U.S. Bank Taps Minnesota Nonprofits to Distribute ‘Microbusiness’ Grants
Three Minnesota nonprofits are among the beneficiaries of a new wave of small business funding from Minneapolis-based U.S. Bank.
As part of the national U.S. Bank Access Commitment announced in February, the company is providing $25 million to its nonprofit partners, who will in turn distribute the funds to women-owned “microbusinesses” across the country. U.S. Bank defines a microbusiness as a company with 10 or fewer employees and $500,000 or less in annual revenue.
In Minnesota, money from the U.S. Bank Access Fund will be distributed by the African American Alliance of Black CDFI CEOs and a Twin Cities office of the national Local Initiatives Support Corp. The former organization, a coalition of Black executives leading community development financial institutions (CDFIs), will then provide money to the African Development Center in Minneapolis, African Economic Development Solutions in St. Paul, and the Neighborhood Development Center, which is also based in St. Paul.
The money will eventually end up in the hands of women business owners of color, a demographic that has historically been left out of many small business initiatives.
“Data show that women of color are the fastest-growing segment of entrepreneurs, and they’re the least funded,” said Reba Dominski, U.S. Bank executive VP and chief responsibility officer.
The precise level of funding for Minnesota companies hasn’t been determined yet. Dominski said that the bank is taking a more hands-off approach when it comes to distributing the funds.
“The last thing our nonprofit partners need is for us to be over-controlling or make things overcomplicated,” she said. “These are partners who are well-versed in making sure funds are distributed in an equitable way that drives the greatest impact.”
As part of the initiative, U.S. Bank leaders also will provide pro-bono consulting, mentorship, and technical assistance for businesses owned by women of color. Dominski said it’s one way to “amplify the impact of the fund.”
“We researched and saw that the most common barriers for women of color who are starting small businesses are all about the lack of access,” she said. “Access to capital, access to technical assistance, access to mentoring.”
Dominski believes the broader initiative will address the lack of access across all three areas, hence the name of the program.
Longer term, U.S. Bank officials say the Access Fund will ultimately benefit more than 30,000 businesses owned by women of color over the next three years.
On a national level, U.S. Bank is also relying on New York City-based Grameen America to distribute the funds. The $25 million will be divided up between 14 states within U.S. Bank’s footprint.
The fund is a collaborative effort between the U.S. Bank Foundation—the bank’s philanthropic arm—and the U.S. Bank Community Development Corp., the company’s community investment subsidiary. In the past, the two entities have provided similar funds “in pockets,” but the new fund marks a more concentrated effort, Dominski said.
“We’ve never done anything at this scale, with this kind of impact,” said Dominski, who also serves as president of the U.S. Bank Foundation. “In order to have the kind of economic, social, and environmental impact that we want to have, it can’t be just about philanthropy. It has to move beyond philanthropy to engage the whole bank.”
In a statement, U.S. Bank chief diversity officer Greg Cunningham noted that the fund is “different because it works to break down structural barriers for women of color business owners, prioritizing Black women, and focuses on the smallest, but most common type of businesses—microbusinesses.”
“Investing in these women and their businesses will not only help build wealth but will have a multiplier effect on the communities hardest hit by the pandemic,” he said.