How Can Policymakers Restart America’s Entrepreneurial Engine?
January 29, 2015
In a report released by the Commission on Entrepreneurship and Middle-Class Jobs at this year’s Milstein Symposium, a convening held at the University of Virginia’s Miller Center dedicated to restoring the American Dream, the authors deliberate the significant barriers to American entrepreneurship and postulate potential policy recommendations. Ultimately, the authors propose five ideas that they believe would help rebuild the American dream by promoting entrepreneurship:
- Unlock Capital for Main Street Entrepreneurs: The small businesses in America’s small towns, or “Main Street” entrepreneurs, often have difficulty accessing the capital needed to grow their businesses, a problem exacerbated by the Great Recession’s negative impact on community banks, which had historically been these businesses’ primary lender. As a way of increasing access to capital, the authors propose restoring the Community Reinvestment Act of 1977 and increasing investments in Community Development Financial Institutions Fund.
- Accelerate Impact Investing through PRIs: Program-related investments (PRIs) are a financial tool used by foundations to provide enterprises that support their mission with working capital (loans, loan guarantees, or equity investments). While currently foundations must determine whether a proposed PRI meets their charitable purpose, the commission proposes revising federal regulations that govern PRIs so that the IRS would make this ruling, allowing the foundations to spend more resources on conducting due diligence on which programs warrant investment.
- Build a Regulatory Roadmap: The commission recommends the creation of a new website that aggregates all relevant open data on federal, state, and local regulations such as incorporation filing and registration requirements and information on tax regulations, licensing, and permitting. This website, which would also include benchmarking and tracking tools, would help new and emerging businesses manage and navigate the oftentimes burdensome regulatory process.
- Empower the Next Generation of Entrepreneurial Leaders: In order for entrepreneurship to serve as an engine for middle-class job creation and access to the American Dream, a broader range of citizens must be motivated to become entrepreneurs. As a way of mobilizing this next generation, the commission proposes targeting K-12 students through competitive entrepreneurship competitions, and through other programs that expose students to an entrepreneurial mindset.
- Equip Civic Leaders to Build Entrepreneurial Ecosystems: As a way of helping civic leaders create “entrepreneurial clusters,” or geographic areas with intellectual, financial, network, and human capital for entrepreneurs, the commission proposes creating a toolkit containing learning modules, action items, and information on assessing ecosystem assets, supporting entrepreneurial culture, engaging large businesses, and working with universities, among others. This toolkit would help connect these civic leaders from across the country and provide opportunities to share best practices and discuss their experiences.