Case Study: Examining Community Impacts in a Poor Urban Neighborhood

The following information provides an example of the do-it-yourself (DIY) approach to demonstrating impact, described in the How to Collect section.

Background

The William M. Factory Small Business Incubator in Tacoma, Washington, helps women, minorities, and low-income entrepreneurs grow their businesses as a way to improve living and working conditions in Tacoma’s east side – one of the city’s poorest neighborhoods.

Incubator staff have tracked the program’s economic impacts since it opened in 1986. Although the incubator is required to report out to the city of Tacoma and the state of Washington, Executive Director Tim Strege says he would collect the data whether it was required or not.

“As a private nonprofit organization, we want to know what impact we’re having on the local economy to gauge our own performance,” he says.

Collection Method

Each quarter the incubator’s information technology specialist, Jeremy Villareal, collects sales, employment, and other data from client firms. Additionally, every year, the incubator does research to ascertain how many graduate firms remain in business, and how many have been acquired by or have merged with other companies.

Villareal begins the quarterly process with an e-mail request for data, providing an Excel spreadsheet for clients to complete and return. He follows that up with office visits to confirm arrival of the e-mail. Villareal believes that personal contact is key to getting the information he needs.

“The more face-to-face visits I can do to help with IT and just check on our clients, the easier it is to extract information because I am constantly building a one-on-one business relationship,” he says.

Because clients of the Factory incubator are accustomed to providing this information on a quarterly basis, the request is no surprise and clients are familiar with the format. Villareal enjoys a response rate of 95 percent in about a week’s time.

Reporting Out

The Factory incubator has a specific client focus: More than 80 percent of incubator clients work in the area of specialty trade construction and include painters, roofers, landscapers, electricians and welders. Strege says the construction industry generates a particularly high percentage of local supply purchases – things like concrete, lumber, and other building materials. Therefore, economic impact reports for the William Factory incubator include data on client spending on supplies. For example, in 2004, clients of the incubator spent nearly $6 million on supplies. Strege estimates that 80 percent of that supply spending occurred within ten miles of the incubator.

Another point of particular local interest is wage rate. Strege explains that in Washington there is a statewide concern that there is a lack of “family wage” jobs. “A regional study found that for people to rent or attempt to buy an entry-level home, a family needs to have an earner who makes a minimum of $15 hour,” he says. So the program raised the bar and aims to help clients create jobs that pay at least $20 an hour.

In 2004, clients of the incubator employed 260 people at an average wage of $22.21 an hour. In its 20-year history, the incubator has graduated more than 200 companies; for the five-year period ending in 2006, 82 percent of incubator graduates remain in business or have successfully merged.

Benefits of Tracking

Strege says that tracking and demonstrating his program’s impact has had benefits both financially and in terms of respect for the program. “At the state level, they feel better about providing resources for the incubator and other incubators because of our performance,” he says.

He also believes that reporting out on his program’s impact has helped to open people’s eyes about what incubation can do for local communities, particularly among minority or low-income populations.

“You don’t need to have a research university to have a successful incubator. You can just grow local companies that do work the local community needs to have done,” he says. “As those businesses grow, local workers spend their earnings within the community.”