Local Chambers of Commerce Are Failing. Small Businesses Nationwide Could Suffer

At the local visitor’s center, you’ll learn a few things about Latrobe, Pennsylvania: The city of 8,000, just east of Pittsburgh, is the original home of golf legend Arnold Palmer, television’s Fred Rogers, and Rolling Rock beer. The banana split dessert originated here.

If you read between the lines, you’ll also understand how much the region’s entrepreneurs are struggling. The visitor’s center is supposed to be staffed most days by Briana Tomack, the Greater Latrobe-Laurel Valley Chamber of Commerce’s president and CEO, or her one full-time employee. On April 15, both were furloughed. Tomack returned earlier this month–and she’s already worried about money again.

Most of her chamber’s nearly 500 member companies can no longer afford to pay dues. Stay-at-home orders and event restrictions have made additional fundraising almost impossible. Without a new source of funding, Tomack says, her chamber–and others like it–won’t survive the year. That would be a major blow for Latrobe’s Main Street: Eighty-five percent of the chamber’s membership are “very small” businesses with few employees. They use chamber resources to aid their HR, marketing, and recruiting efforts.

Tomack’s chamber is one of many in small-town or rural areas across the country on the brink of collapse–and despite their importance to small businesses, they’ve been explicitly barred from federal Covid-19 relief, to this point. Some nonprofits–public charities, private foundations, and veterans’ organizations–are eligible for the Paycheck Protection Program (PPP), the federal government’s $667 billion forgivable loan program. Membership groups like chambers of commerce aren’t, because of their differing tax designations.

As of July 23, the PPP’s budget still has $150 billion remaining. Tomack hopes she’ll finally gain eligibility for that money in Congress’s upcoming Phase 4 Covid-19 relief bill. “Counting July, we need $100,000 to get us through the end of the year,” she says. “Our biggest expenses are payroll and rent. We’re very frugal here–we don’t spend money on things we don’t need.”

Stories like Tomack’s aren’t likely to be extensively reported, because small chambers don’t typically like to publicly admit weakness. They want to preserve their competitiveness against larger regional chambers and maintain morale in their local business ecosystems, according to Tom Sullivan, the U.S. Chamber of Commerce’s vice president of small-business policy. How many chambers are close to failing? Tomack says the number is high. “A chamber in Ohio recently closed,” she says. “I have one up the road [in Pennsylvania] in the same situation we are.”

If local chambers start failing, small businesses nationwide could struggle. A 2012 survey by Atlanta-based consulting firm the Schapiro Group notes that chamber membership increases consumer awareness of a company by 73 percent–and the likelihood of a consumer choosing to do business with that company rises by 80 percent.

In early May, the U.S. Chamber of Commerce sent a letter to Congress on behalf of all nonprofits ineligible for the PPP. It was signed by more than 4,000 organizations, including 2,000-plus chambers of commerce–roughly a third of all local chambers nationwide.

“It’s the biggest coalition letter that I’ve ever seen from local chambers,” says Sullivan.

Such advocacy hasn’t yet succeeded. Sullivan says some lawmakers see chambers of commerce primarily as lobbying organizations, and don’t want to give bailouts to lobbyists. Their reticence is further compounded by a tax designation issue: Chambers are 501(c)(6) nonprofit organizations, alongside real estate boards and professional football leagues. The optics of allowing organizations like the National Football League to access the PPP would be damaging, to say the least.

For Sullivan, the solution is easy: Limit loan recipients by size and specifically prohibit the money from being used to lobby. He says he’s personally witnessed politicians like Speaker Nancy Pelosi (D-Calif.) and Senator Lindsay Graham (R-S.C.) agree–which is why he’s befuddled that it hasn’t happened yet. “It has been incredibly frustrating to be on Zoom calls with politician after politician,” Sullivan says. “Every one of them has agreed with the need for local chambers to access these loans. There have been four bills passed in the past five months, and none of them have included this provision. It defies logic.”

In Pennsylvania, Tomack used her furloughed time to pitch her region’s larger businesses to donate to her chamber–a challenging task, she says, when money should rightfully be going to organizations like food banks. Once Pennsylvania allowed it, she threw a 100-person socially distanced fundraising event to cobble together more funds, which will partially cover operating expenses for the next few months. After that, the game could be over.

“I’m not a quitter,” Tomack says. “I work with a lot of community leaders. I’m going to continue to fight to do what I can to keep us going. But we need funding.”

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