Impact Report of the New Economy Initiative (2016)
An analysis of NEI’s 2008-2015 grants shows how NEI became a catalyst in Detroit’s revival

Capital Access Report (2018)
Report reveals available capital to underserved businesses in Detroit

Community of Opportunity (2019)
Analysis describes the needs of entrepreneurs and identifies 200+ unique assets for them across southeast Michigan

Entrepreneurial Reciprocity (2019)
Report highlights the relationship between entrepreneurs and community engagement

Entrepreneurship & Economic Opportunity Report (2020)
Research uncovers how residents and entrepreneurs perceive small businesses

At that time, nobody was filling that role or recognizing the importance of small business to the economy. “On the small business side, no one was coming. The public sector wasn’t coming, the private sector wasn’t coming. It became clear that if we’re driven by charitable purpose in the context of business development, we’ve got to provide the support for small businesses in underserved communities,” recalls NEI Director Pam Lewis.

NEI was also the catalyst for loan relief in response to COVID-19. This was evident when NEI was able to quickly spring into action and coordinate among many funders and BSOs, which it already had long-established relationships with, to deliver immediate relief to small businesses in Detroit. The pandemic affected business operations, effectively shutting down the market for brick and mortar businesses; many of them had overhead payments to make to keep their spaces and businesses alive. For some, making loan payments interfered with working capital to pay employees and keep the business afloat.

NEI’s loan relief program provided immediate assistance to existing borrowers of NEI-funded community development financial institutions (CDFIs) and microfinance providers that were part of Detroit’s coordinated small business support network. This program relieved borrowers of loan payments for six months, freeing up cash to address other capital needs, protect credit scores, and stabilize the balance sheets of nonprofit community lenders.

NEI administered grants to the nonprofit lenders covering borrower loan payments based on the size of the monthly loan balance of each lender and the number of eligible borrowers. Eligibility was defined by borrowers in good standing and having at least three employees. A total of 260 borrowers received the benefit, at a total cost of $1.1 million.

“Success comes from letting the people who are knowledgeable about the work to actually build their agenda and then provide them the support to move their agenda forward,” says NEI Associate Director Don Jones. “Set the table and get out of the way.”

DIVE DEEPER: Read about how NEI’s Neighborhood Business Initiative Worktable influenced business support organizations to get out of their silos to work together on projects that supported small business growth in neighborhoods.

This work had diffuse outcomes that NEI influenced, such as

• launching Detroit Innovation Fellowship that identified, promoted and supported neighborhood-based innovators driving change in their neighborhoods and
• influencing and working with Ford Motor Company, and other local and national innovators, to launch mobility innovation challenges based on an ethnographic study of residents needing public transportation to get to work or job training.

NEI has remained on Brookings’ radar and NEI Director Pam Lewis now serves as a nonresident senior fellow at the institution’s Metropolitan Policy Program. In addition to Brookings, J.P. Morgan Chase Bank, the Initiative for a Competitive Inner City (ICIC), and other national actors have been active partners and participants in the sustenance of NEI’s network of inclusive small business support organizations.

Within the philanthropic sector, Philanthropy for Active Community Engagement (PACE), joined forces with NEI in 2019 to research and develop Entrepreneurial Reciprocity: The Case for Entrepreneurs’ Engagement in the Community. The report discusses the relationship between entrepreneurship and civic engagement.

NEI has also partnered with the Kauffman Foundation, initially on accelerating innovation efforts with TechTown via Shorebank Enterprises, and then over time with Kauffman’s ecosystem strategy work.

Some of NEI’s most successful storytelling initiatives have included:

Southeast Michigan Startup
Online series that showcased local gazelle companies that were perfecting new and innovative products, creating jobs, and generating lots of revenue. Content included everything from the stories behind the entrepreneurs and the investors that backed them, to the resources they leveraged and the challenges they faced.

High Growth Happy Hour
At this series of events, a founder of a successful larger company, such as Garden Fresh or Shinola, shared stories about launching and scaling a company in southeast Michigan; this was followed by an informal Q&A session and networking with an audience of aspiring high-growth entrepreneurs.

Startup Story Night
In partnership with local media outlets, NEI hosted the Startup Story Night series to elevate the spotlight for local entrepreneurs and serve as a forum for inspiration and practical tools for would-be startups.

In Good Co., Detroit, ingoodcodetroit.com
Each month, the year-long In Good Co., Detroit campaign highlighted Detroit business owners from diverse industries and backgrounds. In addition to stories, In Good Co. featured a directory of hundreds of business support resources that are available at InGoodCoDetroit.com.

CFSEM wanted to ensure that this type of grantmaking would be consistent with its charitable status under Section 501(c)(3). The legal opinion reviewed the circumstances of NEI, the geography proposed to be served, Invest Detroit’s proposal, and IRS revenue rulings that help to indicate what type of economic development activities are appropriate for 501(c)(3) organizations.

Based on the review of IRS revenue rulings, the legal opinion advised that the following factors are particularly important in determining whether economic development activities are consistent with the requirements of Section 501(c)(3):

• The region being served is deteriorated and in need of revitalization.
• The activities are designed to attract businesses that would not, but for the assistance provided, choose to locate in the area.
• The businesses will provide jobs for unemployed and underemployed residents of the community.

In 2017, CFSEM revisited the question more broadly, asking for a legal opinion to look at the purpose of grants 1) to revitalize the economy of distressed areas in metropolitan Detroit by providing financing to entrepreneurs and businesses in the region and 2) to convene educational and networking events to encourage innovation and entrepreneurial support, placemaking and talent attraction across southeast Michigan.

This 2017 review concluded:

“The NEI program continues to fit squarely within the four corners of charitable economic development activity as contemplated by Section 501(c)(3) and current IRS regulatory guidance. The program is targeted to a distressed area whose population is experiencing very high rates of unemployment and underemployment and far higher than average poverty rates. The grants are to charitable organizations that in turn provide financial assistance to individuals and businesses in order to promote the creation of jobs and relieve poverty. The new and emerging businesses serve as intermediaries to help the poor and distressed through the creation of badly needed jobs in the region.”

Any organization looking to do similar work should seek an independent legal opinion.

Detroit, together with the world, faced another crisis in the spring of 2020 as the economic impact of the pandemic became clear. The existing relationships with and among NEI funders and grantees again proved valuable as they were well-positioned to swiftly help lead a response to the small business crisis. As a result, $3 million was raised in a few short weeks and – tapping into NEI’s reserves – over $5 million in immediate relief/response grants were made.

The relief grants relied upon the members of the network to provide grant-based liquidity and capital to microbusinesses and to make in-depth practical assistance available – resulting in over 2,000 microbusinesses receiving grants or assistance.

Both of the responses above illustrate the enormity of relationships across philanthropic organizations that had been built over the years through NEI’s leadership.

CONNECT 313 is a city-wide, data-driven digital inclusion strategy that brings countless organizations together with the goal to make Detroit a national model for digital inclusion and ensure all Detroiters can access the digital world and the opportunity it brings. NEI made sure its grantee business support organizations, including community development organizations, were engaged with this work for their own organizations and for the small businesses they supported.

The Equitable Internet Initiative supports and develops historically marginalized residents to build and maintain neighborhood-governed internet infrastructure that fosters accessibility, consent, safety, and resilience. The initiative was made possible through new infrastructure provided by Rocket Fiber and largely financed by NEI. The project was designed and implemented by the Detroit Community Technology Project, a sponsored project of Allied Media Projects (AMP).

The Detroit Innovation Fellows (DIF) is a talent development program that connects, promotes, and invests in social entrepreneurs who are leading projects to transform their communities in the cities of Detroit, Hamtramck, and Highland Park. DIF fellows are identified through a storytelling process informed by a series of community listening sessions. Fellows receive a stipend to help them further their social innovation projects and attend quarterly convenings to encourage collaboration among them.

NEI events were always incredibly diverse; it was intentional to show diverse faces to demonstrate that a southeast Michigan entrepreneur could be anyone. Its High Growth Happy Hours, Startup Story Nights, grand galas celebrating small business achievements, all were emblematic of events that brought people together to see and experience the community of businesses and those who support and value them.

The NEIdeas: Rewarding Ideas for Business Growth challenge targeted underserved small business owners. The program promoted inclusivity, from its initial outreach into the neighborhoods using trusted connectors, to how awardees were selected, to where they were selected from. Read details about how this project was a game changer for existing small businesses in underserved communities in the NEIdeas Case Study.