundation invented a new kind of stock offering to turn neighborhood stakeholders into real stockholders.
Fulfilling its commitment to "resident ownership," the Jacobs Family Foundation wanted to transfer a chunk of the equity in a commercial development project to residents living nearby. It took attorneys six years and 40 drafts to invent a way, and in 2005 Jacobs issued the first-ever Community Development IPO.
Residents purchased all 50,000 units of stock, priced at $10 per share.
In Philadelphia, Dr. Mariana Chilton began working with mothers who didn't have enough food. Through Witnesses to Hunger, she put the mothers in front of elected officials to advocate for federal nutrition programs.
Chilton discovered that women from Witnesses to Hunger were also entrepreneurs. Hustling to put food on the table for their kids, literally, these mothers were earning $50 here and there doing hair and nails or babysitting.
Problem is, no one treated these mothers as entrepreneurs. Their business activities were discouraged or penalized, either because of overly enthusiastic local government regulations or upside-down rules of federal assistance programs. The reporting requirements, intended to deter fraud, were not calibrated to accommodate modest income fluctuations associated with their entrepreneurial activities.
Chilton is chipping away at change. Her team is giving mothers technical assistance to bring their micro-businesses into the mainstream. She is connecting the women to bank accounts, and Chilton's nonprofit will match deposits the mothers make into savings accounts and Individual Development Accounts.
Policy changes could help. The federal nutrition benefits should diminish gradually over time, as folks get on their feet. At a moment when we need innovative thinking, the old rules still use a bright-line test to force mothers to choose between food and work.
Further, we need more technical and policy advancements that make social investing easy. Few organizations have the time and resources to chase legal solutions for six years. The next generation of leaders must generate breakthrough solutions that can operate at scale.
A good place to start is MCON13, which is hashtag-speak for a conference devoted to engaging the 80 million U.S. millennials in giving and volunteerism. Next month hundreds of professionals will gather in Indianapolis at MCON13 to crack the code on millennials.
Expect millennials to keep blurring the lines. If Sarah can loan $50 to a farmer in Paraguay, why not a hair dresser in Philadelphia?
Six Online Tools & Resources to Help Low-Income Entrepreneurs Save Money
By Brian Spero, Guest Contributor on 06/12/2013 @ 10:30 AM
Thanks to new technology and the Internet, entrepreneurship in America is once again for everyone, providing a real opportunity for those currently categorized as low-income to change their fortune and reach financial self-sufficiency. If you are wrestling with the concept of how to overcome challenges such as limited capital and access to credit to start your own business, or if you work for an organization dedicated to helping low-income entrepreneurs succeed in the mainstream economy, consider these six online tools and resources to keep costs to a minimum.
In the modern era, a functional website is an essential part of establishing a professional business identity. While it can cost thousands of dollars to design a high-end e-commerce website, just about anyone can use WordPress to create a beautiful website or blog at a minimal cost. Registration is free, and the initial process is simple and straightforward, allowing users to choose from a array of themes and options to customize a website's look and functionality. You'll find all of the support you need to get started on the WordPress website, including information on choosing hosting and advanced strategies that enable even a novice to create an online home for an entrepreneurial venture.
- Google Voice
Communication is a basic concern for any business entity, and Google Voice provides a comprehensive free solution for transforming the capabilities of an existing personal line without taking on the additional expense of a business phone. After registering with Google Voice, a unique phone number is assigned that can be used and distributed as a professional contact. Incoming calls are then forwarded to whichever line is chosen (you can use your home number or a cell phone), allowing the user to set preferences for personalized greetings, voice mail forwarding, call screening and more. There are even options for sending SMS to email, conferencing in multiple callers and low-cost international rates.
Accounting and invoicing can be extremely expensive to outsource, as well as intimidating and time-consuming to tackle on your own, making FreshBooks cloud accounting a welcome lifeline for low-income entrepreneurs. With a free basic version to help get started (with up to three clients) and inexpensive monthly fees for a complement of professional features, FreshBoooks is designed to make it simple for businesses to save time billing, get paid faster, record expenses and keep time sheets for individual projects. From providing revealing reports that demonstrate ways to be more financially efficient, to supplying records for everything you need at income tax time, FreshBooks is a time-saving tool for keeping a personal business financially fit.
Starting a venture, whether it's a small business or charitable nonprofit, requires legal expertise to ensure that best interests are protected. Nolo is a comprehensive source that can potentially save startups thousands in legal fees, providing a library of expert-level advice and do-it-yourself instructions on everything from forming an LLC and registering a business name, to insights on businesses taxes, contracts, and litigation. Beyond a huge database of legal topics, Nolo supplies access to the gamut of necessary forms, documents and reference material, as well as a directory of law professionals available for consultation.
When hiring a human resources representative or paying expensive head-hunters is out of the question, oDesk is a powerful tool to help you locate the staff needed to grow a business. oDesk not only helps low-income entrepreneurs connect with service providers through free online job posting, but also features a qualified database of top freelancers working in everything from customer service and sales, to administrative and Web development. With features that help you contract employees on a need-basis, monitor workflow from remote locations, and make safe, direct payments, an independent business can get the high-quality support it needs on its own terms without an additional investment of resources.
FreeCycle is an online grassroots movement that operates on a community level. It connects people interested in giving away quality, no-longer-needed items to those who have a genuine use for it. It's completely nonprofit, totally free and extremely popular, with nearly 10 million members around the world.On any given day, a budget-conscious independent businessperson can find essentials ranging from office furniture, telephones and filing cabinets, to computers, computer accessories and paper products for the simple price of arranging for a pickup. If a business is nonprofit or benefits the community, there can often be found high-end items in excellent condition offered exclusively for ventures with a charitable focus.
As economic turbulence continues to cause high unemployment and underemployment, a growing number of individuals are turning to self-employment as a means for creating opportunity and filling income gaps. By utilizing free and cost-effective online tools and resources, low-income entrepreneurs can leap inherent hurdles and chase down the dream of financial independence and security.
Can you suggest any other online resources for entrepreneurs on a tight budget? Use the comments section below to share your tips!
Brian Spero writes about business, economic policy and technology on the popular personal finance site, Money Crashers.
4 Graphs on the Importance of Entrepreneurship Programs
By Kristin Lawton on 05/06/2013 @ 02:45 PM
Why You Should Take the Microenterprise Census Survey
By Katherine Lucas McKay on 04/03/2013 @ 11:00 AM
The 2013 U.S. Microenterprise Census—the nation’s leading source of data on the microenterprise industry—launched yesterday! The Census, created by the Aspen Institute’s FIELD Program in 1992, has become the most comprehensive and widely used source of information on this field. It provides quality, up-to-date information illustrating the size, scale and impact of the U.S. microenterprise industry.
If your organization offers microenterprise training and technical assistance, IDAs for microenterprise, or microloans, please take the survey! Even if that’s only one part of your mission, your input is valuable. The first organization to complete the Census will receive a prize, and additional incentives will be offered throughout the course of FIELD’s Census campaign. Also, CFED will raffle off a free registration for the 2014 Assets Learning Conference (a $700 value) to those who fill out the Census by June 2. All you need to do to enter the raffle is complete the survey.
The Microenterprise Census is important to CFED because it demonstrates the power of microenterprise ownership to help lower-income families lift themselves out of poverty. Throughout CFED’s 33-year history, we have promoted microenterprise as an asset-building strategy, and, thanks to the Census, we have the data to prove it. One analysis of Census data, for example, found that microenterprise owners who received training and loans over a five-year period increased their revenues by 60 percent; the percentage of clients living in poverty declined from 16 percent to 9 percent, a reduction of more than 40 percent.
By participating in the Census, you not only help make the case for microenterprise as an income- and asset-building strategy, you also help your organization succeed. MicroTracker is increasingly becoming a valuable source of data and information on the micro industry for funders, the media and other stakeholders. Participating in the Census also gives you access to valuable data that can help you manage and showcase your program’s performance, including metrics that compare your organization to industry averages. Join the more than 800 organizations that have participated just in the past five years and take the Microenterprise Census today!
Seven Strategies for Starting a Successful Social Enterprise as a Means for Job Creation
By Brian Spero, Guest Contributor on 03/21/2013 @ 03:30 PM
EDITOR'S NOTE: At CFED, we often tout the positive impact starting a business can have on one's long-term financial security. Today's blog post extends that idea by making the case for starting a social enterprise.
As the job market slowly continues to awaken from its long slumber, many young Americans remain searching for quality employment. For those who have struggled to find work, are underemployed or are unfulfilled by a current career path, starting a social venture may be the answer. Becoming a social entrepreneur doesn't hold the potential of a financial windfall like many other pursuits, but it can be a means to sustainable long-term employment that's personally rewarding and leaves a positive impact on society.
For those who hear the calling of this noble life choice, consider these sound strategies for starting a successful social enterprise:
- Lead With Your Heart. Starting a social venture takes passion, commitment and endurance, so it's essential that you choose an initiative that inspires you. This is your chance to finally do something that you love for a living, and reap the satisfaction knowing your efforts mean even more to the community it serves. It's important to look deep within to learn not only what moves you to action, but also that which will continue to hold your ongoing attention.
- Check Your Head. It's called "social entrepreneurship" because it takes entrepreneurial business acumen to get a social venture off the ground. Make a real assessment of what you are capable of by taking inventory of your skills, your experiences and your core attributes. If you feel you are lacking in any area, be it handling accounting or managing logistics, it could mean you need to find a business partner who complements your organizational needs, or perhaps you are better suited to work as part of an ensemble team.
- Choose Wisely. The success of your enterprise starts and ends with the central mission. While stopping worldwide hunger may be your ultimate wish, an approachable goal, such as feeding hungry local children, may be a more realistic place to start. Some of the most effective social ventures focus squarely on something that can and should be changed, such as malaria plaguing people in developing nations, and providing a straightforward solution, such as supplying those in need with mosquito nets to protect them from the pests that spread disease.
- Make It Your Business. Don't let the altruistic element of social ventures fool you - the essence of what you are doing is starting a business. If you have hopes of making things work, you have to not only make a considerable time commitment, but also carefully create a plan to build your organization. Branding, marketing, building internal infrastructure and managing outbound logistics are just several of the tasks you may have to account for to give your venture the structure to endure.
- Capitalize on Advantages. As with many nonprofit or charitable organizations, opportunities exist to help your venture thrive, from tax advantages to funding grants. Educate yourself on every program you could potentially benefit from, and legally structure your organization to maximize tax relief. There are many organizations like CFED that support, fund and mentor social entrepreneurs. Other examples of these organizations include the Skoll Foundation, Acumen Fund, and Draper Richards Foundation.
- Walk Before You Run. The downfall of many promising ventures is when it expands too rapidly. Keep your goals realistic and train your focus, resisting the urge to grow before your foundation is firmly established. Position yourself for a sustainable future, while defining yourself philanthropically. If you are doing good work, growth will occur naturally.
- Put Yourself Out There. Social entrepreneurs are resourceful, innovative and creative, fearlessly lobbying for action to achieve change. Asking for help, whether it's in the form of a financial contribution, strategic partnership or the commodity of time is never easier than when you are asking for others. Always be on the lookout for ways to promote your cause, utilize efficient online marketing techniques like social media, and value the contributions of friends, family and like-minded individuals.
Social entrepreneurship is a viable alternative to the workforce grind, providing a platform to find financial stability through helping others. By choosing a worthy cause, creating a sound business structure, and generating the ideas and energy necessary to succeed, you can create new opportunities for yourself and others while effecting real change.
What other tips can you provide to those who wish to engage in social entrepreneurship?
Brian Spero is a contributor for the online resource, Money Crashers Personal Finance. He writes about ideas related to economic policy, small business and money management topics.
New From Citi: Money Matters EITC Report
By Sean Luechtefeld on 02/20/2013 @ 10:30 AM
For the second time, Citi has created Money Matters, a free publication available in English and Spanish that is customized for a number of states across the country. This four-page publication is designed to enable hard-working taxpayers to take advantage of the tax benefits that are available to them, and provides information on savings, claiming the EITC, and connecting with local organizations. Most importantly, Money Matters provides lists of local Volunteer Income Tax Assistance (VITA) sites, where IRS-certified volunteers provide free assistance with preparing and filing tax returns.
One of the most important services that these volunteers provide is to ensure that working people claim the benefits to which they are entitled, like the Earned Income Tax Credit (EITC), which can result in substantial tax refunds.
The Money Matters publication provides details about the EITC, the availability of free tax preparation services through the VITA program of the Internal Revenue Service (IRS), partner spotlights and helpful tips on how to save your money and make the most of your tax return.
To read the Money Matters publications, visit the Citi Community Development website today.
CFED Awarded $125,000 Grant from Capital One for Innovative Asset-Building and Microenterprise Services Initiative
By Kristin Lawton on 02/08/2013 @ 11:16 AM
Funding will be used to advance the financial security and upward mobility of low-income entrepreneurs.
CFED announced a $125,000 grant today from Capital One Financial Corporation to support work to identify new scalable opportunities to help disadvantaged entrepreneurs achieve upward economic mobility. The grant will facilitate a partnership between CFED and several microenterprise organizations, including Accion Texas, Inc., the California Association for Micro Enterprise Opportunity (CAMEO), the Enterprise Development Group (EDG) in the Washington, DC metro area, and others. Through these partnerships, CFED will promote emerging practices that service providers can implement to ensure that their clients have access to the financial products and skills they need, and are actively using them to make their businesses stable and sustainable.
“Accion Texas, CAMEO, and EDG, all high-performing, innovative leaders in serving low-income entrepreneurs, will be able to elevate their promising practices and cross-pollinate ideas that can help clients achieve financial security and upward economic mobility,” said Andrea Levere, CFED president. “Capital One’s leadership and support is making it possible to extend the project’s impact beyond our four active partners and reach the wider field of microenterprise practitioners, policymakers and financial institutions.”
The Capital One grant will fund a number of the project’s core activities and products in 2013 including:
- In-depth interviews with key staff at the four partner organizations to learn about their clients’ specific financial capability and product needs, and the operational opportunities and obstacles that affect capacity to deliver new solutions.
- Small group convenings to share our findings and identify ways to replicate effective innovations.
- The development of public education materials, such as an Emerging Practices Guide, a Policy Analysis Report, and several Field Innovation Briefs to be disseminated to policymakers, practitioners, financial institutions and other key stakeholders to make them aware of field developments and opportunities to support promising approaches.
“CFED is a leading national intermediary with decades of experience that combines expertise in both microenterprise and asset building to create synergies in support of microenterprises and the self-employed,” said Daniel Delehanty, senior director, Community Development Banking at Capital One. “Through Capital One’s Investing for Good program, we continue to work with organizations like CFED to help microentrepreneurs grow their businesses through capacity building and integration of innovative financial capability training and support that ultimately helps to create more jobs and stimulate local economies.”
About Capital One
Capital One Financial Corporation, headquartered in McLean, Virginia, is a Fortune 500 company with more than 900 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. Its subsidiaries, Capital One, N.A. and Capital One Bank (USA), N. A., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. We apply the same principles of innovation, collaboration and empowerment in our commitment to our communities across the country that we do in our business. We recognize that helping to build strong and healthy communities - good places to work, good places to do business and good places to raise families - benefits us all and we are proud to support this and other community initiatives.
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