Friends in the White House

During President Obama's first State of the Union Address, he outlined several initiatives he would like to focus on during the remainder of his Presidency. One of those initiatives was to focus on small businesses. President Obama has called small businesses "one of the biggest drivers of employment that we have." In addition to advancing the small business community, Obama has set aside funds to spur social innovation. This is good news for those interested in pursuing social entrepreneurship.

With regards to the small business assistance, the President has outlined a plan to see small businesses possess lower health care costs. He will do this by providing a small business health tax credit that will help employers provide quality health care to their employees. This refundable tax credit offers up to 50% on premiums paid by small businesses on behalf of their employees. Obama's small business health tax credit will work alongside other aspects of his health care plan to lower costs and improve competitiveness for America's small businesses.

Barack Obama also believes that his administration needs to reduce the burdens on small businesses. To do this Barack Obama and Joe Biden will eliminate all capital gains taxes on small and start-up businesses to encourage innovation and job creation. By offering a "Making Work Pay" tax credit to almost every worker in America, Obama hopes to reduce the double taxation's that are often experienced by self-employed business owners who have to pay both the employee and employer side of the payroll tax.

One of the biggest assistance measures being offered to small businesses is the expansion of loan programs. Access to capital is a top concern among entrepreneurs seeking to grow their business or foster a start-up. With the Small Business Lending Reauthorization and Improvements Act, the Small Business Administration's loan and micro-loan programs which provide start-up and long term financing will be expanded. This bill increases financing options that cannot be received via normal channels, helping entrepreneurs get loans, expand their network of lenders, and simplifying the loan approval process. This bill also fosters a national network of public-private business incubators. Business incubators facilitate the critical work of entrepreneurs in creating start-up companies. They offer help designing business plans, provide physical space, identify and address problems affecting all small businesses within a given community, and give advise on a wide range of business practices, including reducing overhead costs.

Zeroing in on social innovation, the Obama administration has created several initiatives that are related to areas that social entrepreneurship tends to address. One of which is to support innovation and high-tech job creation. President Obama believes that their needs to be a concerted effort applied to the creation of new energy sources and the proliferation of the green industry. In doing so, the Obama administration has established a Research and Development tax credit that assists businesses with the creation of high-paying jobs.

There will also be assistance to businesses effected by Hurricane Katrina. Upon taking office President Obama introduced the Hurricane Katrina Recovery Act to rebuild the Gulf Coast area. This bill increased the goal for procurement contracts awarded to small businesses owned and controlled by socially and economically disadvantaged individuals. It will be used for recovery and reconstruction activities related to Hurricane Katrina.

Promoting affordable, high-speed Internet access in rural, urban and minority communities is also a top priority. The lack of broadband access in those areas has created a digital gap between those that have the Internet and those that do not. This creates a limit to the potential of many urban and rural companies and their eventual success. Obama also ties this initiative back to those affected by Hurricane Katrina as they have severely suffered from a lack of IT infrastructure. With the creation of new technologies, better use of the nation's wireless spectrum, and new tax and loan incentives, Obama and Biden believe that full broadband access can be achieved.

Finally, President Obama has created the Social Innovation Fund. Through a grant competition, nonprofits are given the opportunity to battle back against the lack of resources and support they often face. In an effort to address some of our nation's most critical social challenges, the social innovation fund will identify, fund, and supportpromising nonprofit organizations working in low-income communities. The premise is easy. It offers nonprofit critical support with respect to management, staffing, data collection, fundraising, and other challenges that they will need to overcome as they grow.

The First Lady notes that "by focusing on high-impact, results-oriented non-profits, we will ensure that government dollars are spent in a way that is effective, accountable, and worthy of public trust." To hammer that issue home, the social innovation fund will offer incentives for nonprofits to evaluate their effectiveness. Grant makers will be true partners in these evaluation efforts and be jointly held accountable for the results.

The fund will provide about seven to 10 grants of $1-million to $10-million each to existing grant-making organizations. Those groups, in turn, will award annual grants of at least $100,000 to nonprofit groups for projects in the areas of economic opportunity, youth development, and healthy living. Both the grant makers and the nonprofit groups must provide equal matching funds.

Organizations that wanted to apply for social-innovation money must have submitted a letter of intent by March 1, with applications due by April 8. The awards will be announced by July.

What do you think of the White House's efforts? And do you think we will see the creation and advancement of more small businesses and social enterprises?

Photo courtesy: Lana's Hope