Talking Small Biz: Goldman Sachs, Philly: Perfect together?

Bigwigs at Wednesdays announcement (from left): John Grady, PIDC; Patricia Coulter, Urban League of Philadelphia; John F.W. Rogers, Goldman Sachs; Mayor Nutter; Rep. Pat Meehan; Stephen M. Curtis, Community College of Philadelphia. (Mitchell Leff / City of Philadelphia)
Bigwigs at Wednesdays announcement (from left): John Grady, PIDC; Patricia Coulter, Urban League of Philadelphia; John F.W. Rogers, Goldman Sachs; Mayor Nutter; Rep. Pat Meehan; Stephen M. Curtis, Community College of Philadelphia. (Mitchell Leff / City of Philadelphia)
Posted: January 11, 2013

BIG CORPORATE GIFTS almost always make a statement.

That was the case Wednesday when Goldman Sachs' executive vice president and chief of staff, John F. W. Rogers, and Hizzoner Mayor Nutter announced that the investment-banking firm would commit $20 million to help small businesses in the region.

But a closer look at the statement being made here reveals that the success around the country of the Goldman Sachs program is unclear.

Philadelphia will get $10 million to be lent to small businesses and to be administered by the Philadelphia Industrial Development Corp. A big chunk of $5 million will be set aside to fund business-education classes for selected business owners at Community College of Philadelphia.

A number of organizations, including the Greater Philadelphia Chamber of Commerce and the Urban League of Philadelphia, will help recruit small-business owners.

Eligible businesses must be at least 2 years old, have revenue of between $150,000 and $4 million in the latest fiscal year and have at least four employees, including the owner.

Nationwide, Goldman Sachs is dedicating $500 million to the cause - dubbed "10,000 Small Businesses," a program launched in New York in 2010. Philadelphia is the latest - and ninth - city to partner with Goldman Sachs.

Meanwhile, the Wall Street behemoth - which has a market cap of $65.6 billion - is touting the success of 10,000 Small Businesses in some of those cities, although it doesn't say which ones.

Thus far, 1,035 business owners have participated in the education portion of the program, and 99 percent have completed the program, a Goldman Sachs spokeswoman said.

She said 70 percent of the graduates increased their revenue within six months of graduation and 50 percent added new jobs.

Almost half the businesses that completed the education program are women-owned and almost 40 percent are African-American- or Latino-owned.

Beyond that, Goldman didn't offer proof of meaningful outcomes, such as the number of jobs created and where they were, except that they involved four locations.

I have no reason to doubt that Goldman Sachs is helping to create jobs, but cause and effect of job creation are hard to measure.

Cynics might argue that Goldman Sachs may be motivated more by image burnishing than job creation. After all, its critics regard the firm as less than a benevolent force and more a symbol of Wall Street greed in recent years.

And, yes, I know the money for 10,000 Small Businesses is less than the $550 million Goldman paid the Securities & Exchange Commission in July 2010 to settle civil claims that it misled investors in mortgage securities. (The company didn't admit or deny wrongdoing.)

City officials hope this program - and other recent initiatives by the Nutter administration to support start-ups - will help grow small businesses here, particularly those owned by low-income people, people of color and women.

Let's hope Goldman's largesse pays off. Job creation is always a challenge in Philadelphia, where unemployment, taxes and other costs remain stubbornly high.

As one entrepreneur with a business here told me, sustainable jobs will be created if "there's a business environment where employers feel confident that hiring is a reasonable risk."


Email: hinkelm@phillynews.com

Phone: 215-854-2656

On Twitter: @MHinkelman

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