ACTION Speaks Louder: Local Nonprofit Puts Stimulus Money to Work

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Flagpole Magazine (Georgia; CFED)
By: Andre Gallant
March 31, 2010

"We're creating a new animal in a short period of time," says Gwen O'Looney of the micro-enterprise development work underway at ACTION, Inc. The former Athens mayor is managing a $1.2 million American Recovery and Reinvestment Act grant that bolsters much of ACTION's anti-poverty and community stabilizing work, but with a portion of the funds, O'Looney is nurturing an economic development tool that targets low-income Athenians who lack access to traditional credit.
"We're turning mom and pop shops into businesses," ACTION CEO John Scoggins says. By reaching out to entrepreneurs with household incomes at or below 200 percent of federal poverty guidelines--$21,660 for one person, $44,100 of a family of four--ACTION aims to make legitimate businesses out of weekend, garage and kitchen table operations. Existing businesses are fair game as well, as long as they meet the standards, but ACTION wants to focus on start-ups that can't go to banks, the local government or other non-profits for help.

On top of tracking down a previously unmapped population, ACTION has the added task of completing its stimulus-funded mission by the end of September. But funds didn't arrive until December of last year, and at this point, the organization has only a few months left to finish the job.

There's been some confusion as to just how much of ACTION's recovery money, a Community Service Block Grant, is earmarked for direct economic stimulus: about a quarter goes to micro-enterprise development. Another quarter goes to employment initiatives; ACTION has created 10 part-time assistant positions to help administer programs throughout the region and given daycare scholarships to job seekers and the newly employed. A large portion of the money goes to eviction and foreclosure assistance, which has become increasingly important as furlough days take their toll on many ACTION clients, O'Looney says.

Scoggins is quick to defend perceived criticism of their work. "We don't give away money to anybody," he says. When ACTION helps someone meet a mortgage or rent payment, that money is "leveraged" by a mortgagee or renter contribution. Scoggins adds: housing support goes to a property owner, and that money goes back into the economy. "The notion that ACTION and ARRA [are] giving away money" is false, he says. "Nobody gets money without contribution."

While ACTION, a private non-profit, runs human development programs in a 10-county area stretching from Walton west to Elbert, from Jackson south to Greene, Clarke County uses 45 percent of the community action agency's resources due to its population and high level of poverty, Scoggins says.

With strict state and federal oversight of stimulus money, and a public wariness of recovery efforts in general, ACTION finds itself under the watch of many eyeballs. The Georgia Department of Human Services oversees the stimulus grant and is "so careful with this money," O'Looney says.

ACTION splits the economic development portion of the grant into four parts: micro-enterprise training, job creation grants, individual development accounts and a program called Green Partners that's planting gardens in various locations throughout ACTION's coverage area. Outside of Clarke County, ACTION is the food bank for many communities, O'Looney says. A pound of tomatoes given to someone in Madison County is a pound they don't have to buy at the store: "It translates into money," says Scoggins.

Micro-enterprise training begins with a stack of prospective entrepreneur applications that Angelyne Diaz, O'Looney's program assistant, whittles down into classes of 15. During the initial application process, and over the course of two five-hour training sessions, Diaz assesses each applicant's progress and selects up to 10 for continuation. Out of the first class of 15, nine made it through.

Each one of the graduates "selected for continuation" receives a 4 GB computer and software worth $500 and another $500 for paperwork needed to legitimize their business: a license, articles of incorporation or insurance. Any money beyond that will depend on the graduate's success as an entrepreneur--how their business plan develops and whether or not the business can create jobs for others besides the owner.

"If we believe the business is moving toward job creation, then it's legitimate in my mind to give them money for job sustenance," O'Looney says. So far, out of the nine entrepreneurs selected to graduate from the program, only two have received job creation grants totaling $50,000. These two grants produced five jobs, O'Looney says.

After her husband heard an ACTION ad on the radio, Tonya Knox signed up for the training to develop her fairy-tale-themed children's party planning business. She flew through the program, according to Diaz, and Knox's Princess Dream Party business has customers already. Knox says she keeps a few employees "on-call," and is working to become Job Creation Grant eligible. Diaz also is helping Knox legitimize her three-year-old summer camp for girls.

Diaz says she's working through 100 new applications for the next two classes. Unfortunately, O'Looney hasn't had too many takers on her favorite development tool: the individual development account (IDA). New to the Athens area, an IDA is a basic matching fund program whose savings can be spent on secondary schooling, business building or homeownership: anything that helps low-income families build assets and economic well being, according to the Corporation for Enterprise Development.

IDA holders set a savings goal for a computer, for example, and ACTION matches the savings dollar for dollar. ACTION partnered with Athens First Bank and Trust on the project, but only one person has opened an account, according to O'Looney.

"We really need to get the word out on this," she says. ACTION planned initially to use a flexible, low-interest revolving loan to help develop micro-enterprises, but they've changed strategy for two reasons. First, Scoggins says implementing such a complex financial tool in an eight-and-a-half-month timeframe is next to impossible. Second, ACTION found it difficult to find existing, credit-worthy businesses that met the poverty guidelines. O'Looney says the government made it clear that they don't want the stimulus going to people who've been in the economy and know the channels to find money; they want it in the hands of people in need. But O'Looney isn't worried about the change: "I feel good about having us focus more and more on the truly beginning small business."

While not a business novice, Seth Hendershot needed ACTION's help when he decided to "up the ante" on his coffee shop operation.

Hendershot owns the Tasting Room inside the Jittery Joe's roaster on East Broad Street but is "not in the position to get a traditional loan from a bank" as he prepares to open a stand-alone Tasting Room on Oglethorpe Ave. Hendershot meets the federal requirements for the Job Creation Grant, and he says he's hoping to receive $20,000 to create more than two jobs.

ACTION focuses on entrepreneurs "who seldom see themselves as appropriate [for real financial assistance] but are doing legitimate business," according to O'Looney. The original press release referred to these businesses as the "underground economy"--but has ACTION been able to reach their quarry?

"I think we have," O'Looney says. "It's hard to find these people." Out of the original class of 16, only two held previous business licenses. Nine brand new businesses, six expanding businesses and one legitimizing business completed the training, according to an ACTION document. The former mayor admits they need better PR, so they've taken out ads in Zebra magazine, checked in with faith-based organizations and improved contact with banks that can refer the entrepreneurs ACTION wants to help.

O'Looney says the program is finding its footing and she's excited about "carving deeper and deeper into that population that has not been helped by programs in the past." She thinks they're doing what needs to be done and what hasn't been done before and getting the money to the right people "in an accountable and honorable way." Hopefully, ACTION can knock it out by the Sept. 30 deadline.

"The private non-profit sector is asked to do a job much greater than creating a new jet or a new weapon," O'Looney says. "We're given less money and more ropes. If [only] we had the liberty they give a weapons builder--a billion dollar contract for 10 years. We're supposed to change the tide of culture and poverty in very little time with very little resources."

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This page contains a single entry by Ernest Roberts published on March 31, 2010 3:57 PM.

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