Proposal for Emerging Opportunities Program 2016

1 Proposal for Emerging Opportunities Program 2016 Submit application to EOPapplications@cityofmadison.com Deadline: 12:00 pm (noon) on Friday, March 18, 2016 LATE APPLICATIONS WILL NOT BE ACCEPTED. Please limit your proposal and responses to the form and space provided. Any materials submitted in addition to this application form will not be considered in the evaluation of the proposal. Do not attempt to unlock or alter this form. If you need assistance with this proposal or are unclear about how to respond to any questions please contact CDD staff at 266-6520. Agency or Group: Title of Proposal: Contact Person: Nehemiah Community Development Corporation Amount Requested: African American Emerging Entrepreneur Loan Fund Carrie Vanderford Sanders $5,200.00 Address: 655 W Badger Road, Madison, WI 53713 Telephone: 608.257.2453 x 238 E-Mail: Is this Group a 501 (C) (3)? Applicant Organization founded (Year): Name of Fiscal Agent (if Applicable): Fiscal Agent Contact Person: Project Description: ( Approx. 20 Words) cvsanders@nehemiah.org Yes or No Yes 1995 N/A N/A If no, applicant will need to secure a fiscal agent with 501 (C) (3) status The African American Entrepreneur Loan fund will increase business ownership by African Americans. 1. Emerging Need or Opportunity: (5000 characters) Please describe the emerging need or unanticipated opportunity that warrants City resources and attention at this time: Madison's racial inequality is evident not only only in lower high school graduation rates and higher incarceration rates for African Americans in our community but also in the challenges and barriers that African American entrepreneurs encounter in obtaining essential start-up capital for wealth-creating, job creating small businesses. Madison has no shortage of talented African Americans with dreams of starting and operating successful businesses. What we do have a shortage of is financing for these start-up businesses. Far too many African American entreprenuers lack the personal assets or strong credit history or business track record that is necessary to qualify for a traditional business loan from a traditional lending source. Access to start-up capital for these African American entreprenuers has been extremely limited. To reduce or eliminate racial inequities means doing more than solving presenting problems - it means capitalizing on opportunities to build wealth within the African American community to ensure these Madisonians enjoy the same high quality of life as every other resident of Madison. The opportunity exists to build a strong culture

of entrepreneurship and local business ownership within the African American community, but to do so there is an acute need for these entrepreneurs to have access to flexible and affordable financial capital that is complemented by ongoing professional business coaching and advisory services. We have had conversations with many established African American business owners as well as aspiring business owners regarding their experience in starting a business in Madison. We found, time and time again, that one of the most enduring and signfiicant barriers to African American entrepreneurial success in Madison is the lack of access to flexible and affordable financial capital necessary to move from a business plan to a succesful start up to a stable, growing business. With the number of local banks it may seem unlikely that a good idea for a business and a solid business plan would lack for financing - but that is exactly what has been happening for African American entrepreneurs. While all entrepreneurs face hurdles when they start their businesses, its clear that the starting line for African American entrepreneurs isn't the same as majority, white entrepreneurs. Since there is no lack of talent, hardwork and or dreams in the African American community there must be another explanation for why so few African Americans in our community become business owners. We know from our work in the African American community that a significant barrier for African American entrepreneurs is the lack of access to flexible, affordable financial capital - particularly for individuals who do not have significant personal assets (such as equity in a home) or strong personal credit or a long track record of business succcess. There is a need in our community for a loan fund which will be able to carefully examine a start-up plan and assess its risk and make key loans which are packaged together with business coaching and professional advisory services. This type of loan fund, the one we propose, not only meets a longstanding unmet need in our community but it capitalizes on the emergin opportunities we have as we work together in our community to reduce and eliminate racial disparities. 2. Applicant Organization or Group: (5000 Characters) Please briefly describe the history and structure of your organization. Include information about staffing, your board and/or volunteers. Please describe any successes you have had in the areas of programming or the project described in this proposal. 2

The Nehemiah Center for Urban Leadership Development (Nehemiah) was created in the mid 1990's in response to unmet social, academic and spiritual needs of at-risk and disenfranchised African American and biracial children in the greater Madison community. From its beginnings we have been an organization whose services grow out of our deep connection with the community and its residents. Nehemiah serves the under-resourced and often disconnected population of the greater Madison area with an emphasis on the African American family. Nehemiah addresses the needs of the entire family by focusing on spiritual issues, economic needs and academic success. We inspire transformation by building meaningful relationships, providing coaching and mentoring, creating peer support groups and offering mediation and advocacy. In order to interrupt the cycle of poverty, racism, and discrimination that many families face, we concentrate on prevention, early intervention, education and restoration. Nehemiah is led by Rev. Dr. Alexander Gee, Jr., President and founder and we are guided by a board of community volunteers who contribute their professional experience and talents to ensure we continue to be an effective non-profit. Our current board includes business owners and other professionals who contrinbute valueable expertise to all of our programming. Current board members include Eric Farnsworth, Kirbie Mack, Dr. Floyd Rose, Anthony Timmons and David Hart. In addition to our board we will be utilizing volunteers as subject matter experts who will present to our bi-weekly Lending Circle learning communities for Borrowers. Addtiionally we will have a Lending Committee, comprised of five to seven community volunteers (predominantly African American) who will review and approve prospective loans. Nehemiah's program staff are led and supervised by Rich Henderson, Executive Manager. Rich has more than 25 years of experience leading teams, increasing cultural competence and mobilizing and supervising front-line program staff. Currently we invest in three primary areas - Youth Leadership Development (K-12), Reentry Services and Economic and Community Development. In 2016 Nehemiah hired Carrie Vanderford Sanders, a skilled professional in economic and community development, to lead the planning and implementation of a new comprehensive strategy that will result in new investments in neighborhoods in which we work and support entrepreneurship that builds personal and community wealth in Dane County's African American community. Our community and economic development work includes: (a) affordable housing development, (b) a loan fund providing low-cost capital and advice to African American entrepreneurs creating access to quality, living wage jobs in communities of color, (c) job training opportunities for youth and adults that result in family-sustaining wage jobs; and (d) commercial development which supports businesses run by and for Madison's African American community. Nehemiah has earned a reputation as a trusted partner within the African American community and our past successes in a wide range of areas has built the foundation on which we will be building our intiatives in community and economic development. 3. Intended Service Population: (2500 characters) Please describe the intended service population (e.g., where they are located, ages, ethnicities, income ranges, English language proficiency etc.). Our project will primarily serve emerging African American entrepreneurs. We will reach out community wide to invite applications for funding; however, we anticipate our greatest impact will be in neighborhoods which have historically been underserved with respect to access to financial capital for African Americanowned entrepreneurial efforts. These entreprenuers may be at the early stages or they may have made initial financial investments and now need finanical capital to stabilize or expand their businesses. A key target population for our loan fund are African Americans who do not have access through their own personal credit to essential business loans nor do they have a proven track record for their business idea. Our loan fund will meet the needs of African American start-up entrepeneurs who lack personal credit or personal financial capital and need not only access to flexible, affordable financial capital but also solid advisory services as they embark on their entrepreneurial efforts. 3

4. Innovation: (5000 characters) How does this proposal reflect a new or innovative approach to the stated problem? Traditional business lending practices all too often have resulted in low access to financial capital for African Americans, many of whom do not have personal equity or strong personal credit to support a traditional loan application. Nor do these early stage, emerging entreprenuers have a track record of business success to assure a bank that they loan is likely to be repaid on time. Our loan fund will open up the opportunity for financial capital to be invested in our community with new business start-ups as well as in expansion of existing businesses owned by African Americans. Our loan fund will bring flexible, affordable financial capital to a greatly underserved market. Another innovative aspect of our loan fund, is our commitment to support those we lend to with active, ongoing Lending Circles. Lending Circles are a recognized international best practice that results in increased rates of success for start-ups. These circles, meeting twice monthly, will be comprised of loan fund borrowers facilitiated by a seasoned business executive and coach. The circles provide accountability, support, problem-solving cohorts and intentional directed learning activities. These circles will also benefit from expertise which is provided to the group to ensure they have essential professional advisors supporting their success.. 5. Project/Program Goals: (5000 characters) Please describe the specific goals, objectives and intended measurable impacts of this program/project. Include the number of people you expect will benefit from this project. During year one of our Loan Fund we will lend up to $100,000 to five to ten emerging, early stage, entrepreneurs. We anticipate these loans to range in size from $5,000 to $20,000. The length of repayment for each loan will be individually determined to ensure business success, ranging from as short as twelve(12) months to as long as three (3) years. Listed below are specific year one goals: a. To do community outreach in collaboration with our partners with the result that 15 to 20 people participate in our loan fund activities including our business advisory services. b. To make at least five loans to African American entreprenuers who have been unable to obtain business capital through conventional sources. c. To convene and facilitiate at least one Lending Circle in support of our loan fund participants who will meet bi-weekly for the duration that a person is in repayment of their loan. d. To assist aspiring entrepreneurs who have not yet obtained funds through our loan program by ensuring they receive appropriate business coaching and advisory services. Our longer term goals include: A. Increasing the amount of loan capital we have available and have out working in the community. B. Increasing the number of businesses owned by African Americans in our community C. Promoting business growth, including the creation of family sustaining wage employment, by our African American entreprenuers.. 6. Program/Project design: (5000 characters) Please describe structure of proposed program or project, hours of service/schedule, staffing, curriculum or project/service structure, etc. Carrie Vanderford Sanders, Nehemiah's Director of Community & Economic Development will lead the loan fund program, investing.25 FTE into this role. Carrie's team will include an experience Lending Circle Facilitator and guidance and support from Nehemiah's Executive Manager, Rich Henderson. A team of volunteers, all African American business people, will serve on the Local Review Fund team and will provide advisory services to loan applicants. In addition. we anticipate that our loan fund participants will benefit from the collaborations we are building with community organizations such as WWBIC and the Black Chamber of Commerce. 4

The African American Entrepreneur Loan Fund's mission is to provide low-cost capital to African American entrepreneurs who will bring value (living wage jobs, economic input to the City etc.) to the Madison community. We seek to build wealth within the African American community in a manner which is sustainable and beneficial to the greater Madison community. Our loan fund has been made possible because of a socially responsible investor who has agreed to provide Nehemiah with a low-interest (2%) $100,000 loan to serve as our initial loan fund capital. We are creating a sustainable loan fund by (a) leading out these funds at a rate of 5-6% to our African American entrepreneurs, (b) supporting these entrepreneurs and promoting success through the use of Lending Circles and advisory services and (c) working to increase the amount of capital available for loans. Nehemiah has already sought and received a $10,000 donation to pay a portion of the costs associated with starting and operating the loan fund. We anticipate that a grant through the Emerging Opportunities Program will complete our fundraising for our loan fund program start-up costs. Carrie Vanderford Sanders will underwrite the proposed loans and present an applicant package to a Lending Committee for their approval. The Lending Committee will include Nehemiah staff and community volunteers with relevant experience including established successful African American entrepreneurs, individuals with expertise in business lending, legal expertise and key business skills such as marketing and human resource management. Our loan fund will utilize what is known as a circle or peer-lending model in which the borrowers meet regularly (bi-weekly) as a small group to discuss their goals, challenges and successes. This group will be facilitated by a paid, trained, experienced business coach. Our business loan rates and terms will vary dependent on the type of risk associated with the loan. We will lend for relatively short terms (three years or less), providing that initial funding and then having our loans repaid so we can assist others in launching their businesses. We anticipate that a successful loan repayment to our loan fund will open up opportunities for these young businesses to obtain any further capital they need for business expansion from other local, more traditional, lending sources. In addition to lending African American entrepreneurs essential capital we will provide customized business technical assistance services including: business plan development, market/feasibility assessment,and topics such as understanding business financials (pre and post loan). We will offer one-on-one business coaching (either in-house or through our partner organizations such as WWBIC) and support their transition from entrepreneur to owner/manager/employer. In addition we will offer access to credit building strategies that support personal financial stability while we are assisting them as business owners in developing long-term plans for business growth and expansion. 7. Community Engagement: (2500 characters) Please describe how community, residents and program and/ or project participants were engaged in the development of this proposal. The evolution of Nehemiah's Loan Fund is directly connected to our conversations with our community partners. A local business person approached Nehemiah with an opportunity to serve as a lead investor in a loan fund targeted to meet the needs of eary stage emerging African American entreprenuers. Those intitial conversations branched out to conversatoins with others in the local business and faith community and these conversations helped crystallize our commitment to using a loan fund to increase African American business ownership and success. As we have initiatied our loan fund we have reached out to African Americans seeking financial capital to learn from them their unique needs and challenges. Our loan fund practices have been shaped by those conversations. 5

8. Collaboration: (2500 characters) Please describe the level of involvement with other service providers, schools, funders, government bodies, or other public or private stakeholders in the development of this proposal and its expected implementation. As we have explored and initiated our Africa American Entrepreneur Loan Fund we have been reaching out to several potential partners and collaborators. Our research and connections with others has helped us identify the need, the population to be served, the type of loan products that needed; the type of advisory, wrap-around services needed for borrowers; and the type of policies and procedures which should be in place for the operation of the loan fund. To date we have estalbished the following connections with others in the community and as we launch our loan fund we will continue to build working relationships with other public and private stakeholders. A few of these key stakeholders are: A. Our Investors, currently only one private individual is funding our loan fund. We expect the number of private investors will increase as we gain a track record of repayment from our borrowers. An increase in the number of investors will result in an increase in the number of loans we can authorize. B. We have extended invitations to key individuals to participate as part of our Lending Committee and while we are not yet ready to publicly announce this committee, we are excited at the caliber of private citizens willing to invest their time and talents into our effort to increase business ownership by African Americans. C. Our Lending Circle wil be led by an established business consultant with a track record of helpnig entrepreneurs succeed. In addition, guests will join the Lending Circles to provide information on topics ranging from business planning, business insurance, cash flow analysis, and more. D. We have reached out to the Black Chamber of Commerce and the Wisconsin Womens Business Initiative Corporation as key partners in recruitment of potential borrowers and provision of advisory services, respectively. 9. Proposed Timeline for Implementation: Activity Estimated Start and Completion Dates Orient & Launch Lending Committee 4/15/2016 Start origination activities to identify and solicit loan applications from qualified borrowers 5/1/2016 Underwriting and presentation of loans to Lending Committee for review with appropriate action steps if approved 6/1/2016-5/30/2017 Lending Circles begin meeting, bi-weekly 6/1/2016-5/30/2017 Loans are monitored and corrective actions taken as needed 6/1/2016-5/30/2017 10. Funding: (500 characters each) a) What other funding have you sought and/or received to support this project? Nehemiah has a commitment from a local business owner who is serving as our key investor, putting up $100,000 in to the revolving loan fund. This investor anticipates earning interest on these funds at 2% and he is supporting the work through an outright donation of $10,000 to cover start-up 6

administrative costs. Nehemiah has raised funds that cover 50% of the cost of the Loan Fund's Director. b) Do you anticipate future funding needs from City sources associated with this proposal? Please describe. The city's initial investment will assist us with this start-up. While we belive any City investiment in promoting African American business ownership will benefit the city, we do not anticipate requiring additional city funding for our loan fund to succeed. c) Has your organization received funding from the City of Madison Community Development Division, City of Madison CDBG office, Community Services, the Emerging Opportunities Program or the former Emerging Neighborhoods Program in the last 5 years? Yes No 11. Budget: Summarize your project budget by estimated costs, revenue, and fund source. BUDGET EXPENDITURES TOTAL PROJECT COSTS AMOUNT OF CITY $ REQUESTED AMOUNT OF NON- CITY REVENUES SOURCE OF NON- City FUNDED PORTION A. Personnel Costs (Complete Personnel chart below) 1. Salaries/Wages (show detail below) 14,835 3,000 11,835 Nehemiah 2. Fringe Benefits and Payroll Taxes 1,483 300 1,183 Nehemiah B. Program Costs 1. Program supplies and equipment 1,500 1,500 0 2. Office Supplies 3. Transportation 4. Other (explain) 4,750 400 4,350 Nehemiah C. Space Costs 5. Rent/Utilities/Telephone 1,000 1,000 Nehemiah 6. Other (explain): Nehemiah D. TOTAL (A + B + C) 23,568 5,200 18,368 Explanation of Other expenses: (500 characters) Annual interest expense on the loan capital: 2.00% on $100,000 = $2,000 Honoraria for Lending Circle Guests = $25 for 30 guests = $750 Template loan documents drafted by Attorney and approved by Nehemiah staff = $2,000 12. Personnel Chart: Please list all paid staff that will be working on the proposed program/project. Title of Staff Position F.T.E.* Proposed Hourly Wage* 7

Title of Staff Position F.T.E.* Proposed Hourly Wage* Nehemiah Director of Community & Economic Development.25 $20.00 Lending Circle Facilitator.03 $50.00 Nehemiah Executive Manager.03 $23.00 TOTAL.31 *FTE = Full Time Equivalent (1.00,.75,.50, etc.) 2080 hours = 1.00 FTE Please identify FTE that will be spent in this project. *Note: All employees involved in programs receiving City of Madison funds must be paid the established Living Wage as required under City of Madison Ordinance 4.20. Effective January 1, 2016 December 31, 2016, the Living Wage is $12.83 per hour. $ $ 13. Fiscal Agent Relationship (if applicable): If applicant organization is not a 501c (3) this section must be completed. If applicant is a 501c (3) please skip to the Signature Page. Fundamental expectations of the Fiscal Agent and Applicant relationship: The Fiscal Agent should read the EOP application and have some confidence that the applicant agency will be able to successfully implement the proposed project or program. The Fiscal Agent will accept allocated funds from the City of Madison for the identified program or project and reimburse the applicant for expenses incurred performing the work of the contracted program. The Fiscal Agent and the applicant agency will decide who will provide and purchase the necessary insurance coverage for the identified program. The Fiscal Agent will ensure that the funded project or program is in compliance with City of Madison Purchase of Service Contact requirements, including but not limited to Living Wage requirements, Non Discrimination and Affirmative Action, and equal benefits protections. Applicant is expected to provide the Fiscal Agent with the Fiscal Agent Commitment Form. Please indicate date and staff person that received this form. Date: 03/10/2016 Staff person: Carrie Vanderford Sanders Position: Director of Community & Economic Development Telephone Number: (608) 257-2453 8

-SIGNATURE PAGE- City of Madison Contracts: The following information is provided in order to outline city requirements that will apply if your proposal is funded. All allocated funds will be administered through contracts with the City of Madison, community Development Division. If funded, the City of Madison reserves the right to negotiate the final terms of a contract with the selected organization. If funded, applicants will be expected to attend a mandatory meeting on contracting requirements the week of November 17. City purchase of service contracts include requirements regarding non discrimination, and consideration of vulnerable populations along with specific requirements regarding the following three areas: 1. Affirmative Action: If funded, applicant hereby agrees to comply with City of Madison Ordinance 39.02 and file either an exemption or an Affirmative Action Plan with the Department of Civil Rights. A model Affirmative Action Plan and instructions are available at http://www.cityofmadison.com/dcr/aaplans.cfm. 2. Living Wage Ordinance: All employees involved in programs supported by City of Madison funds must be paid the established Living Wage as required under City of Madison Ordinance 4.20. The Living wage effective January 1, 2016 is $12.83 per hour. For more information on Living Wage requirements, go to http://www.cityofmadison.com/finance/wage/. 3. Insurance If funded, applicant agrees to secure insurance coverage in the following areas to the extent required by the office of City Risk Management: Commercial General Liability Automobile Liability Worker s Comp Professional Liability The cost of this coverage can be considered in the request for funding. The Certificate of Insurance that will be required at the time of contracting is available on the City of Madison Risk Management website. A sample contract that includes standard provisions may be obtained by contacting the Community Development Division at (608) 266-6520. 4. Signature: (Any applications submitted without a signature will be considered incomplete and will not be considered for funding.) Applicant Signature: Enter Name: Richard Henderson, Executive Manager Date: 03/10/2016 By entering your initials in the box, 9 RH You are electronically signing your name and agreeing to the terms above.