Blog Post

Small Business, Big Impact: Philanthropy’s Untapped Opportunity to Advance Health and Equity

nat rosasco • December 11, 2019

Introduction

Leaders in health philanthropy increasingly recognize the role of business in advancing their objectives. To date, the focus of most efforts to engage business has been primarily on large companies. By contrast, the role of small business in creating healthy, equitable communities has generally not been explored. 

This is not entirely surprising for several reasons:
1) large businesses present scale opportunities out of the gate. For example, a single corporate policy change at Walmart can affect more than two million employees; 
2) large corporations exert considerable influence on their peers and the public. When large companies act, their efforts tend to be newsworthy and cause ripple effects across their peers and society at large; and 
3) large, publicly-traded companies are relatively transparent and offer a source of considerable data that can be used to make the case for public health collaboration and measure progress toward a goal. 

Yet small businesses are an untapped resource and could be a critical partner in creating opportunities for everyone to live a healthy life. Small business influences the financial lives of roughly 30% of the U.S. population: Nearly 100 million people generate their livelihoods from small businesses as either owners or employees. These businesses are in every state in the country, representing more than 90% of all businesses in every state. Their voices are trusted at a time when confidence in government, media and other institutions is generally declining. 

Small business leaders are largely untapped partners in advancing health for communities and their residents and in advancing health equity. Small business create jobs and build wealth—and especially in low-wealth communities—and the small business startup rate is highest in communities of color. Building wealth where opportunities have been historically limited is essential for advancing health equity. Moreover, as the second most trusted institution in the United States, a failure to engage small business leaders as partners and ambassadors in efforts to advance health and health equity is a missed opportunity.

Effectively channeling the potential of this critical segment of businesses will require effort and investment to address the unique characteristics that distinguish small business from large employers. For starters, the universe of small business is extremely fragmented, especially when compared to large corporations. In addition, unlike large businesses that can assign entire teams to special projects, small businesses are generally more strapped for time and resources. That said, it’s nearly impossible to address health equity and reach deep into communities without effectively engaging small business. 

In this report, we start by making the case for engaging small business in advancing health equity, or what the Robert Wood Johnson Foundation (RWJF) has framed effectively as a “Culture of Health.” Then we share seven ways to engage small business in advancing healthy, equitable communities. Finally, we close with some recommendations to move forward including 1) the need for thoughtful investment in infrastructure to support engagement with small business; 2) opportunities for coordination among foundations that focus on a range of issue areas including health, community economic development, entrepreneurship, and racial equity; and 3) the potential for collaboration across sectors to ensure that public, private, and social sector actors with a vested interest in small business and healthy communities can contribute to advancing their critical shared objectives. 

What is a “Culture of Health”

A “Culture of Health” represents the vision of The Robert Wood Johnson Foundation (RWJF) to make health a national priority, valued and advanced by collaborators from all sectors. For RWJF, building a Culture of Health means working together to develop scalable solutions and take targeted action in communities toward a shared goal of better health. To mobilize its vision, the Foundation created an Action Framework to drive measurable, sustainable progress and improve the health and well-being of all people.

The Case for Engaging Small Business

Small business owners generate wealth and create jobs in every community across the country, and are generally viewed as leaders in their communities. Engaging with small business allows you to 1) advance health equity and 2) inform priorities and promote policies. 
Advance Health Equity 
Building wealth and income is critical for improving health equity. Substantial evidence shows that both wealth and income influence the health of individuals, and inequities in these areas have repeatedly been linked with poorer average health outcomes at the national level. Strategies to advance health equity should take into account the critical role of small business for both.

Somewhat surprisingly, 43% of small businesses in the United States are located in low-wealth communities, which also suggests that these businesses are critical sources of jobs and income in these areas. Building wealth where opportunities have been historically limited is essential to advance health equity. Small businesses compete in virtually every industry sector, with the highest concentration in services, construction, and retail trade.

Business owners themselves represent a cross-section of the U.S. population. The majority of business owners today are white, but the growth rate of business starts is highest among black Americans and Latino(a) business owners. More men own businesses than women, but about one-quarter of businesses are women-owned and the share is growing rapidly, especially among black and Latina women. Boomers and millennials also both represent sizable segments of small business owners, with a significant portion of young people considering starting a business.

Business ownership is also a driver of wealth creation. On average, business-owning households hold more than twice the wealth of their wage-earning peers. The wealth-creation impact is more pronounced for business owners of color. Black business owners are, on average, more than seven times wealthier than their wage-earning peers. Similarly, Latino(a) business owners hold roughly four times as much wealth as non-business owners. Business ownership is also a proven path to addressing the racial wealth gap: while on average white adults hold 13 times the net assets of their black peers, this racial wealth gap narrows by more than 75% to a three-fold differential when comparing business owners by race.

As these facts suggest, small business owners and employees represent a broad cross-section of American society who depend on and contribute directly and indirectly to health equity and healthy communities. The performance of small business contributes to healthy, equitable communities through the assets, income, and jobs they create. Small businesses can lead the way to advancing healthy communities when the practices they adopt shape the lives of their families and employees. 
Inform Priorities & Promote Policies 
Small business is the second most trusted institution in the United States and is trusted far more than large business. This deep sense of trust creates an imperative both to understand authentic perspectives of small business owners and to harness that credibility to support policies that promote health equity. 

Many of the stakeholders we interviewed, especially those who focus their work on advocacy, referred to the strong “moral authority” small business leaders convey on most issues. This was true for issues closely aligned with the direct interests of small business as well as broader issues of equity and inclusion, where the “voice of small business” contributed to policy momentum. 

Knowing what is on the minds of small business owners can help identify priorities in a specific place or across the country. Additionally, support from small business can strengthen the case for policy proposals that advance healthy communities. Yet the sheer number of small businesses creates an imperative to capture enough inputs so that perspectives are representative and sample sizes are robust. However, reaching business owners directly can be challenging. 

Small business owners are stretched thin and pressed for time. As one business owner shared, “You hustle and grind and sacrifice everything else in the name of success.” More than one owner we talked to relayed the quip that in a small business the CEO is the “Chief Everything Officer.” Business owners typically choose where and how to engage carefully, with an eye toward prioritizing activities that advance the business and address their pain points.

7 Ways to Engage Small Business for Health and Equity

Small businesses advance healthy communities and health equity by virtue of the contributions they make to the economic and social fabric of the places they serve. At the same time, this highly trusted segment of businesses can provide valuable insights into the needs and priorities of communities, and can serve as an important advocate for policy. In this section, we outline seven ways to engage small business. These themes are derived from the ways that small business contributes to healthy communities and insights from interviews with almost 100 practitioners and thought-leaders across the country. 

Considerations Moving Forward

By virtue of their number, distribution, and trusted position, small businesses can lead the way to advancing healthy communities and health equity. However, absent purposeful action, the opportunity to harness their power will be missed. The seven themes outlined above present opportunities to rethink the current engagement model with “business” to include small business. At the same time, developing ideas within these themes presents the space to consider collaborations that move beyond the “usual suspects” to include some nontraditional partners. Our work has also highlighted the need for infrastructure investments to listen to and engage small business effectively and efficiently so that feedback loops are strengthened, data-driven insights are available, and the advocacy landscape is less purely partisan. 

Finally, we see significant opportunities for “cross-sectoral” funding collaboratives to amplify impact of traditional community development. We observe many foundations engaged but from different vantage points. Getting to high-impact projects likely requires dialogue to “translate” language into common understanding, develop a shared frame, and identify shared priorities. 

This report and the extensive research that informed it shows that small businesses are critical to creating healthy communities, but they continue to be an untapped resource. We hope this report helps lay the foundation for a better understanding about the leadership role that small business plays in our economy and society. This work should spark a dialogue among public health leaders (and others) to expand collaboration with “business” to include small business. The report frames themes and ideas that can strengthen meaningful engagement with small business—a vast and diverse constituency—and outlined opportunities for interested investors and funders who seek to advance health equity to include small business in their work. 

Small business contributes to economic growth and plays a significant role in communities across the country, employing more than a quarter of the population, driving wealth creation in communities, and holding a spot as the second most trusted institution in the country. As such, small business can play a critical role in creating healthier and more equitable communities. 

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