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Even in today’s lean economic times, most news stories about entrepreneurs tend to focus on the “whiz kids” at technology companies and places like Silicon Valley where these businesses thrive. But entrepreneurs don’t just live in high-tech meccas. In fact, America’s inner cities may be a more promising environment for entrepreneurs than the classic suburban corporate campus. That’s one finding from a recently completed eight-year $18 million program, known as the Rebuilding Communities Initiative (RCI), that targeted new investments in five distressed city neighborhoods across the United States.

The RCI was launched in 1993 by the Annie E. Casey Foundation ( The program targeted neighborhoods in five cities: Boston, Denver, Detroit, Philadelphia, and Washington, DC. And it began with an audacious goal: to “transform troubled, economically disenfranchised neighborhoods into safe, supportive, and productive environments for children, youth and their families.” This transformation would occur through what the foundation called “collaborative neighborhood governance,” in which residents themselves would lead change as opposed to responding from direction set by government or other outside players.

“What does this have to do with entrepreneurship?” you might ask. When RCI first began, the answer probably was not a lot. After seven years of effort, however, the leaders in each community have recognized that entrepreneurship will ultimately be a primary driver in re-integrating troubled neighborhoods back into the economic mainstream.

Resident empowerment — bringing neighborhood residents into agenda-setting, leadership and decision-making positions — is the theme that links all of the disparate communities supported through the RCI initiative. This finding proved to be something of a surprise to the program’s designers who originally were seeking ways to improve service delivery in distressed neighborhoods. They soon found that to many people “improved service delivery” means more government dictates. Thus, RCI needed to do more than improve service delivery — it needed to foster direct community involvement in defining and solving local problems. Finding ways to encourage and engage local leaders proved to be a major challenge. This is a time-consuming process that requires extensive cooperation within the community.

Creating this sense of local leadership and capacity are the key building blocks that must exist before local entrepreneurs can grow and thrive. Many of the projects originally funded through the RCI program are now embarking on aggressive efforts to support and nurture community-based entrepreneurs. In Detroit, for example, the Warren/Conner Development Coalition ( has established School to Work/School Based Incubators in six local schools. Through these incubators, local youth are learning the nitty gritty of running a business and critical skills like information technology. Similar projects to promote youth entrepreneurship are up and running at Washington, DC’s Marshall Heights Community Development Organization ( and Denver’s NEWSED CDC (

These developments are positive signals about the potential for new entrepreneurial initiatives. But good intentions are not enough. Government and non-profit agencies serving inner-city neighborhoods must also bring a new mindset to the table. In a recent meeting with Massachusetts-based entrepreneurs, NCOE staff heard a litany of complaints about interactions with local politicians and community development corporations (CDCs). These concerns took many forms, but the bottom line was simple: entrepreneurs want a clear-cut “business-like” relationship with service providers. Decisions on loans and other forms of assistance need to be made quickly and efficiently. Red tape and slow decisions are the kiss of death for new business owners. If they apply for aid, there should be an explicit time limit placed on agency decisions. Moreover, the process for decisions must be transparent so that all sides can fully understand it. At present, guidelines and procedures are fuzzy at best. As one Boston-based entrepreneur put it, working with city agencies is like “navigating through a dysfunctional family.”

At the same time, service providers should reach out to community based businesses as partners in the community development process. Local businesses should sit on lending committees, and should help design loan review processes so they are “business-friendly.” They should also consider creating an “Entrepreneur’s Team” that serves as an ombudsman for helping new businesses obtain assistance or wind their way through government regulations and licensing procedures.

Thanks to initiatives like RCI, formerly distressed urbanneighborhoods are revitalizing and embracing entrepreneurship as core development strategy. If CDCs and city agencies become entrepreneurial themselves, the prospects for truly dynamic change are promising.

This NCOE Update article was written by National Commission on Entrepreneurship on 2/28/2005

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