Giving Compass' Take:

• According to the author, philanthropy must invest more in underserved entrepreneurs to stimulate and grow a more inclusive economy.

• How can donors support entrepreneurship that is making an impact? How can funders identify these investment opportunities?

• Read about the impact of supporting underserved entrepreneurs.

The data tells us that the number of start-ups fell by nearly half between 1978 and 2011, and start-up rates were lower between 2009 and 2011 than they were between 1978 and 1980 in every state and Metropolitan Statistical Area except one. If we aren’t producing new businesses, we aren’t producing jobs and opportunities for people of color and low-income Americans.

To succeed, we need philanthropists and other social change actors to expand our aperture from primarily focusing on mitigating the damage capitalism can cause—through efforts such as workforce re-training for jobs lost to globalization or advocating for environmental protections—to affirmatively building a new capitalism that creates shared prosperity.

Now is time to transform the face of entrepreneurship in America. Our current institutions—the banks, and private equity and venture firms that provide capital, as well as the technical assistance providers that help companies grow—have a pitiful track record of serving people of color and women successfully.

Capital, both loans and equity, for all types of businesses, at every stage, must be more readily available. We need to attract many more actors and investors to this work to not only stimulate competition, but also expand the number and types of products on offer.

Lenders and investors must expand existing definitions of risk, return, and exit. We need to not only push existing lenders and investors to change and diversify their definitions of these concepts, but also create new and different institutions willing to use more flexible investment parameters.

We need to connect the dots. Social enterprise-building organizations... are working effectively to help companies grow in many places. Services like these can and should be everywhere.

The entrepreneurs we hope to benefit must be a part of the process. Human-centered design—listening to and co-creating solutions with the communities we are trying to help—is becoming the status quo approach to social change.

Read the full article about entrepreneurship in America by Ben Hecht at Stanford Social Innovation Review.