Beyond Charity: Inner City Business Opportunities

Business opportunities abound in the inner cities of America.

Sounds counter-intuitive doesn't it?

But it is true.

Several years ago Harvard professor Michael Porter established the Initiative for a Competitive Inner City . I remember hearing Porter when he came to Dallas a decade ago.

Porter's method was ingenious. He picked out 800 zip codes in the 100 largest American cities where unemployment and poverty were at least 50% higher than in their metropolitan surrounding areas. He went to work as a champion of inner city development. The result? In those disadvantaged neighborhoods were 364 companies that grew an average of 866% in the five year period between 1998-2002!

What are the competitive advantages of inner city locations, as compared to suburban locations? Porter's list is impressive.

Most inner city neighborhoods are underserved by businesses. As a result and due to population density, they possess more buying power per square mile than other communities.

Inner city communities often are located closer to major transportation infrastructure. They also contain a labor force that responds with loyalty to new opportunities for work.

Property for development tends to be more readily available and less expensive.

Porter's working definition of an "inner-city company" is precise.

These unique companies are independent, for-profit corporations or partnerships. They are headquartered in or have at least 51% of their physical operations in an economically distressed urban area. They employ 10 or more workers. And, they have recorded a five-year sales history of at least $200,000 in 1998 and at least $1 million in 2002.

Thirty-two percent of the employees of these companies are minority as compared to just 11% nationwide. Inner-city companies provide health care, retirement benefits, life insurance, homeownership incentives and education and training at a rate well above national industry averages.

Here in Dallas at On-Target Supplies and Logistics, employees are required to pursue, at company expense, training or education that will lead to a promotion or a better job elsewhere. Employees who do not comply are fired. Albert Black, founder and CEO, says he just won't invest in employees who don't want to invest in themselves.

Inner-city companies make public schools stronger, as many higher paid employees find ways to become involved in their children's education. Further, these companies become deeply involved in the issues and needs of the communities where they are located. For many employees a company's commitment to improving the city is socially and ethically attractive.

Being close to the heart of the city provides companies a kind of cultural experience and context that stimulates and defines corporate identity in creative ways. In short, most of these companies are extremely dynamic. They are doing their part to challenge poverty and to help renew disadvantaged communities.

One of the reasons why those of us who care about attacking poverty are talking more and more about public policy, politics and economics is because we know that charity alone will never change the cities of America.

Charitable acts will always be necessary.

But what is really needed is social change at the systemic level.

Cities serious about providing opportunity for everyone, including low-income people, will work hard to encourage more corporations to move toward the city. Cities with a vision for making things work for everyone will find ways to encourage housing development and diversity in the heart of the city.

Moving beyond charity to real, sustainable change for urban areas means we need to be more than nice. We need to be smart and we need to be willing to take and to encourage creative risks.