Small Business Administration: Opportunities Exist to Strengthen Engagement with Historically Black Colleges and Universities

The 101 HBCUs play an important role in higher education and in their local and regional economies. Among African Americans who obtained a doctorate in science, technology, engineering, or mathematics in 2005–2010, more than one-third earned their undergraduate degrees from an HBCU. SBA is part of a long-standing White House initiative to strengthen the capacity of HBCUs, including their ability to access and participate in federal programs. SBA's mission includes business development, and SBA also works with colleges and universities to provide entrepreneurial training and counseling.

GAO was asked to review SBA's entrepreneurship-related efforts with HBCUs. This report examines (1) SBA efforts to foster entrepreneurship with HBCUs in recent years, (2) SBA's plans for the White House Initiative on HBCUs, and (3) the extent to which SBA collected information specific to HBCUs. GAO analyzed SBA information on HBCU participation in programs and activities for fostering entrepreneurship and reviewed related standard operating procedures. GAO also interviewed officials at SBA headquarters and eight SBA district offices, and representatives of nine Small Business Development Centers (selected for a high number of agreements with HBCUs and other factors).

The Small Business Administration (SBA) worked with Historically Black Colleges and Universities (HBCU) to foster entrepreneurship, primarily through its Small Business Development Center program (which provides counseling and training), strategic alliance memorandums, and co-sponsorship agreements. Two HBCUs—Howard University and the University of the Virgin Islands—have hosted SBDC “lead centers” since the 1980s. SBA also signed at least 35 strategic alliance memorandums with HBCUs and at least 16 co-sponsorship agreements in 2013–2018.

In 2018, SBA developed a plan to support HBCUs (including goals and measures) for the White House Initiative on HBCUs. However, SBA headquarters did not communicate this plan or its goals to key Small Business Development Centers or SBA district offices (those with HBCUs in their service areas). As a result, SBA may have missed opportunities to collaborate with HBCUs and help achieve the goals of its plan.

SBA has collected limited information about its programs and activities with HBCUs. SBA could not establish a baseline for performance measures developed in its 2018 plan because SBA district offices and the Small Business Development Centers are not required to collect or report information about their HBCU-related outreach and other activities. For example, while representatives from the nine Small Business Development Centers with whom GAO spoke said they conducted outreach to HBCUs, this information was not reported to SBA headquarters. Without collecting relevant information about its HBCU-related efforts, including data for performance measures, SBA cannot assess the extent or effectiveness of its efforts to support HBCUs.

GAO is making three recommendations, including that SBA communicate planned efforts to support HBCUs to key Small Business Development Centers or district offices, and collect additional information on its efforts to support HBCUs. SBA agreed with GAO's recommendations.

Historically Black Colleges and Universities (HBCU) play an important  and unique role in the higher education system. HBCUs educated more  than 226,000 African-American students pursuing a higher education  degree in 2017, the year with the most recent available data. Among  African Americans who obtained a doctorate in science, technology,  engineering, or mathematics in 2005–2010, more than one-third earned  their undergraduate degrees from an HBCU. In addition, one study  estimated that HBCUs injected $14.8 billion into their regional economies  in 2014, adding more than 134,000 jobs on- and off-campus.

The Small Business Administration (SBA) is part of a long-standing White  House initiative to strengthen the capacity of HBCUs, including their  ability to access and participate in federal programs. SBA helps  Americans start, build, and grow businesses through a variety of services  and programs, including entrepreneurial development. SBA’s priority  goals for fiscal years 2018–2019 highlighted agency goals to more  broadly reach emerging markets that are socially and economically  disadvantaged. SBA’s entrepreneurial development programs provide  assistance and resources, such as training and counseling, to existing  and potential entrepreneurs in communities across the country,  particularly underserved communities. SBA also works with many  colleges and universities to provide entrepreneurial training and counseling on campus. However, little is known about the extent to which  SBA has worked with HBCUs to foster entrepreneurship.

You asked us to review SBA’s entrepreneurship-related efforts with  HBCUs. This report examines, as did two related products, (1) SBA  efforts to foster entrepreneurship through key programs and activities with  HBCUs in recent years, (2) SBA’s plans for the White House Initiative on  HBCUs, and (3) the extent to which SBA collected and recorded  information about its programs and activities at HBCUs. Our review of  efforts to foster entrepreneurship focused on counseling and training.

To address the first objective, we analyzed SBA programs and activities  that in previous work we identified as key for fostering entrepreneurship  with HBCUs—the Small Business Development Center (SBDC) program,  strategic alliance memorandums, and co-sponsored activities. We also  obtained data from SBA’s Office of Entrepreneurial Development and  Office of Strategic Alliances and identified the participation of institutions  of higher education (HBCUs and non-HBCUs) in key programs and  activities. To assess the reliability of these data, we reviewed available  data, cross-walked them with publicly available information, if applicable,  and requested written responses from SBA officials about the data and  their limitations, if any. We determined the data were sufficiently reliable  for describing the general scale of SBA’s efforts with HBCUs and non- HBCUs.

To address the second and third objectives, we reviewed SBA data  manuals and standard operating procedures. We interviewed SBA  officials in the Office of Entrepreneurial Development, Office of Field  Operations, and Office of Strategic Alliances and regional SBA  stakeholders—such as SBDC representatives and SBA district office  officials. We selected the SBDCs and district offices where we conducted  interviews based on a combination of factors, including (1) HBCU  participation in the SBDCs (hosting a lead or service center), (2) high  number of HBCUs located in the state, and (3) high number of strategic  alliance memorandums or co-sponsorship agreements signed with  HBCUs. Specifically, we interviewed staff from six SBDC lead centers  and three associated service centers, and eight SBA district offices  (which had 47 HBCUs in their collective service areas). Furthermore,  based on data SBA provided of signed strategic alliance memorandums  with HBCUs, we selected and interviewed staff from eight HBCUs that  had strategic alliance memorandums with SBA or were located near an  SBA district office. We also reviewed additional documents SBA provided  related to its plans and reports for the White House Initiative on HBCUs.  We assessed SBA’s plan and related efforts against federal internal  control standards. See appendix I for more details on our scope and  methodology.

We conducted this performance audit from June 2018 to November 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Key SBA Offices and Resource Partners Involved in Entrepreneurial Programs and Outreach

The Office of Entrepreneurial Development, Office of Field Operations,  and Office of Strategic Alliances are key SBA offices that administer  entrepreneurial programs and manage outreach efforts that could foster  entrepreneurship (see fig. 1).

Office of Entrepreneurial Development. The Office of Entrepreneurial  Development oversees several programs, primarily through a nationwide  network of public and private resource partners that offer small business  counseling and technical assistance. These resource partners include  SBDCs, Women’s Business Centers, and SCORE chapters. The SBDC  program receives the majority of entrepreneurial development program  funding to provide technical assistance (business counseling and training)  to small businesses and aspiring entrepreneurs. SBDC services include  assisting small businesses access capital, develop and exchange new  technologies, and improve business planning, strategy, and financial  management.

The entities eligible to receive SBDC funding are primarily institutions of  higher education. By statute, the amount eligible entities receive is  determined by a state population-based funding formula subject to the  amount of an appropriation in any given fiscal year. As a condition of  receiving the grant, the recipient or host institution is required to match  the funding. The host institution (funding recipient) is responsible for  establishing a lead center and network of service centers for a designated  service area. The SBDC program has 63 lead centers (generally hosted  by institutions of higher education) and more than 900 service centers,  including satellite locations.

SBA has identified certain special emphasis groups to be targeted for  assistance by SBDCs, such as certain populations of business owners.  The groups do not include institutions; thus, HBCUs are not included as  special emphasis groups. According to SBA officials, SBDCs target  underrepresented groups in the population of business owners near  HBCUs.

Office of Field Operations. SBA also provides services through a  network of 10 regional offices and 68 district offices that are led by the  Office of Field Operations. SBA district offices serve as the point of  delivery for most SBA programs and services. Some district office staff  (including business opportunity, lender relations, and economic  development specialists) work directly with SBA clients. SBA’s district  offices also can initiate and oversee outreach activities to foster  entrepreneurship. For example, SBA district offices can implement  counseling or training events on their own, participate in such events  organized by third parties, or co-sponsor such activities with a third party  (for-profit, nonprofit, or government entity) through a co-sponsorship  agreement. Moreover, district offices can enter into a 2-year agreement  with a nonprofit or government party, known as a strategic alliance  memorandum, to foster a working relationship designed to strengthen  small business development in a local area.

Office of Strategic Alliances. The Office of Strategic Alliances, housed  in SBA’s Office of Communication and Public Liaison, reviews co- sponsorship agreements and strategic alliance memorandums drafted by  district or program offices. The co-sponsorship agreements and  memorandums are based on an internal SBA template provided by the  Office of Strategic Alliances, which also maintains records for both  strategic alliance memorandums and co-sponsorship agreements.

Figure 2, an interactive map, illustrates locations of SBDC lead centers  and SBA district office in states with HBCUs. See appendix II for  additional information on figure 2.

Historically Black Colleges and Universities

As of December 2018, there were 101 HBCUs, located across 19 states,  the District of Columbia and the U.S. Virgin Islands. As previously  discussed, HBCUs educated more than 226,000 African-American  students in 2017. HBCUs also have played a critical role in supporting  underserved students and communities. We previously reported that a  higher proportion of students at private HBCUs (77 percent) received Pell  Grants in the 2015–16 school year than students at similar private  colleges or universities (43 percent). Pell Grants provide low-income  undergraduates who demonstrate financial need with financial assistance  to help meet education expenses.

Executive Orders on the White House Initiative

Executive Order 12232 (1980) established the White House Initiative on  Historically Black Colleges and Universities to strengthen the capacity of  HBCUs to provide quality education. Subsequent administrations issued  executive orders to continue the initiative. Most recently, as expressed  in Executive Order 13779 (2017), federal priorities for working with  HBCUs encompass two missions: (1) increasing the role of private-sector  entities in helping to improve capacity of HBCUs, and (2) enhancing  HBCUs’ capabilities for helping young adults. The initiative has been  housed in the Executive Office of the President since 2017, according to  representatives from the initiative.

The more recent executive orders (from 2002, 2010, and 2017) direct  each department and agency designated by the Secretary of Education to  prepare an annual plan on efforts to strengthen HBCU capacity. Annual  plans are to describe how the department or agency intends to increase  the capacity of HBCUs, including by identifying federal programs and  initiatives in which HBCUs are underserved or that HBCUs may have  underutilized. SBA is one of the agencies designated to prepare an  annual agency plan. The more recent executive orders also state that a  Board of Advisors on HBCUs (in the Department of Education) shall  report annually to the President on the Board’s progress in carrying out its  duties, which include advising the President on matters pertaining to  strengthening the educational capacity of HBCUs. The current Board  was chartered in May 2019.

SBA Used Existing Programs and Mechanisms to Engage with HBCUs; Stakeholders’ Collaborative Experiences Varied

SBA has used SBDCs, strategic alliance memorandums, and co- sponsored activities to foster entrepreneurship with HBCUs in recent  years; stakeholders’ experiences collaborating with SBA varied.

Small Business Development Centers. Two HBCUs—Howard  University in Washington, D.C., and the University of the Virgin Islands in  St. Thomas, U.S. Virgin Islands—have been longstanding host institutions  for SBDCs. More specifically, they have been the only host institutions for  two lead SBDCs, the District of Columbia SBDC and the Virgin Islands  SBDC, for more than 30 years (and remained so as of September  2019). Colleges and universities predominately have been the  institutional hosts of lead SBDCs since the 1980s according to SBA  officials.

According to SBA officials, there is little turnover among institutions  hosting lead SBDCs because SBDC program announcements for host  institutions are not full and open competitions and existing host  institutions often renew their cooperative agreements to continue  operating lead SBDCs. Based on the statutorily defined and population- based allocation formula, the District of Columbia SBDC and the Virgin  Islands SBDC together received about 1.3–1.4 percent of the total SBDC  funding awarded to institutions of higher education from fiscal year 2008  through 2018.

The District of Columbia SBDC and the Virgin Islands SBDC have  engaged with HBCU students, alumni, or faculty. As we previously  reported, District of Columbia SBDC representatives told us that as of  November 2018 they were working with 10–15 Howard University student  clients. They also stated they work with all students who come to their  center seeking help and do not have a cap on the number of student  clients. Similarly, the Virgin Islands SBDC representatives told us as of  February 2019 they had made presentations to upper-level business  classes and freshmen development seminars at the University of the  Virgin Islands. They also counseled students who participated in an  annual entrepreneurial competition. They noted that many of the SBDC  clients they serve have some affiliation with the university, such as being  an alumnus or having attended classes there.

In addition to establishing the lead SBDC, the host institution establishes  a network of service centers to deliver services, such as counseling and  training, within its service area, including at HBCUs. As of September  2018, at least 16 HBCUs hosted SBDC service centers across 11  states. Three SBDC service centers we reviewed that were HBCU- hosted had engaged with HBCU students, alumni, or faculty. For  example, the Alabama SBDC service center representatives (housed at  Alabama State University in Montgomery, Alabama) said the center works  with several faculty members who provided training at SBDC workshops  and assisted the service center on specialized topics, such as marketing.  Through its relationship with faculty members, the Alabama SBDC  service center also conducts outreach to students.

Similarly, representatives of two service centers for the North Carolina  Small Business Technology and Development Center (housed at North  Carolina Central University in Durham, North Carolina, and North  Carolina A&T State University in Greensboro, North Carolina) said they  have worked with students on the respective campuses. For example,  the service center at North Carolina Central University has engaged  graduate business students on marketing projects.

While the number of HBCU-hosted lead SBDCs has remained unchanged  in recent years, it is unclear how many HBCUs have hosted service  centers. SBA officials told us that the number fluctuates but were unable  to provide the list of all service centers in existence prior to 2018. We  discuss SBA’s data collection efforts later in this report.

Strategic alliance memorandums. From 2013 through 2018, SBA  signed at least 35 strategic alliance memorandums with HBCUs (see  table 1). SBA signed at least 51 such memorandums with institutions of  higher education in states with HBCUs in that period. As we previously  reported, strategic alliance memorandums are mechanisms to initiate and  formalize a relationship with nonprofit and governmental agencies, but  they are not necessary to initiate a relationship. SBA officials told us the  memorandums do not authorize or fund events or activities and are  largely symbolic. In August 2019, SBA officials said that numbers of  strategic alliance memorandums can fluctuate due to their 2-year duration  and changes in SBA administration.

Representatives of six HBCUs with whom we met that signed strategic  alliance memorandums varied in their assessment of the usefulness of  the memorandums. Three of the six HBCUs said they had positive  experiences as a result of the memorandums:

Representatives of an HBCU in North Carolina said a May 2013  memorandum established a relationship with SBA and provided  access to information and resources not otherwise available.

Representatives of another HBCU in North Carolina said a 2013  memorandum helped recruit speakers for two entrepreneurship  classes.

A representative from an HBCU in Tennessee told us that a 2013  memorandum enabled the college to connect students, alumni, and  faculty with the resources of SBA’s Tennessee District Office and its  resource partners. The representative said a subsequent 2018  memorandum resulted in collaboration with SBA to host a 1-day small  business conference on campus.

In contrast, representatives of the three other HBCUs either were  unaware of the memorandum or said it produced no results:

Representatives of two HBCUs (one in Alabama and one in Georgia)  told us they were unaware of the signed strategic alliance  memorandums (March and April 2013, respectively) due to staffing  changes in senior administrative positions.

A representative from another HBCU in Georgia told us the school  had little involvement with the Georgia SBA district office after signing  a memorandum in April 2013. Officials from the district office with  whom we spoke agreed with this statement but noted the college had  not asked them to participate in any events.

Co-sponsored activities. As shown in table 2, from fiscal years 2013  through 2018, SBA signed at least 16 co-sponsorship agreements with  HBCUs to jointly conduct activities or events. Twelve of the 16 co- sponsored activities were training or counseling events related to  entrepreneurship. SBA signed at least 78 co-sponsorship agreements  with institutions of higher education in states with HBCUs in that period.

SBA’s Recent Plan and Goals for HBCU- Related Efforts Were Not Communicated to the Field

SBA Developed 2018 Plan for the White House Initiative on HBCUs but Was Unable to Provide Plans for Other Years

SBA developed a fiscal year 2018 plan for the White House Initiative on  HBCUs, in accordance with Executive Order 13779 (2017). SBA’s 2018  plan included two primary goals. The first goal was to raise awareness  and provide information to increase the capacity of HBCUs to participate  in federally funded programs. More specifically, the plan stated that SBA  would engage with HBCUs and provide them with information needed to  access and compete for federal grants and contracts. The second goal  was to promote collaboration among HBCUs, SBA resource partners, and  SBA district offices. For example, the plan stated that SBA would  encourage the formation of strategic alliance memorandums between  SBA district offices and HBCUs to promote and support entrepreneurship  in underserved markets. The plan also stated that SBA would explore and  consider partnerships with the National Association for Equal Opportunity in Higher Education, among other organizations, to raise awareness,  disseminate information, and share resources among and with HBCUs.

The 2018 plan also described five measures to monitor SBA’s efforts to  engage, share information, and increase the capacity of HBCUs. The  measures are (1) number of outreach events, (2) number of outreach  attendees, (3) number of partnerships established, (4) percentage of  engaged HBCUs that pursued federal funding, and (5) percentage of  HBCUs engaged that found the information useful.

The two previous Executive Orders (from 2002 and 2010) on the White  House Initiative on HBCUs also directed designated agencies to prepare  annual plans on their efforts to support HBCUs. For years prior to 2018,  SBA only could provide documentation of plans for 2011 and 2012.  Officials of the Office of Entrepreneurial Development told us they were  not aware of records for plans developed for the other years in the period  we reviewed (2008–2018).

Responsibilities of SBA Offices for Addressing the White House Initiative on HBCUs Are Unclear

SBA was unclear about the responsibilities of the offices involved in the  agency’s efforts for addressing the White House Initiative on HBCUs. In  March 2019, SBA officials told us the SBA Administrator had designated  the Office of Entrepreneurial Development as the lead office for  addressing the initiative in 2018. However, the responsibilities for other  offices involved in efforts that include HBCUs remain unclear.

SBA could not provide documentation of roles, responsibilities, or  reporting lines among offices involved in addressing the White House  Initiative on HBCUs. For example, the Associate Administrator for the  Office of Entrepreneurial Development stated the agency’s interaction  with HBCUs occurs through SBA district offices. However, there is no  documentation describing how the Office of Entrepreneurial Development  and Office of Field Operations, which is responsible for SBA’s district  offices, should work together to address the White House Initiative on  HBCUs. Moreover, because SBA has not documented specific roles and  responsibilities (to include reporting lines), it is unclear how plans  prepared for the White House Initiative on HBCUs would be implemented  among headquarters, field offices, and resource partners.

Additionally, the role of the director of the Office of Faith Based and  Community Initiatives in efforts to address the HBCU initiative is unclear.  SBA officials told us the Office of Faith Based and Community Initiatives  is not involved in administering the initiative. However, the director of that  office serves as SBA’s representative to the Interagency Working Group  of the White House Initiative on HBCUs. According to SBA officials, the  director’s role is to support efforts by the Office of Entrepreneurial  Development on the initiative due to staffing shortages. However, officials  were unable to tell us in greater detail how the director would provide  such support.

Federal internal control standards state that management should  establish an organizational structure, assign responsibility, and delegate  authority to achieve the entity’s objectives. For example, management  assigns responsibilities to discrete units to enable the organization to  operate in an efficient and effective manner and to delegate authority to  key roles throughout the entity. Additionally, management establishes  defined reporting lines within an organizational structure so that units can  communicate (up, down, and across the organization) the quality  information necessary for each unit to fulfill its overall responsibilities.

SBA’s uncertainty about the responsibilities of the offices involved in the  White House Initiative on HBCUs may be a result of changes over the  years as to which program office was chiefly responsible for the effort.  According to the Associate Administrator of the Office of Entrepreneurial  Development, the responsibilities for the White House initiative on HBCUs  have resided in various SBA program offices over the years. Moreover,  the Associate Administrator told us the Office of Entrepreneurial  Development was designated the lead office for the initiative late in the  planning process; therefore, it took time to transfer responsibilities for  addressing the initiative to the Office of Entrepreneurial Development. As  a result, the Office of Entrepreneurial Development had not yet defined  the responsibilities for other offices involved in efforts related to the White  House Initiative on HBCUs. In September 2019, SBA officials told us they  intended to establish an intra-agency working group focused on HBCUs,  which would define the roles and responsibilities of headquarters offices  related to the initiative.

While the Office of Entrepreneurial Development has been designated as  the lead office, without clearly assigned roles, responsibilities, and  reporting lines for the other offices involved in the White House Initiative  on HBCUs, SBA may not be able to effectively implement future plans for  the initiative. Additionally, the lack of clearly assigned roles,  responsibilities, and reporting lines has resulted in and may result in  future loss of institutional knowledge on efforts to implement the initiative.

SBA Has Not Communicated Its Plan to Support HBCUs to Key SBDCs and District Offices

SBA’s 2018 plan to support HBCUs had the goal of promoting  collaboration among HBCUs, SBA resource partners, and SBA district  offices. However, SBA headquarters did not communicate its plan for  supporting HBCUs to SBDCs and district offices with HBCUs in their  service areas.

Specifically, SBA officials told us the Office of Entrepreneurial  Development, which oversees the SBDC program, did not communicate  the 2018 plan to support HBCUs to SBDCs, including the goal to  collaborate with HBCUs. None of the SBDC representatives with whom  we spoke (for six lead centers and three service centers), reported that  SBA communicated information related to the 2018 plan, including goals,  measures, or other HBCU-related expectations. Furthermore, none said  they received guidance from SBA headquarters related to fostering  entrepreneurship with HBCUs, although SBDCs deliver counseling and  training to potential and existing business owners.

Similarly, the Office of Field Operations, which oversees district offices,  did not communicate the 2018 plan to support HBCUs to district offices,  including the goal to collaborate with HBCUs, according to SBA officials.  While SBA’s district offices deliver most of SBA’s programs and services,  none of the representatives of the eight district offices with whom we  spoke answered questions related to SBA’s planned efforts to support  HBCUs because they stated they were not involved with agency plans for  the White House Initiative on HBCUs or were otherwise unable to provide  a response.

Federal internal control standards state that management should  internally communicate the necessary quality information to achieve the  entity’s objectives. For example, management assigns the internal  control responsibilities for key roles and communicates quality information  up, down, and across reporting lines. This enables personnel to perform  key roles in achieving objectives, addressing risks, and supporting the  internal control system.

According to SBA officials, SBA headquarters did not communicate its  plan for supporting HBCUs to SBDCs and district offices due to the timing  of the plan’s issuance—the 2018 plan was not finalized until near the end  of the fiscal year. SBA officials told us that instead of communicating the  2018 plan at the end of the 2018 fiscal year, officials chose to focus on  the upcoming fiscal year and future efforts to support HBCUs.  Additionally, SBA officials stated the Office of Field Operations was not  involved in addressing the White House Initiative on HBCUs, although the  office is responsible for providing policy guidance and oversight to district  offices in implementing agency goals and objectives.

Because SBA headquarters did not communicate its plan for supporting  HBCUs, SBDCs and district offices with HBCUs in their service areas  were not aware of the goal to collaborate with HBCUs. Therefore, the  agency may have missed opportunities to collaborate with HBCUs and  work toward 2018 plan goals, even if for a brief period. As of September  2019, SBA officials told us the agency’s fiscal year 2019 plan (or update)  for the White House Initiative on HBCUs had not been finalized. As a  result, it was unclear when this plan would be communicated to SBDCs  and district offices. If the 2019 and subsequent plans for supporting  HBCUs are not communicated to SBDCs and district offices, SBA risks  repeating a scenario in which SBDCs and district offices with HBCUs in  their service areas are unaware of goals to support HBCUs, and therefore  may miss opportunities to engage with HBCUs.

SBA’s Data Collection for Its HBCU-Related Efforts Is Limited

The extent to which SBA collected information about its programs and  activities with HBCUs is limited. More specifically, SBA did not collect  relevant information to establish a baseline for performance measures  developed in its 2018 plan for the White House Initiative on HBCUs. SBA  officials told us that they wanted to use the measures to establish a  baseline to better assess progress towards meeting the plan’s goals to  support HBCUs in fiscal year 2019.

As noted earlier, the 2018 plan’s five measures are (1) number of  outreach events, (2) number of outreach attendees, (3) number of  partnerships established, (4) percentage of engaged HBCUs that pursued  federal funding, and (5) percentage of HBCUs engaged that found the  information useful.

Number of outreach events and attendees. SBA collects information  on the number of outreach events and the number of outreach attendees,  but this information is incomplete and not specific to HBCUs.

According to SBA officials, SBA district offices are required to collect and  report the number of outreach events and attendees to the Office of Field  Operations. However, information for outreach activities is reported on  an aggregate basis to headquarters and does not specifically identify  which institutions hosted or participated in the events. As such, the  information reported also does not specifically identify attendees affiliated  with an HBCU, such as students, faculty, or alumni. Therefore, while  representatives of all eight district offices we contacted said they have  conducted outreach activities with HBCUs, these activities would not be  readily identifiable in the information reported to headquarters.

Until July 2019, SBA district offices reported outreach events through the  activity contact report. District offices were able to include optional  information, such as the event location and organization name for their  outreach events, as shown in figure 3. SBA officials told us they can  perform manual searches for specific text (such as the specific name of  an institution or “HBCU”) included in information reported by district  offices that may identify HBCU-related activities. However, they said  manual searches are not easy or effective or routinely performed.  Therefore, manually searching for specific text that may be included in  information reported by district offices does not lend itself to efficient  monitoring of HBCU-related outreach.

SBA officials told us a temporary reporting tool (used since late July 2019  in place of the activity contact report) includes an optional data field for  district offices to identify whether their activity was HBCU-related. While  this additional field may enable users to conduct manual searches for  HBCU-related outreach more easily, SBA officials told us the data from  the field are still reported in the aggregate to SBA headquarters and  therefore continue to be not readily identifiable as HBCU-related. For  more information about SBA’s systems for reporting (including district  offices), see appendix IV.

Additionally, SBA officials told us headquarters does not have policies or  guidance for district offices for systematically collecting or reporting data  on their HBCU-related outreach. At least one district office, West Virginia,  voluntarily tracks its activities with the HBCUs in its region, using a  spreadsheet it developed.

Unlike district offices, SBDCs are not required to collect and report  information related to outreach (such as the number of outreach events  and attendees) to the Office of Entrepreneurial Development. As a result,  although all nine SBDCs we contacted conduct outreach to HBCUs, SBA  lacks data about these activities. The 2020 funding opportunity for  SBDCs requires SBDCs with HBCUs in their states to report outreach  events with HBCUs in their semi-annual and final year-end reports.

Number of partnerships established. SBA collects information on the  number of partnerships established, but this information is incomplete and  not specific to HBCUs. According to SBA officials, there is no written  definition defining partnerships for this measure, but it would include both  informal and formal partnerships. SBA collects information related to formal partnerships: SBDCs, strategic alliance memorandums, and co- sponsorship agreements. However, these records do not allow for the  ready identification of HBCU partnerships because there are no data  fields to identify whether the partner is an HBCU.

SBDCs. Information on the number of SBDCs hosted by HBCUs is  incomplete. SBA’s records do not allow for ready identification of  HBCUs as host institutions because there is no field to identify  whether a host institution is an HBCU. While SBA provided  information on the number of SBDC lead centers hosted by HBCUs  over time, information was not available on the number of SBDC  service centers hosted by HBCUs during the time frame of our review  (2008–2018) because according to SBA officials, host institutions for  service centers can change over time.

Strategic alliance memorandums. Information on the number of  strategic alliance memorandums signed with HBCUs is incomplete. In  September 2018, SBA provided us a list of HBCUs that signed  strategic alliance memorandums from 2008 through 2018, developed  by cross-referencing records of memorandums with a list of HBCUs.  SBA identified 24 such HBCUs, but we identified an additional three  HBCUs that had signed strategic alliance memorandums during this  period. In June 2019, SBA provided us a list of all strategic alliance  memorandums signed from 2015 through 2018, but we found that a  2016 memorandum with Alabama A&M University (Huntsville,  Alabama) was not included.

Co-sponsorship agreements. Information on the number of co- sponsorship agreements signed with HBCUs is incomplete. In  November 2018, SBA provided us copies of co-sponsorship  agreements signed with HBCUs from fiscal years 2013 through 2018  by manually cross-referencing its records with a list of HBCUs. SBA  identified 14 such agreements, but we identified an additional two co- sponsorship agreements signed with HBCUs.

Usefulness. SBA does not collect information on the percentage of  HBCUs engaged in activities that found the resources and information  SBA provided to be useful.

According to SBA officials, district offices are not required to collect  written feedback related to the usefulness of information presented during  their activities, such as counseling and training. If district offices solicit  feedback, it cannot be distinguished as feedback from HBCUs. For  example, SBA district offices may solicit written feedback for co- sponsored activities using a headquarters-developed form. The form  does not include fields for participants to identify their affiliation with an  HBCU and therefore, feedback received would not be HBCU-specific.

Unlike district offices, SBDCs are required to issue evaluation forms for  SBDC clients who receive continuous counseling or attend an SBDC  training event. For example, representatives from the Alabama SBDC  lead center told us they conduct quarterly counseling surveys, which  include questions related to the timeliness of the counseling and  knowledge of the business advisor. SBDCs report data on client  satisfaction rates to SBA headquarters. However, SBA officials told us the  feedback-related information SBDCs collect and report to headquarters is  not specific to HBCUs, despite the agency’s identification of this measure  as relevant in its 2018 plan.

Federal internal controls standards state that management should use  quality information to achieve the entity’s objectives. For example,  management obtains relevant data based on the identified information requirements and relevant data have a logical connection with the  identified information requirements.

SBA lacks information related to programs and activities with HBCUs  because district offices and SBDCs with HBCUs in their service areas  have not been required by relevant program offices to collect or report  information specific to HBCUs, including information relevant for  measures developed in SBA’s 2018 plan. Without collection of relevant  information for its HBCU-related efforts, particularly for measures  developed for annual plans, SBA will not be able to establish a baseline  of its efforts to support HBCUs. Moreover, without this baseline SBA  cannot determine the extent or effectiveness of its efforts to support and  engage HBCUs.

SBA’s priority goals include reaching emerging markets that are socially  and economically disadvantaged. The agency’s efforts related to HBCUs,  which educate many low-income students and help support their local  communities, can assist the agency in advancing that goal. But while SBA  has long participated in the White House Initiative on HBCUs, it has not  clearly assigned responsibilities among relevant offices for addressing  its plan for the initiative;  communicated its plan to support HBCUs to SBA district offices and  SBDCs (with HBCUs in their service areas), which deliver training and  counseling; and  collected relevant information to establish a baseline and track  ongoing efforts to support HBCUs.

Addressing these issues would better position SBA to assess the extent  to which it is reaching its goals specific to supporting HBCUs, as well as  agency-wide priority goals to more broadly reach socially and  economically disadvantaged communities.

We are making the following three recommendations to the Small  Business Administration:

The SBA Administrator should assign and document clear roles,  responsibilities, and reporting lines for headquarters offices’  implementation of SBA’s plan for addressing the White House  Initiative on HBCUs in a timely manner. (Recommendation 1)

The Associate Administrators of the Office of Entrepreneurial  Development and Office of Field Operations should communicate  planned efforts to support HBCUs, including expectations, goals, and  related measures, to the district offices and Small Business  Development Centers with HBCUs in their service areas.  (Recommendation 2)

The Associate Administrator of the Office of Entrepreneurial  Development should take and document steps to ensure that the  office’s reporting mechanisms collect the information needed to  establish a baseline for, and also inform future monitoring and  assessment of, efforts to support HBCUs. (Recommendation 3)

We provided a draft of this report to the Small Business Administration for  review and comment. In comments reproduced in appendix V, the Small  Business Administration agreed with our three recommendations. The  Small Business Administration also provided additional examples of  recent accomplishments and plans in their comments.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the Acting  Administrator of the Small Business Administration and other interested  parties. In addition, the report will be made available at no charge on the  GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-8678 or OrtizA@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix VI.

Appendix I: Objectives, Scope, and Methodology

You asked us to review SBA’s entrepreneurship-related efforts with  Historically Black Colleges and Universities (HBCU). This report  examines, as did two related products, (1) the Small Business  Administration’s (SBA) efforts to foster entrepreneurship through key  programs and activities with HBCUs in recent years, (2) SBA’s agency  plans for the White House Initiative on HBCUs, and (3) the extent to  which SBA collected and recorded information specific to HBCUs. Our  review of efforts to foster entrepreneurship focused on counseling and  training.

To address the first objective, we analyzed SBA programs and activities  that in previous work we identified as key for fostering entrepreneurship  with HBCUs. Key programs and activities are the Small Business  Development Center (SBDC) program, strategic alliance memorandums,  and co-sponsored activities. We obtained data from SBA’s Office of  Entrepreneurial Development and Office of Strategic Alliances for these  key programs and activities, and identified the participation of institutions  of higher education, including HBCUs. We reviewed and analyzed data  provided to us by SBA of the host institutions and the total amount of  funding obligated to administer the SBDC program in fiscal years 2008– 2018 and signed agreements (strategic alliance memorandums and co- sponsorship agreements) with institutions of higher education (HBCUs  and non-HBCUs) in fiscal years 2013–2018. In addition, we conducted an  on-site file review to record strategic alliance memorandums signed in  fiscal years 2013–2015 that were not readily available electronically. To  assess the reliability of these data, we reviewed available data, cross- walked them with publicly available information, if applicable, and  requested written responses from SBA officials about the data and their  limitations, if any. We determined the data were sufficiently reliable for  describing the general scale of SBA’s efforts to engage with HBCUs and  non-HBCUs.

To address the second objective, we reviewed SBA’s 2018 plan for the  White House Initiative on HBCUs and documentation of plans for 2011  and 2012, which were the only years in the period of our review (2008– 2018) for which SBA could provide documentation of such plans. We also  analyzed the three most recent executive orders related to HBCUs to  understand the responsibilities expected of federal agencies and identify  changes over time. We also reviewed additional documents that SBA  provided related to its agency plans, such as efforts to promote small  business research programs, and one available annual agency  submission (fiscal year 2010) to the White House Initiative on HBCUs on  SBA’s efforts to support HBCUs.

We interviewed SBA officials from the Office of Entrepreneurial  Development, Office of Field Operations, and the Office of Strategic  Alliances. We also interviewed representatives of six SBDC lead centers  and three associated service centers, and eight SBA district offices (with  47 HBCUs in their areas). We selected these SBDC networks and  district offices based on a combination of factors, including (1) HBCU  participation in an SBDC network (hosting a lead or service center), (2)  high number of HBCUs located in the state, and (3) high number of  agreements (strategic alliance memorandums or co-sponsorship  agreements) SBA signed with HBCUs.

Based on data SBA provided of signed strategic alliance memorandums  with HBCUs, we selected and contacted 12 HBCUs that had signed a  strategic alliance memorandum with SBA between 2013 and 2018 or  were located close to SBA offices or resource partners such as SBDCs.  We interviewed staff at eight of these HBCUs and the remaining four  HBCUs did not respond. We visited the District of Columbia, Maryland,  North Carolina, and the U.S. Virgin Islands and met with SBDC  representatives, SBA district officials, and HBCU representatives, as  applicable. We also interviewed America’s SBDCs, an association for  SBDCs, and representatives of the following advocacy groups: the  Thurgood Marshall College Fund, the United Negro College Fund, and  the National Association for Equal Opportunity.

To address the third objective, we reviewed two sets of SBA standard  operating procedures to understand information collected and reported for  (1) the SBDC program, and (2) outreach activities that include co- sponsored activities and strategic alliance memorandums. We reviewed  available program announcements or funding opportunities, and  cooperative agreements for recipients of the SBDC program to identify  their reporting requirements. We reviewed guidance related to the Office  of Field Operations’ goals and measures to identity SBA district offices’  reporting requirements. In addition, we reviewed user manuals, data entry  form templates, and data dictionaries for SBA information systems used  by SBDCs and SBA district offices, such as the Entrepreneurial  Development Management Information System and the Activity Contact  Report, to identify the extent to which data collected and reported  included HBCU-related activities.

We reviewed SBA’s 2018 plan for the White House Initiative on HBCUs to  identify performance measures developed to monitor SBA’s HBCU- related efforts. We then analyzed whether the information that SBDCs  and SBA district offices are required to report included information for  monitoring the performance measures developed in the 2018 plan. We  assessed SBA’s plans and related efforts against federal internal control  standards. Additionally, we interviewed SBA officials from the Office of  Entrepreneurial Development, Office of Field Operations, and Office of  Strategic Alliances; SBA district office officials from eight offices; and  SBDC representatives from nine SBDC networks to better understand the  extent to which SBA collects and records information related to their  engagement with HBCUs.

We conducted this performance audit, from June 2018 to November 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Appendix II: Selected Small Business Administration Resources in Historically Black Colleges and University States

The Small Business Administration’s (SBA) Small Business Development  Centers (SBDC) and district offices provide services that could foster  entrepreneurship. The SBDC program provides technical assistance  (business counseling and training) to small businesses and aspiring  entrepreneurs. SBDCs assist small businesses access capital, develop  and exchange new technologies, and improve business planning,  strategy, and financial management, among other services. The recipient  or host institution of the SBDC is responsible for establishing a lead  center and a network of service centers for a designated service area.

SBA district offices serve as the point of delivery for most SBA programs  and services. Some district office staff (including business opportunity,  lender relations, and economic development specialists) work directly  with SBA clients. SBA’s district offices also can initiate and oversee  outreach activities to foster entrepreneurship.

As of December 2018, there were 101 Historically Black Colleges and  Universities (HBCU), located across 19 states, the District of Columbia,  and the U.S. Virgin Islands. Table 3 lists those states (in addition to the  District of Columbia and the U.S. Virgin Islands), the locations of SBDC  lead centers and district offices, and the HBCUs.

Appendix III: Small Business Administration Outreach to Historically Black Colleges and Universities on Two Research Programs

The Small Business Administration’s (SBA) 2018 plan for the White  House Initiative on Historically Black Colleges and Universities (HBCU)  identifies two programs as available resources that are underutilized by  HBCUs. More specifically, the Small Business Innovation Research  (SBIR) and Small Business Technology Transfer (STTR) programs  provide research and development funding to small businesses to  develop and commercialize innovative technologies. The programs are  authorized by the Small Business Act, and SBA’s Office of Investment  and Innovation is responsible for their oversight, including coordinating  the participating agencies’ efforts for the programs.

The SBIR program began in 1982 and has four main purposes: (1) use  small businesses to meet federal research and development needs, (2)  stimulate technological innovation, (3) increase private-sector  commercialization of innovations derived from federal research and  development efforts, and (4) foster and encourage technological  innovation by small businesses owned by women and disadvantaged  individuals.

The STTR program began in 1992 and has three main purposes: (1)  stimulate technological innovation, (2) foster technological transfer  through cooperative research and development between small  businesses and research institutions, and (3) increase private-sector  commercialization of innovations derived from federal research and  development.

Both programs are similar in that participating agencies identify topics for  research and development projects and support small businesses, but the  STTR program requires the small business to partner with a nonprofit  research institution, such as a college or university or federally funded  research and development center.

SBA has made some recent efforts to increase awareness among  HBCUs about opportunities to access these programs. For example:

SBA participated in the HBCU and Minority-Serving Institution  Technology Infusion Road Tour, which was organized by the National  Aeronautics and Space Administration. As a part of this effort, SBA  participated in presentations on the SBIR and STTR programs at  three HBCUs: Tennessee State University (Nashville, Tennessee) in  April 2017, Johnson C. Smith University (Charlotte, North Carolina) in  February 2018, and Clark Atlanta University (Atlanta, Georgia) in  March 2018.

In 2018, SBA conducted an SBIR Road Tour to raise awareness of  available research and development funding. As part of the tour, the  agency conducted workshops and presentations at two HBCUs:  Alabama A&M University (Huntsville, Alabama) and Jackson State  University (Jackson, Mississippi).

SBA participated in the 2018 National HBCU Week Conference  hosted by the White House Initiative on HBCUs. SBA staff served as  speakers and panelists in sessions related to access to federally  funded programs (such as SBIR and STTR), and science, technology,  engineering, and mathematics.

The North Carolina Small Business and Technology Development  Center, an SBA resource partner, hosted a workshop in April 2018 at  an HBCU—North Carolina Central University (Durham, North  Carolina)—focused on preparing proposals for the SBIR and STTR  programs.

Appendix IV: Small Business Administration Information Systems and Forms on Counseling and Training Activities

The Small Business Administration’s (SBA) information systems collect a  variety of information about SBA’s Small Business Development Centers  (SBDC) and district office activities, including counseling and training.

Partner Identification Management System. SBDC lead centers are  required to maintain their lead center and service center information in  SBA’s Partner Identification Management System. This information  includes each SBDC service location by name, host institution, and  physical address. Additionally, SBDC locations are identified as the lead  center, service center, or satellite location. There is no data field to  identify the type of host institution (such as institution of higher education)  or whether the host institution is a Historically Black College and  University (HBCU).

Entrepreneurial Development Management Information System.  SBDCs are required to report their program data, including counseling  and training activities, through SBA’s data collection system, known as  the Entrepreneurial Development Management Information System.  According to the user manual, the system is designed around two primary  forms: SBA’s counseling information form and SBA’s management  training report. These forms include data fields for users to enter  demographic information on clients and training participants, such as  race, gender, and veteran status. Figure 4 shows the data fields related to  demographic information included in SBA’s counseling information form.

Figure 5 shows data fields related to demographic information included in  SBA’s management training report.

There are no data fields for users to enter information related to whether  a client or training participant is associated with an institution of higher  education, including an HBCU. The Entrepreneurial Development  Management Information System enables SBA management to generate  reports based on demographic information, such as the number of  minority participants trained by SBDCs, but not on the number of HBCU- affiliated clients and training participants.

Activity contact report. Until July 2019, district offices were required to  report activities (including training, presentations, and interactions with  stakeholders) that aligned with their goals and measures to the Office of  Field Operations through SBA’s activity contact report. District office staff  reported their activities in categories that included general inquiries,  training, presentations, counseling and technical assistance, outreach,  meetings, and special initiatives.

Activity contact report forms did not include data entry fields specific to  the type of institution (such as institutions of higher education, including  HBCUs) that hosted or participated in the district office’s activity.  Additionally, the activity contact report forms did not include data entry  fields to identify whether participants were affiliated with an HBCU  (students, faculty, or alumni).

For some activity contact report categories, the forms included additional  data entry fields for the event location and name of the organization  involved. For example, the activity contact report form for meetings  included optional data fields for the event location and organization name,  as shown in figure 6.

According to SBA officials, the temporary reporting tool (used since late  July 2019 in place of the activity contact report) includes an optional data  field for district offices to identity whether their activity was HBCU-related.

Appendix V: Comments from the Small Business Administration

Appendix VI: GAO Contact and Staff Acknowledgements

In addition to the contact named above, Lisa Moore (Assistant Director),  Chir-Jen Huang (Analyst in Charge), Rachel Beers, John Karikari, Ben  Licht, John Mingus, Sulayman Njie, Maria Psara, Barbara Roesmann,  Jessica Sandler, Jena Sinkfield, and Andrew Stavisky made key  contributions to this report.

Historically Black Colleges and Universities (HBCU) educated more than 226,000 African-American students pursuing a college degree in 2017.

Among other things, the Small Business Administration works with colleges and universities to provide entrepreneurial training and counseling for students and adjacent communities. We looked at how SBA has worked with HBCUs.

SBA’s efforts included providing training and counseling through its Small Business Development Center program, with centers on at least 16 HBCU campuses. We made 3 recommendations, including that SBA collect additional information to measure the effectiveness of its efforts.