NEW YORK – Goldman Sachs Group Inc. announced Tuesday it is teaming with billionaire investor Warren Buffett to invest $500 million to provide thousands of small business owners across America with college scholarships and boost their access to capital.
Goldman’s philanthropic effort, called “10,000 Small Businesses,” includes a $200 million contribution to community colleges, universities and other institutions to give grants to small business owners to further their education.
The New York-based bank also will invest $300 million through a combination of lending and charitable support. Goldman said the money will be funneled through community development financial institutions to boost lending and technical assistance available to small businesses in underserved communities.
In addition, Goldman Sachs executives, in partnership with national and local business organizations, will aid small businesses with advice, technical assistance and professional networking opportunities.
An advisory council co-chaired by Goldman Sachs CEO Lloyd Blankfein will oversee the initiative. Legendary investor and Goldman’s largest shareholder, Warren Buffett, and Harvard Business School Professor Michael Porter will serve as co-chairs as well.
“Our recovery is dependent on hard working small business owners across America who will create the jobs that America needs,” Buffett said in a statement. “I’m proud to be a part of this innovative program which provides greater access to know-how and capital two ingredients critical to success.”
The initiative comes as Goldman has started to see a rebound across many of its businesses even as the broader economy and consumers continue to struggle with rising unemployment and mounting loan losses. The bank, which has outperformed other financial companies for years, has been the strongest in its industry throughout the financial crisis. It had less exposure to toxic mortgage-backed securities than other companies and also has been more aggressive in its trading.
Its continued strength throughout the downturn allowed Goldman to quickly repay the $10 billion government bailout it received at the height of the credit crisis. That repayment was also done, in part, to rid the bank of restrictions on annual compensation that were attached to the loan. Goldman has been criticized for setting aside billions for employee paychecks despite the continuing weak economy.
10,000 Small Businesses, which has been in development for nearly a year, is a five-year program modeled on the Goldman Sachs 10,000 Women initiative, which creates partnerships between academic institutions and non-profits to provide business and management education to women around the world.
Other Council members include Dr. George Boggs, president and CEO of the American Association of Community Colleges, Dr. Glenn Hubbard, dean of Columbia Business School and Marc H. Morial, president and CEO of the National Urban League, among others.
The first community colleges to participate will be LaGuardia Community College in Queens, N.Y., which houses a Small Business Development Center. The first community development financial institution to receive financing from Goldman Sachs will be New York-based Seedco Financial Services Inc.