Small businesses are essential contributors to local communities and the US economy. The COVID-19 pandemic underscored the vulnerabilities of these businesses, particularly those owned by marginalized groups that face systemic barriers such as limited access to capital.

Kaiser Permanente’s Diverse Business Growth strategy, initiated in response to wealth inequities and discrimination, was aimed at supporting small businesses in historically disinvested communities by partnering with business support organizations (BSOs), community development financial institutions (CDFIs), and other nonprofits. This initiative is part of Kaiser Permanente’s broader mission to improve the social determinants of health and create healthy communities.

As the first part of a two-part evaluation of this initiative, Urban conducted more than 50 semistructured interviews with key stakeholders, including Kaiser Permanente staff, grantee and subgrantee staff, and business owners who received support through the program. The evaluation also incorporated analysis of grantee reports to assess the strategy’s overall impact and identify areas for improvement.

Through our study of the Diverse Business Growth strategy, we found:

• Direct support to small businesses. Tailored financial assistance and one-on-one advising led to positive outcomes for many small businesses.
• Support to the ecosystem. Organizations valued technical assistance, which strengthened their operational capacity, improved marketing strategies, and facilitated access to valuable networks and relationships.
• Systems change. Grantees fostered systems change by building capacity and creating opportunities for business owners to engage in policy discussions, enhancing advocacy efforts, and increasing overall participation in the policymaking process.
• Organizations noted challenges with the length of the grant period, while regional staff expressed difficulties balancing community needs and capacity with the priorities of the Diverse Business Growth strategy.

Based on our review of the Diverse Business Growth strategy, we make the following recommendations:

• Develop a clear theory of change to guide implementation of the strategy. A theory of change can be a powerful tool for providing an implementation road map and fostering alignment among partners, as well as helping identify and interrogate assumptions about how to achieve the desired impact. Although it is important to allow for flexibility and adaptability within a large-scale investment strategy, it is also critical to have a clear sense of the implementation structure and activities that will yield higher impacts and clearly defined metrics to measure and track progress toward goals.
• Strengthen the engagement structure between national partners and regional staff. Set up subnational implementation strategies specific to the nuances and capacities of the local ecosystem, develop clearly defined subgrantee guidelines, and create structures for implementation collaboration.
• Focus funding should go directly to businesses, especially through vehicles that expand accessibility. Allocate more funding to affordable and accessible capital products (such as loan guarantee programs, credit enhancements, or microloans) that go directly to small businesses. Carefully assess organizations and their activities that will be funded through subgrantees (e.g., cohort programs, one-on-one coaching, and specific stages of business). Consider metrics other than just the number of businesses served, such as those that indicate business growth.
• Leverage existing local initiatives and adapt programming as necessary. Clearly define the relationship between national and local initiatives. Identify existing local initiatives that national partners could support. Consider whether it makes sense for all partners to cover all geographies. Programming should be responsive and adaptive to local needs.