A Place-Based Approach for Advancing Equity through the Economic Development Administration
As Congress looks to reauthorize the Economic Development Administration (EDA) for the first time since 2004, LISC’s Matt Josephs and Michelle Harati take a look at new bipartisan legislation that offers a place-based approach to expand equitable access to EDA resources.
Federal economic development policies and programs have long played a critical role in fostering opportunity and resiliency for small businesses. The COVID-19 pandemic and resulting economic impacts reminded us of the fragility of small businesses, particularly those owned by economically disadvantaged individuals and those located in disinvested urban and rural communities.
Appropriately, the Department of Commerce’s Economic Development Administration (EDA) received $4.5 billion in supplemental funding – over 10 times its current annual appropriations level – to bolster its role in supporting businesses and communities struggling to recover from the economic impacts of COVID 19, enabling the EDA to demonstrate in real-time that there is unprecedented demand for their investments.
For the first time since its inception, the EDA has also committed to include an equity lens in all of its investments. The EDA identifies equity – which it defines as investments that directly benefit underserved populations and underserved communities – as the highest priority on its list of investment priorities released in the spring of 2021.
We applaud the EDA’s commitment to equity but also recognize that, historically, its programs have generally not targeted those populations or communities with the intentionality needed to meet their needs. EDA’s recent blog post recognizes the need to equitably direct investments and recognizes there is “more that can be done and more to learn… [to] provide more underserved communities and populations much needed resources and to continually evolve our programs to be accessible and best meet those communities’ needs.” With efforts underway to reauthorize the agency for the first time since 2004, it is clear not only that EDA needs significantly higher authorized funding levels (industry advocates are calling for $3 billion annually) but that its programs need to be better aligned to enable economically disadvantaged businesses and communities to flourish.
LISC is therefore calling on Congress to include the bipartisan Revitalizing Small and Local Business Act (RSLBA) as a critical component of the reauthorization of the EDA. The legislation (S.3340/H.R.7451), introduced by Senators Padilla (D-CA) and Wicker (R-MS) and Representatives Carter (D-LA) and Guest (R-MS), includes resources for national nonprofits to provide core operating support, technical assistance, and training to networks of Business District Organizations (BDOs) working on the ground in underserved rural communities and urban neighborhoods.
By leveraging the existing infrastructure of national organizations with local partners, RSLBA would advance equity across EDA’s investments by expanding federal support for place-based economic development initiatives, with a focus on broadening storefront opportunities for businesses owned by people of color. The legislation would also allow EDA to direct resources and technical expertise to communities that have identified commercial corridors and main streets as economic assets in need of revitalization. In many communities, and particularly in rural communities, BDOs are the only local economic development entity connecting entrepreneurs to resources, capital, and physical space for business growth.
The RSLBA also represents a new approach to EDA funding, one that should help elevate EDA’s commitment to equity. Historically, EDA has invested primarily through its regional offices, supporting planning, implementation, and construction for businesses to expand local and regional economies. While these methods have proven successful for larger-scale economic development, the small businesses that tend to populate main streets and neighborhood commercial corridors in disinvested communities –and in particular, the BDOs that serve them – are often left out. There is currently no program at EDA, or any other federal agency for that matter, focusing on BDO capacity-building.
A robust economic development framework must invest in the success of BDOs, entrepreneurs, and the local business districts in which they operate. The pandemic illustrated how historic underinvestment in some communities left many small businesses and business districts more vulnerable to economic shocks and limited growth opportunities. An essential component of supporting small businesses is supporting main streets, commercial corridors, and business districts. These places are critical community assets that respond to local market needs and create vital spaces for commercial activity and social interaction. When they thrive, they attract additional investments to a community, further advancing growth and opportunity for residents.
The RSBLA recognizes that a comprehensive approach is required to promote equitable economic development and provides EDA with the funding and administrative means to do so. We applaud Senators Padilla and Wicker and Representatives Carter and Guest for introducing this bipartisan legislation. It’s a novel approach to helping advance equity, by directing resources and technical expertise to small organizations working in hard-to-reach rural and urban communities and with disadvantaged small businesses. We urge Congress and the Biden administration to enact the RSBLA as part of the reauthorization of EDA.
Endorsing Organizations
The Revitalizing Small and Local Businesses Act is endorsed by the following national nonprofit organizations that collectively represent thousands of local, state, and regional organizations and small businesses:
- Association of Enterprise Opportunity
- Council of Development Finance Agencies
- Co.Starters
- Forward Cities
- Local Initiatives Support Corporation
- Main Street America
- National Alliance of Community Economic Development Associations
- National Association for Latino Community Asset Builders
- National Association of Affordable Housing Lenders
- Rural Community Assistance Partnership
- Small Business Anti-Displacement Network
- Small Business Majority
- Small Business Roundtable
- United States Black Chambers
- United States Hispanic Chambers of Commerce
- Urban Manufacturing Alliance
Matt Josephs, Senior Vice President, LISC Policy
Matt manages the team that is responsible for developing LISC’s federal policy agenda; communicating this agenda to LISC employees, board members, funders and other stakeholders; and pursuing this agenda through engagement with members of Congress and other federal officials.
@LISC_policy
Michelle Harati, Senior Policy Officer
Michelle advocates for federal policies to broaden pathways to opportunity, supporting multiple LISC national programs, including: economic development and small business, workforce development and financial capability, creative placemaking, and AmeriCorps. Before joining LISC, she worked with the City of San Diego Economic Development Department as a Community Development Specialist. She was also a Senior Asset Building Coordinator at the International Rescue Committee's (IRC) Financial Opportunity Center in San Diego and served two terms as an AmeriCorps member. Michelle holds a B.A. in Political Science from the University of California, Los Angeles, and a M.P.P. from Georgetown University.
@michelleharati