The City of San Antonio is poised to end its direct support of three nonprofits that provide support services to small businesses on the East, South and West sides of town.
Pitched in the city’s 704-page proposed fiscal year 2025 budget document as a cost savings of $517,000, the change would mean the end of municipal operational support for Prosper West, SAGE and Southside First Economic Development Council.
All three nonprofits have faced leadership changes and other challenges in recent years; struggles that their leaders say have hampered their ability to help small businesses in historically underserved parts of town. Like the businesses they aim to serve, the nonprofits have struggled through the pandemic, inflation and construction woes.
In 2023, an internal city audit found that the city’s Economic Development Department had not been adequately monitoring its funding agreement with Prosper West, and the nonprofit had not properly documented all its processes.
That audit was the catalyst behind the city’s decision to hold off on funding all three nonprofits. The CEO of Prosper West resigned earlier this year, citing in part a strained relationship with city officials.
Prosper West is now helmed by an interim CEO, as is Southside First, although Linda Pearson recently laid herself off due to budget constraints. She is now working in a voluntary capacity. SAGE’s latest CEO, James Nortey, began in January; its board recently voted to triple its service territory.
The city’s decision earlier this year to hold back funding that had been allocated in the 2024 budget further strained the nonprofits, all had to lay off staff to stay afloat.
Earlier this year, the city gave $1.5 million to another nonprofit to distribute in lieu of those missing general fund dollars, but delays getting individual contracts in place with the three nonprofits mean that to date, that money hasn’t started flowing.
With the city’s proposed 2025 budget and its 2026 plan both showing the $517,000 as cost savings, the shift away from directly funding these organizations, which each serve small businesses within defined geographic boundaries, appears to be permanent.
SAGE’s Nortey has said he’s working to expand the nonprofit’s breadth of funders to adjust for the loss of direct city funding.
But he expressed disappointment in the city’s decision. “Budgets are moral documents that reflect values and priorities,” he said, and ending operational support for SAGE “continues the tradition of neglect on the Eastside.”
Expanding indirect support
According to the narrative that opens the proposed budget document released by the City’s Manager’s office, the city believes that small business support should not be geographically defined, but instead be “culturally informed and consistent across providers.”
The document also notes that the city “is still being viewed as the ‘first dollar in'” by the nonprofits, “but could leverage greater outcomes when viewed as ‘last dollar in.'”
That appears to sum up the strategy of the city’s Economic Development Department: it will still support nonprofits that serve San Antonio’s small businesses, but will do so through “capacity strengthening, technical assistance and specific initiatives that address barriers to accessing capital.”
The beginning of that shift could be seen when the department reworked its contract earlier this year with the San Antonio chapter of LISC, a national nonprofit that works with existing local organizations in historically disadvantaged communities to boost their capacity through leadership training, technical assistance and funding.
The $1.5 million the city gave LISC will cover up to $260,000 in operating expenses for six nonprofits that offer small business support services through the end of 2025. That includes SAGE, Prosper West and Southside First, as well as three nonprofits that do not operate within geographic boundaries: Maestro Entrepreneur Center, Culturingua and American Indians of Texas at the Spanish Colonial Missions.
In addition to that money, LISC has created a networking group for all six nonprofits to strengthen their boards of directors and come up with consistent policies and procedures that will help them access other sources of funding — so they can better provide services to San Antonio’s small businesses.
“You need boots on the ground and grassroots connections in the community,” so strengthening these nonprofits is in the city’s interests, said Leilah Powell, LISC San Antonio’s executive director.
Creating an ecosystem
The nonprofits and the city agree that small businesses’ single greatest need is access to flexible capital. The city has given out millions in federal pandemic relief grants to small businesses over the past several years, but that money has largely been spent.
Earlier this year, the city partnered with LiftFund again to launch another round of the popular zero percent interest loan program. Sixty-six businesses have received loans from $500 to $100,000, which can be used for startup costs, daily operations and expansion.
And the city will continue its construction mitigation grant program for at least the next two years, according to the budget document, which shows $1.4 million earmarked in each year for businesses impacted by ongoing construction projects.
The city also funds small business support through Launch SA, now being administered by Geekdom, which recently reopened in a refurbished space in the Central Library. Like the other nonprofits, Launch SA offers networking and support via classes, panel discussions and one-on-one assessments of businesses’ needs.
The goal is for the Economic Development Department to focus on the small business ecosystem as a whole, said Brenda Hicks-Sorensen, the department’s executive director, and make sure a small businesses can get services regardless of where they enter that ecosystem. The nonprofits, she said, should be “connectors.”
