Editor’s note: The opinions expressed in this commentary are the author’s alone. Adam Arredondo is CEO of STARTLAND — formerly the Kansas City Startup Foundation — the parent organization of Startland News and the talent programs MECA Challenge, MECA Methods, and Back2KC. This opinion piece was produced independently of Startland News with light editing.
No matter how uncomfortable the pandemic makes you, there are thousands of Kansas Citians and small business owners who are far more uncomfortable, far more scared, and in some cases, hopeless. They live in parts of our community that most who are reading this will likely never visit.
Unprecedented times call for unprecedented action.
Inspiring, innovative, and necessary work is happening every day in response to the COVID-19 pandemic.
Our local elected officials have taken decisive action to flatten the curve. Citizens are adhering to the restrictions. Entrepreneurs have rapidly retooled their businesses, attempting to survive while still serving their community. Parents are tapping into their creativity as they juggle homeschooling and remote work (if they are fortunate enough to remain employed). The list goes on.
Adapting and problem solving in the face of changing circumstances is the essence of entrepreneurship. As we are seeing, Kansas City’s grassroots entrepreneurial spirit is strong.
While in the upper echelon of our community, Kansas City “nice” is stifling the entrepreneurial spirit required to address some of the biggest problems we have ever seen. This moment requires an unprecedented community response to avoid years-long cultural and economic damage. Yet, our community-wide tendency to sugar-coat or simply avoid the uncomfortable truth is keeping that from happening. Meanwhile, frustrated grassroots leaders are desperately leading relief efforts with little or no additional resources.
The fact is that for the first time, our small businesses are leading the recession and as the quarantine extends into a second month, the ugly reality is that the pandemic is also killing local businesses; especially restaurants, social venues, and other local favorites reliant on foot traffic.
We have only heard of a few permanent closures as of yet — including Nick & Jake’s Plaza location, Parkway Social, and One Block South entertainment district — but silently, many other locally-owned businesses have already closed forever with more soon to follow. Many of the unique small businesses that make Kansas City special and worth visiting will be gone without immediate intervention. Yet, almost no one is talking about it.
Why hasn’t Kansas City’s response been bigger, faster, more entrepreneurial?
Why has AltCap not received the lending capacity they need from local banks to help desperate, diverse small businesses — despite receiving more than $30 million in funding requests in the first 72 hours? (And no, this effort is not redundant with the Paycheck Protection Program. Read on.)
Why has Chef Collective KC — a growing cohort of KC’s most prominent chefs — struggled to raise the first $1 million of a $5 million vision to feed the growing number of food-insecure Kansas Citians while saving local restaurants?
Why has Charlotte Street Foundation only been able to raise $120,000 for gig-less local artists after receiving $150,000 of requests in the first 24 hours and over $320,000 to date?
Why has LEANLAB only been able to raise $1 million after discovering that $4.6M of technology is needed to connect Kansas City-area, low-income students — our future leaders — so they can learn from home?
Why are critical, innovative, collaborative efforts like these not being funded?
Our community has repeatedly shown the capacity for much greater generosity. Why not now?
Do those with funding capacity not fully appreciate the immediate, critical need to prop up essential educational, economic, and cultural parts of our community to prevent irreversible damage? Is our lack of civic candor keeping us from having the difficult, necessary conversations? Perhaps we simply aren’t yet the adaptable, entrepreneurial community we aspire to be.
Whatever the reasons, there is nothing but ourselves stopping us from rising above all of this to save the community we love. We must.
With rolling restrictions likely for months beyond the current Stay At Home order; the lasting impacts of this moment are difficult to fathom and are most definitely going to be greater and more far-reaching than we can fathom, especially to our low-income communities and small businesses.
For all leaders and those with means, look in the mirror and ask, “How am I going to be remembered during this time?”
The following letters are to three groups of Kansas Citians who hold the keys to carrying Kansas City through this pandemic; local banks, benefactors of donor-advised funds, and fellow Kansas Citians still receiving full paychecks.
Dear Kansas City-area banks,
Let me first acknowledge that there are some admirable examples of local banks working intentionally to change the statistics and be more inclusive in their lending to women- and minority-owned small businesses. We applaud and appreciate your much-needed efforts.
With that being said, here are the facts: women and people of color are half as likely as white men to be approved for small business loans, according to a recent Federal Reserve survey. This is not your fault alone, but it is your legacy.
Daily, we hear the stories of small business owners who are declined for a loan that might have been their lifeline. These are profitable businesses that employ thousands of people in our community. They have good credit scores. They have sound business management practices. They are small, and therefore, less profitable for you to serve. Banks have hung them out to dry — not just recently, but for a generation.
At the same time, when Community Development Financial Institutions (CDFIs), like AltCap, step up to provide the critical capital that these businesses need in times of crisis, you tell them that their services are duplicative, while in fact, they are cleaning up the banking industry’s mess. If you think I’m crazy, answer this question: When was the last time you made a $15,000 business loan to a person of color?
Yes, PPP loans were available. Yes, technically, you made a few to “small businesses.” The average size of a PPP loan was $250,000. The top industries to secure PPP loans were construction companies (14 percent), professional services, and health services companies. All of these are industries designated “essential” or white-collar professions easily able to work from home. Do they sound like the businesses most in need of help to you?
CDFIs fill a critical community need especially for woman- and minority-owned businesses who are half as likely to get traditional bank financing, as stated above. Our local CDFI, AltCap, knows how to work with these entrepreneurs and will provide essential, time-sensitive financing that could save many local businesses that we love that don’t otherwise have options.
We know that some of you have a war chest of lending capacity. Even if only 1 percent of that capacity is lent to AltCap, the positive impact on our community will be felt for years to come.
So, why are local banks not extending AltCap’s lending capacity for their emergency relief fund?
AltCap has a strong balance sheet with room for leverage. They have 12 years of proven microlending capacity with a default rate of less than 5 percent on their existing microloan portfolio. They have proven their ability to underwrite sound loans quickly and have a waiting list of hundreds of qualified loan applications waiting to be funded.
There’s no excuse. Fulfill your civic responsibility and extend lending capacity to AltCap to help save livelihoods and our local culture.
We are counting on you, as neighbors, to step up in our community’s time of need.
How are you going to be remembered during this time?
Dear benefactors of donor-advised funds,
Let me first start by thanking those philanthropists in the Kansas City area who have led the charge in responding to the COVID-19 crisis. Thank you for launching AltCap’s relief fund. Thank you for establishing a $16M relief fund for nonprofits providing critical community and health support. Thank you for countless behind-the-scenes efforts that won’t be publicized. For those doing everything they can to support, this letter is not intended for you.
Despite this generosity, the fact is that the Greater Kansas City Community Foundation is the 4th largest community foundation in America with more than $3.1 billion of assets under management. According to GKCCF’s 2018 annual report, 2,784 unique donor-advised funds made up 48 percent of total assets or more than $1.5 billion.
While $16 million is a life-changing amount to most, it is a mere 0.5 percent of GKCCF’s total assets, which points toward a substantial amount of additional giving capacity, especially from donor-advised funds.
(For those unfamiliar, a donor-advised fund is a giving vehicle and tax-avoidance strategy that allows donors to receive a full, immediate tax deduction on contributions and then recommend grants at any point in the future. There are no time requirements on giving so donor-advised funds can remain dormant for years.)
This letter is to the hundreds of benefactors of donor-advised funds with hundreds of millions of dollars cumulatively sitting in GKCCF. You have already received your full tax deduction but have not provided the full charitable benefit. Now is the time to keep the promise you made when you took your deduction.
Finance AltCap’s COVID Relief Fund to save diverse local businesses that keep our local culture and economy strong. Fuel the KC Chef Collective’s Community Meals Project to feed the hungry while simultaneously saving local restaurants. Fund Charlotte Street Foundation’s Rocket Relief Fund to provide emergency relief to Kansas City-area artists. Support LEANLAB’s effort to provide needed technology to underserved students — our future innovators and entrepreneurs — so they can continue to grow.
Your community desperately needs you to step up. We implore you to step up. And we know you can.
How are you going to be remembered during this time?
Dear fellow Kansas Citians still receiving a full paycheck,
I, like many of you, was excited to receive a stimulus check last week of $2,400.
But have we stopped to ask ourselves why we received it?
We received it because there are millions of desperate Americans without jobs — 26 million as of April 23 — without childcare, without a safety net who have nowhere to turn.
It would take too long for the federal government to determine who actually needs the lifeline, so everyone who makes less than $75,000 individually or $150,000 as a couple is receiving support. And 80 million of us received it first because we signed up for direct deposit when we filed our taxes.
Yet, those who need the support most are much less likely to even have a bank account, let alone direct deposit there taxes. Therefore, they may not receive critically-needed relief for weeks if not longer.
With that in mind, for those of us — stimulus check or not — that have simply been inconvenienced by the quarantine, challenge yourself to support those less fortunate; give to a COVID-related cause or a person you know that is in need.
My wife and I have given half — $1,200 — of our stimulus money evenly to these four causes and I personally challenge all stimulus receivers that aren’t in desperate need to do the same or more.
When 20 people give $1,200 to AltCap’s COVID Relief Fund, lifesaving relief will be provided to another local business.
When someone gives $1,200 to Chef Collective KC’s Community Meals Project, 400 meals will be provided to hungry Kansas Citians.
When someone gives $1,200 to Charlotte Street Foundation’s Rocket Relief Fund, one artist will receive emergency relief.
When someone gives $1,200 to LEANLAB’s effort to provide needed technology to students, four families get connected for one year.
Beyond these large community efforts, all of us must commit to buying local because up to $93 of every $100 we spend at Kansas City-owned businesses will stay in the local economy as compared to $31 when we buy from national chains.
Here are some great ways to buy local:
- order carryout from local restaurants
- buy from local makers and artists — here or here
- buy this cool T-shirt
Collectively, we can save countless local businesses and ease the burden for our less-fortunate neighbors.
How are we going to be remembered during this time?
It takes a village!
(UPDATE: After several conversations post-publishing, it’s clear that the inclusive work of some local banks was not appropriately acknowledged. This has been added to the letter to banks.)
Adam Arredondo is CEO of STARTLAND — formerly the Kansas City Startup Foundation — a community-building 501(c)3 nonprofit activating a thriving and inclusive culture of innovation in Kansas City through stories, experiences, and talent. STARTLAND is the parent organization of Startland News, MECA Challenge, MECA Methods, and Back2KC.