[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
SUBCOMMITTEE HEARING: IS THE VETERANS
CORPORATION PREPARED TO PROVIDE
ENTREPRENEURIAL DEVELOPMENT ASSISTANCE
TO SERVICE MEN AND WOMEN
RETURNING FROM IRAQ AND AFGHANISTAN?
=======================================================================
SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT
COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MAY 2, 2007
__________
Serial Number 110-18
__________
Printed for the use of the Committee on Small Business
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
______
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA M. VELAZQUEZ, New York, Chairwoman
WILLIAM JEFFERSON, Louisiana STEVE CHABOT, Ohio, Ranking Member
HEATH SHULER, North Carolina ROSCOE BARTLETT, Maryland
CHARLIE GONZALEZ, Texas SAM GRAVES, Missouri
RICK LARSEN, Washington TODD AKIN, Missouri
RAUL GRIJALVA, Arizona BILL SHUSTER, Pennsylvania
MICHAEL MICHAUD, Maine MARILYN MUSGRAVE, Colorado
MELISSA BEAN, Illinois STEVE KING, Iowa
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska
DAN LIPINSKI, Illinois LYNN WESTMORELAND, Georgia
GWEN MOORE, Wisconsin LOUIE GOHMERT, Texas
JASON ALTMIRE, Pennsylvania DEAN HELLER, Nevada
BRUCE BRALEY, Iowa DAVID DAVIS, Tennessee
YVETTE CLARKE, New York MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana VERN BUCHANAN, Florida
HANK JOHNSON, Georgia JIM JORDAN, Ohio
JOE SESTAK, Pennsylvania
Michael Day, Majority Staff Director
Adam Minehardt, Deputy Staff Director
Tim Slattery, Chief Counsel
Kevin Fitzpatrick, Minority Staff Director
SUBCOMMITTEE ON INVESTIGATIONS & OVERSIGHT
JASON ALTMIRE, PENNSYLVANIA, Chairman
CHARLIE GONZALEZ, Texas LOUIE GOHMERT, Texas, Ranking
RAUL GRIJALVA, Arizona LYNN WESTMORELAND, Georgia
.........................................................
(ii)
C O N T E N T S
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OPENING STATEMENTS
Page
Altmire, Hon. Jason.............................................. 1
Gohmert, Hon. Louie.............................................. 2
WITNESSES
Blackwell, Walter, National Veterans Business Development
Corporation.................................................... 3
Elmore, William D., Office of Veterans Business Development, U.S.
Small Business Administration.................................. 5
Sharpe Jr., Joseph, National Economic Commission, The American
Legion......................................................... 8
Celli, Louis J., Committee on Veterans Business Affairs.......... 9
Cain, Allan D., Carthage Self-Storage............................ 13
APPENDIX
Prepared Statements:
Altmire, Hon. Jason.............................................. 26
Gohmert, Hon. Louie.............................................. 28
Blackwell, Walter, National Veterans Business Development
Corporation.................................................... 30
Elmore, William D., Office of Veterans Business Development, U.S.
Small Business Administration.................................. 43
Sharpe Jr., Joseph, National Economic Commission, The American
Legion......................................................... 49
Celli, Louis J., Committee on Veterans Business Affairs.......... 53
Cain, Allan D., Carthage Self-Storage............................ 57
Statements for the Record:
Clair, James A., Ultimate Defensive Driving School............... 60
Wynn, Joe, Veterans Enterprise Training and Services Group, Inc.. 63
(iii)
SUBCOMMITTEE HEARING: IS THE
VETERANS CORPORATION PREPARED
TO PROVIDE ENTREPRENEURIAL
ASSISTANCE TO SERVICE MEN AND
WOMEN RETURNING FROM IRAQ AND
AFGHANISTAN?
----------
WEDNESDAY, MAY 2, 2007
U.S. House of Representatives,
Committee on Small Business,
Subcommittee on Investigations & Oversight
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2360 Rayburn House Office Building, Hon. Jason Altmire
[Chairman of the Subcommittee] presiding.
Present: Representatives Altmire, Gohmert.
OPENING STATEMENT OF CHAIRMAN ALTMIRE
ChairmanAltmire. I'm pleased to call to order this
morning's hearing on the Preparedness of the Veterans
Corporation to Provide Entrepreneurial Development Assistance
to Servicemen and Women Returning from Iraq and Afghanistan.
The Committee is concerned about the country's ability to
fully meet the needs of our nation's Veterans. I believe that
we owe no greater debt to the men and women in uniform and to
date over 600,000 Veterans have come home from Iraq and
Afghanistan.
Given the significant number of returning service members,
it's critical that they're afforded every opportunity for
economic success at home. And to ensure that the emerging needs
of Veterans from the Iraq and Afghanistan Wars are being met,
this hearing today will focus on the effectiveness of the
National Veterans Business Development Corporation.
Congress created the Veterans Corporation in 1999 to help
Veterans transition their skills and leadership experience into
economic success. Its mission is to provide entrepreneurial
development resources for these heroic Americans to start small
businesses. The organization operates customized small business
assistance programs including access to capital and
entrepreneurial development resources.
Today, we will examine the Veterans Corporation's level of
readiness to meet the emerging needs of Veterans. This
Committee wants to work with all involved to ensure that the
Corporation can fulfill its mission.
Within the last few years, the organization significantly
changed its operations, shifting much of its service delivery
responsibilities to public and private entities such as the
SBA's Veterans Business Outreach Centers. There has been great
unease about the organization as it implements its remaining
direct services. The Veterans Corporation services should be
reflective of the needs of Veterans returning from Iraq and
Afghanistan.
In addition to generating rapid growth in the sheer number
of Veterans returning, the wars being waged in Iraq and
Afghanistan have affected the composition of our nation's
Veterans. For example, 30 percent of these troops represent the
National Guard and Reservists; 1 in 5 are now service-disabled;
and 15 percent are women. This unique composition of Veterans
creates unique needs as many return and seek economic stability
through entrepreneurial opportunities.
The Veterans Corporation must operate new programs for
service-disabled and female Veterans and its reservist programs
should be expanded. It's clear that as Veterans continue to
turn to the Corporation, it must respond appropriately to meet
these emerging needs. We also need to reduce the Corporation's
dependence on its partners for the delivery of Veteran
services. Many of the Veterans Corporation's partners have not
created programs that address the needs of the current
composition of separating service members.
The Veteran population requires customized assistance to be
successful in starting or expanding these endeavors. By
delegated the responsibilities, the organization has become
less accountable in its service delivery performance. Outreach
efforts have also lagged. Currently, one third of Veterans have
no knowledge of programs targeted to them to promote small
business entrepreneurship.
The Veterans Corporation should utilize its resources more
effectively and efficiently through improvements in its
operational strategy.
With more and more Veterans returning home from abroad and
re-entering civilian life, I will continue to work to ensure
the resources they deserve as will the other Members of the
Committee. I look forward to the witnesses' comments on the
emerging Veterans' needs and the Veterans Corporation
performance in fulfilling them. And I wanted to make clear
before our witnesses today and thank you all for being here,
that we're here to help you achieve your mission. This is not
an effort to play gotcha in any way. We're here to see if we
can identify ways that this Committee can help you and work
with you in achieving the goal that we all know is important,
of helping these Veterans when they come back, returning into
entrepreneurship activities.
So thank you all and I now recognize Ranking Member Gohmert
for his opening statement.
OPENING STATEMENT OF MR. GOHMERT
Mr.Gohmert. Thank you, Mr. Chairman, I do appreciate your
having this hearing and I appreciate the witnesses being here.
It's obviously important or you wouldn't have gone to this
trouble and we appreciate your efforts.
I want to particularly welcome a constituent of mine, my
dear friend, Allan Cain, for making the trip to testify before
the Committee and I'll be introducing him a bit later.
But as a U.S. Congressman and former Captain in the U.S.
Army, one of my top priorities is to ensure that our nation's
military service Veterans receive the help and care they need
and deserve. As I repeatedly said, any nation that fails to
honor those who have honored it with their service will not
remain a nation much longer.
As I visit with small business owners in my District in
East Texas, I'm continuously shocked at the increasing costs
and number of procedural hoops that small business owners must
deal with just to open their doors in the morning. Without any
assistance in navigating the difficult process of starting a
small business, Veterans may end up paying more, the process
taking longer, or worse, the Veteran may not open a small
business at all.
According to Census estimates, about 4.2 to 5.5 million
small businesses are owned by one or more U.S. Veterans. With
the increased number of troops necessary for U.S. military
operations abroad, there will no doubt be an increase of
Veterans returning to the country, entering the job market and
beginning a small business. It is essential we do our part here
to ensure the transition from the service to small business is
as simple and trouble free as it can possibly be.
Again, thank you, Mr. Chairman, for holding this hearing
and I look forward to hearing from our panel of distinguished
witnesses. Thank you.
ChairmanAltmire. I ask unanimous consent that the record
will be open for five days for Members to submit their
statements. Hearing no objection, so ordered.
So I'd like to first, before I introduce the witnesses,
extend a warm welcome to a constituent of mine, Mr. Jim Clair,
who took the time to appear at the hearing today.
Jim, could you stand up? Mr. Clair is a former U.S. Marine
and a current member of the Army National Guard which he just
recently rejoined at the age of 40. He is also an owner of a
driving school business and I want to thank him for being here
because there's thousands and thousands of Veterans who are
benefiting from small business entrepreneurship, but I can
think of no better example than Jim Clair. And I appreciate you
being here.
Our first witness today is Mr. Blackwell. He is President
and CEO of the National Veterans Business Development
Corporation. The Veterans Corporation was established in 1999
to provide entrepreneurial development services for our
nation's Veterans and I want to thank you, Mr. Blackwell, for
being here and we look forward to hearing your remarks.
STATEMENT OF MR. WALTER BLACKWELL, PRESIDENT AND CEO, NATIONAL
VETERANS BUSINESS DEVELOPMENT CORPORATION
Mr.Blackwell. Chairman Altmire, Ranking Member Gohmert and
distinguished Members of the Subcommittee, thank you for giving
me this opportunity to testify before you today.
I request that my written testimony, along with a copy of
TVC's annual report be entered into the official record.
ChairmanAltmire. Without objection.
Mr.Blackwell. My name is Walter G. Blackwell. I'm President
and CEO of the Veterans Corporation and a Navy Veteran. I'm
joined today by two of our three ex officio members of the
board, Linda Oliver, representing Defense Secretary Gates;
fellow panelist, Bill Elmore, representing SBA's Administrator
Preston; Scott Deniston, representing Secretary of Veteran
Affairs Nicholson wanted to be here today, but his schedule did
not permit.
Together, these agencies and TVC are creating and
delivering tools and opportunities for Veteran entrepreneur
success. Joe Sharpe, also on this panel here today, from the
American Legion and Joe serves as chairman of TVC's Veteran
Service Organization Council. Bill Ferguson, sitting behind me
of the Iraq-Afghanistan Veterans of America, our newest member
of that VSO, is also in attendance today.
Today, you've asked us is the Veterans Corporation, TVC,
prepared to provide entrepreneurial development assistance to
servicemen and women returning from Iraq and Afghanistan. Our
answer is a resounding yes. The Veterans Corporation is
uniquely positioned to assist our nation's Veterans. The needs
of Veterans returning from the current conflict are really no
different from the needs from past conflicts, however, this set
of servicemen and women, returning from Iraq and Afghanistan,
is the first set of Veterans comprised of those who embrace and
implement on-line electronic tools for communications and
education.
TVC has made extensive efforts over the last several years
to accommodate this fact in creating and assembling an on-line
tool box for business in transition. TVC has leveraged the
knowledge and experience gained in delivering face-to-face
programs, education, mentoring and counseling since 2001 by
expanding the essential elements of business education,
mentoring and counseling into on-line deliverables. During the
summer of 2006, we further enhanced TVC's website to provide a
straightforward format to access the extensive resources
available to today's Veteran entrepreneurs. Details of these
programs can be found in my written testimony.
Iraq and Afghanistan Veterans, like Veteran entrepreneurs
from all generations, have three critical business needs:
access to capital, access to bonding, and access to education
through coursework, mentoring, and counseling. TVC's status as
a 501(c)(3) organization has allowed us to create valuable
mentored public/private program partnerships not available
through any current government agency. Two of TVC's private
sector partners are with me today: Jim Mingey, President and
CEO of the National Economic Opportunity Fund. Jim operates
TVC's access to the capital program and works with Veteran
entrepreneurs who need business loans, financial assistance or
strategic financial planning. Also joining me is Lynn Schubert,
President and CEO of the Surety and Fidelity Association of
America. Lynn and her organization facilitate TVC's fully
mentored access to bonding program providing Veteran
entrepreneurs involved in contracting fields such as
construction with a complete set of bonding products.
TVC continues to fund three Veteran business resources: in
St. Louis, Missouri; Flint, Michigan; and Boston,
Massachusetts. The Committee will hear from Lou Celli, the head
of our Boston hub this morning. Lou is currently working with a
soldier recovering from a traumatic brain injury at Walter
Reed, who is interested in opening a Dunkin' Donuts franchise.
Let me give you just one example of our current work with a
newly returned Veteran. David Barker is an Army Reservist
currently in San Diego, California where he is recovering from
injuries that he sustained while fighting in Iraq June 11,
2005. His goal, when he leaves the military next month, is to
return to his home town and run his family's collision, paint,
and repair shop. Jim Mingey flew to El Paso, Illinois to meet
and talk to David and his family and discuss their business
plans and financial needs. David estimates that he'll need
approximately $265,000 for a building and two years of salaries
and expenses. Jim's currently working with David to get that
financing.
In my remaining time, I'd like to highlight two significant
new programs. First is our Boots to Business Transition Skills
for Success. Boots to Business is a comprehensive on-line
resource providing educational workplace training,
transitioning skills, and Boots to Business combines the
elements from successful programs used independently in
thousands of vocational schools, job training centers,
community college, detention and correctional facilities, Job
Corps Centers, and adult education programs nationally. TVC has
integrated the best of these elements into a cohesive,
interactive, on-line program.
TVC has also launched a comprehensive new program Deploy-
proof Your Business, designed to assist members of the National
Guard and Reserve in protecting their businesses before they're
deployed. Deploy-proof Your Business includes sections on
suspending or sustaining your business, as well as a
comprehensive section comparing the two options side by side.
With helpful tools, links, checklists and other on-line
resources, this site is developed as an on-going program to
answer the questions and frustrations many National Guardsmen
and Reservists have when they leave their businesses for
deployment.
With us today is also Jim Clair, introduced by the Chairman
previously. And we're delighted that Jim works with us and we
hope to assist him as he prepares for his own deployment in the
future.
Mr. Chairman, I'd be happy to answer any questions you or
other Committee Members may have. Thank you.
[The prepared statement of Mr. Blackwell may be found in
the Appendix, on page 30.]
ChairmanAltmire. Thank you, Mr. Blackwell.
The second witness is Mr. William Elmore. He's the
Associate Administrator for the Veterans Business Development
at Small Business Administration. He heads the Office of
Veterans Business Development, administers the Veterans
Business Outreach Center, and is an ombudsman for Veterans
Affairs at the agency.
Welcome, Mr. Elmore.
STATEMENT OF MR. WILLIAM ELMORE, ASSOCIATED ADMINISTRATOR FOR
THE VETERANS BUSINESS DEVELOPMENT, UNITED STATES SMALL BUSINESS
ADMINISTRATION
Mr.Elmore. Thank you, sir. Chairman Altmire and Ranking
Member Gohmert, distinguished Members of the Committee, thank
you for your invitation and the opportunity to share with this
Committee the initiatives of the U.S. Small Business
Administration with regard to our efforts to support and assist
the success of Veterans, National Guard and Reservists, as well
as to share with you some of the assistance that we are
presently providing to members of the U.S. military who have
been or who may be activated for the global War on Terror.
I am Bill Elmore, the Associate Administrator for Veterans
Business Development. Before I begin my testimony, I would like
to express my deepest sympathy for the loss of your colleague
and a Member of this Committee, Congresswoman Juanita
Millender-McDonald.
On behalf of Administrator Preston and the SBA, I want to
thank you for the opportunity to be able to share some of SBA's
accomplishments over these past six years. On January 24, 2007,
Administrator Preston and Office of Federal Procurement Policy
Administrator Dennett, jointly issued a memorandum for heads of
departments and agencies. This memorandum expressed SBA's broad
commitment to enhancing all of our entrepreneurial programs and
services for our nation's brave service members, more
specifically those members returning from duty in the global
War on Terror, who are injured or disabled.
SBA's Office of Veterans Business Development plays an
important role in assisting and supporting Veteran
entrepreneurs, however, it is important to note that SBA
support efforts go beyond the activities of my specific office.
To keep SBA's commitment to our service members, we have
tasked our loan programs, our business counseling and training
programs, and our procurement assistance programs with
expanding and improving services for Veterans and specifically
service-disabled Veterans. We have significantly increased
loans to Veterans. The number of new loans to Veterans has
grown from 4,800 in FY 2000 to approximately 8,000 in FY 2006.
Prime contracts have a three percent government-wide
federal procurement goal established by Public Law 106-50 for
small businesses owned and controlled by service-disabled
Veterans. In addition, 106-50 establishes a best efforts clause
for Veterans in federal procurement at the subcontracting
level. Though the Federal Government has yet to achieve the
required three percent goal, it is making progress towards
accomplishing it. In 2004, President Bush issued Executive
Order 13360 to strengthen opportunities in federal contracting
for service-disabled Veteran-owned small businesses.
Preliminary data shows that SBA and the Department of Veterans
Affairs both exceeded the three percent goal for SDV small
businesses in Fiscal Year 2006.This accomplishment demonstrates
leadership by example and represents a significant improvement
for both agencies over our achievements in FY 2005.
The number of small businesses owned by SDVs who are
expressing interest in federal procurement by registering in
Government Central Contractor registration has grown
significantly and continues to grow.
I wanted to share with you that SBA is strengthening our
full range of programs, including our Small Business
Development Center program, SCORE; our Women's Business Center
program; our Veterans Business Outreach Center program that you
mentioned; our Special District Office Outreach Initiative; our
Surety Bond Guarantee program. We're going to be implementing a
new matchmaking initiative very soon, specifically for Veterans
and service-disabled Veterans and we're strengthening the role
that our Procurement Center representatives play in the whole
federal procurement arena, specifically for Veterans and
service-disabled Veterans.
I would now like to speak to SBA's efforts to assist small
business owners who are members of reserve components that have
been or may be affected by activation. In FY 2001, we began
offering and continue to promote a disaster loan program as one
tool that can be of great assistance to an activated reservist
business owner. I am proud to report to you that SBA initiated
and continues to lead the federal effort to conduct outreach,
develop assistance for and design program efforts to enhance
pre- and post-mobilization business planning, lending and other
assistance for small business owners who may be at risk of
economic damage when activated.
In the wake of September 11, 2001, attacks on America, we
established an SBA working committee to coordinate agency
outreach and service delivery to Reservists. In 2002, we took
several steps to assist Reservists by creating the Reserve and
Guard Fact Sheet which has been distributed to hundreds of
thousands of mobilizing and de-mobilizing Reservists, as well
as establishing a special webpage specifically for Reserve and
Guard Members.
We have also produced and we have distributed in excess of
40,000 of what we refer to as our Reserve and Guard kits which
is at least at last state of production, comprehensive,
compilation of all the services and programs of SBA and every
other agency organization that we could find across America.
And those were included in there.
It is important to note that we include Reservists with
Veteran status in our Community Express Loan Program presently
and last year Congress enacted our proposal for the authority
to include Reservists in our definition of Veteran for purposes
of our comprehensive outreach program. We recognize the
importance of supporting and maintaining the civil skills of
the self-employed Reservists involved in the global War on
Terror as our nation's efforts against terror continue. We
understand the importance of SBA's programs in providing
assistance and support to our brave men and women and we are
proud of the efforts of service-disabled Veterans, Veterans and
Reservists and we intend to continue our aggressive efforts on
their behalf.
And I want to thank you for this opportunity to testify
before you today. I am proud of the progress we have made and
we look forward to continuing to assist our brave men and women
who unselfishly serve our nation proudly.
This concludes my testimony, and I welcome any questions
you may have. Thank you.
[The prepared statement of Mr. Elmore may be found in the
Appendix, on page 43.]
ChairmanAltmire. Thank you, Mr. Elmore.
Our third witness is Mr. Joseph Sharpe, Jr. He's the third
witness. He is the Deputy Director of the National Economic
Commission for the American Legion. The American Legion, which
has nearly three million members was founded as a community-
service organization in 1919 to assist war-time Veterans.
We're honored to have you here today, Mr. Sharpe. We look
forward to your testimony.
STATEMENT OF MR. JOSEPH SHARPE, JR., DEPUTY DIRECTOR OF THE
NATIONAL ECONOMIC COMMISSION, AMERICAN LEGION
Mr.Sharpe. Mr. Chairman and Members of the Committee, I
appreciate this opportunity to share the views of the American
Legion on whether the Veterans Corporation is prepared to
provide entrepreneur development assistance to servicemen and
women returning from Iraq and Afghanistan.
American Legion views small business as the backbone of the
American economy. It is the mobilizing force behind America's
past economic growth and will continue to be the major factor
as we move well into the 21st century.
Presently, more than 9 out of every 10 business firms
produce approximately half of the gross national product.
Currently, over one half of the nation's workforce is employed
by small business with the average company employing
approximately 11 persons.
Small businesses created by some estimates, 60 percent to
80 percent of the net new jobs, therefore providing a central
element for strong economic growth. Government should assist in
the creation of new jobs by encouraging qualified entrepreneurs
to start and expand their small businesses. No group is better
qualified or deserving of this type of assistance than our
Veterans.
Congress enacted the Veterans Entrepreneurship and Small
Business Development Act of 1999, Public Law 106-50 to assist
Veterans and service-connected disabled Veterans own businesses
by creating the National Veterans Business Development
Corporation. In the beginning of its inception, the Veterans
Corporation created a Veterans Entrepreneur Training program to
provide and foster successful Veteran entrepreneurship within
the Veteran Business Committee. But this program no longer
exists.
Currently, the organization's main efforts have been to
provide distance learning education, would-be Veteran
entrepreneur training and how to start and expand their own
businesses to include training and finance, accounting, and
contracting. The Veterans Corporation has gone through a number
of mission and staffing changes since its inception. Its latest
vision to assist Guard and Reserve in transitioning members of
the Armed Forces and their families with establishment of their
own businesses. However, the Veterans Corporation and the
American Legion are currently involved in the discussion on the
best method or methods of assisting these deserving Veterans.
TVC has in the past stressed creating on-line education
programs to assist Veterans with obtaining basic literacy
skills hosted by other third-party organizations. Their current
plans are to create an on-line platform to match Veterans with
entrepreneur education and career opportunities and to provide
grants to small business development centers around the country
and other business development organizations to specifically
assist Veterans.
In conclusion, the American Legion realizes the National
Business Development Corporation created through Public Law
106-50 was uniquely positioned to provide American Veterans
with superior entrepreneurship training and business resources
that shows them how to start or grow a business and in turn
contribute to the economic well-being of the nation. The
American Legion believes that the Veteran Corporation has not
fulfilled all the mandates of Public Law 106, and is actively
moving away from those mandates into a different direction by
focusing their efforts and funding on on-line entrepreneur
programs they believe would maximize their available resources
and reach more returning Veterans. Therefore, the American
Legion strongly recommends that the Small Business
Administration Office of Veterans' Business Development, be the
lead agency to ensure Veterans returning from Iraq and
Afghanistan are provided with entrepreneur development
assistance. Comprehensive training should be handled by SBA,
and augmented by TVC's on-line training. The American Legion
strongly supports the mandates of Public Law 106-50 that were
designed to assist all Veterans wishing to start or expand
their businesses and to protect their businesses.
If there's a true desire to assist Veterans returning from
Iraq and Afghanistan in developing small businesses, we must
work together to enforce the mandates of Public Law 106-50.
Mr. Chairman, this concludes my testimony. I appreciate the
opportunity to present the views of the American Legion.
[The prepared statement of Mr. Sharpe may be found in the
Appendix, on page 49.]
ChairmanAltmire. Thank you, Mr. Sharpe.
Our fourth witness today is Mr. Louis Celli. He is the
founder and CEO of the Northeast Veterans Business Resource
Center which trains Veterans to start and grow small
businesses. He is also chair of the Advisory Committee on
Veterans Business Affairs which provides advice to the
Administrator of the Small Business Administration, Congress,
and the President.
Welcome, Mr. Celli.
STATEMENT OF MR. LOUIS J. CELLI, JR., CHAIRMAN, COMMITTEE ON
VETERANS BUSINESS AFFAIRS
Mr.Celli. Good morning, Chairman Altmire, Ranking Member
Gohmert, and distinguished Members of this Committee. Thank you
for the invitation to come before you and share my experiences
and work within the Veteran business-owner community. I'm a 22-
year Veteran of the United States Army, a disabled Veteran and
I've started two businesses. I am the chairman, as you've
mentioned, of the SBA's Veterans Small Business Advisory
Committee, and the vice chairman of the American Legion's Small
Business Task Force.
My company, the Northeast Veterans Business Resource Center
is headquartered in Massachusetts and has an office at Walter
Reed Army Medical Hospital. We're a nonprofit organization that
teaches, coaches, and mentors Veteran to start and grow micro
enterprises and small businesses and we receive our funding
from the Veterans Corporation.
Over the past four years, we've served over 4,000 Veterans
through counseling, seminars, and formal classroom-style
training.
I'm here today to offer testimony on behalf of these
clients as well as to offer you the benefits of research and
opinion of our Veterans Small Business Advisory Committee which
was established under the same public law, Public Law 106-50
that created the Veterans Corporation.
The question before the Committee today is: is the Veterans
Corporation prepared to provide entrepreneurial development,
assistance, to service men and women returning from Iraq and
Afghanistan? In my opinion, the answer would have to be no. The
Veterans Corporation has neither the reach nor the funds to
adequately address the needs of the growing number of Veterans
interested in entrepreneurship.
Congress, and specifically, this Committee, have been
working for Veteran business owners for years. This issue and
specifically the Veterans Corporation is as important to our
Veterans as it is to you. Public Law 106-50 was written as a
plan, a plan to assist self-employed Veterans and encourage
entrepreneurship.
At the time 106-50 was written, a number of federally-
funded programs were already in place and available to
Veterans. Small Business Development Centers, Procurement and
Technical Assistance Centers, better known as PTACs, SCOR,
Women Business Centers, and yet, Congress finds the following
and I read directly from Public Law 106-50, ``Veterans of the
United States Armed Forces have been and continue to be vital
to the small business enterprises of the United States. In
serving the United States, Veterans often face great risks to
preserve the American dream of freedom and prosperity. The
United States has done too little to assist Veterans,
particularly service-disabled Veterans in playing a greater
role in the economy of the United States by forming and
expanding small business enterprises. The medical advances''--
and this is especially true now seven years later today--``and
new medical technologies have made it possible for service-
disabled Veterans to play a much greater role in the formation
and expansion of small business enterprises in the United
States. The United States must provide additional assistance
and support to Veterans, to better equip them to form and
expand small business enterprises, thereby enabling them to
realize the American dream they fought so hard to protect.
Each of the entities created by 106-50, the SBA's Office of
Veterans Business Development, the VA's Office for Veterans
Enterprise, the SBA Veterans Business Advisory Council, the
Veterans Corporation, and the Veterans Representative for SCOR
and all the others were established solely for the purpose of
expanding the eligibility for certain small business assistance
programs to include Veterans, directing certain departments and
agencies of the United States to take action that enhanced
small business assistance to Veterans and establish new
institutions to provide small business assistance to Veterans
or to support the institutions that provide such assistance.
The Veterans Corporation specifically was established to
expand the provisions and improve access to technical
assistance regarding entrepreneurship for the nation's Veterans
and to assist Veterans including service-disabled Veterans with
the formation and expansion of small business concerns, by
working with and organizing public and private resources
including those of the SBA, the Department of Veterans Affairs,
the Department of Labor, the Department of Commerce, Department
of Defense, SCOR and the Business Development staffs at each
department and agency of the United States.
And''--and this is most important--``in carrying out the
purpose described in Public Law 106-50, the Corporation shall
establish and maintain a network of information and assistance
centers for use by Veterans and public.''
In 2004, TVC had built up to I believe it was 12 contracted
resource partners delivering hands-on training and
entrepreneurship programs around the country. By February 2006,
they had consolidated to eight regional hubs and today they've
been reduced to three.
In the past six years, TVC has been through four leadership
changes, four logo and branding changes, and at least as many
business models. Within the past two years, TVC has focused on
a variety of different initiatives, each more spectacular than
the last: an elaborate self-pacede-learning project, SUNY
University, University of Maryland, the Veterans Economic
Opportunity Fund, TVC's Governors and Mayors Advisory Council,
the Veterans Business Directory, a Mobile Entrepreneurial
Resource Center, branded and sponsored by NASCAR, professional
artists and announcers providing and donating recorded PSAs and
the virtual business center just to name a few.
To date, none of these projects have assisted Veterans and
over the years, the only success stories and clients presented
as accomplishments in the fruits of the labor continue to be
that of the resource centers.
House Report 106.206 that accompanied Public Law 106-50
references the Veterans Corporation's most significant and
single purpose is to establish an independent network, a
nationwide network of business assistance and information
centers for Veterans. Chairman Talent, on June 23, 1999, at the
mark-up hearing for H.R. 1568 said the following in response to
a question/comment from Congressman Pascrell. ``The gentleman
exposed a little secret behind this bill. I think these, the
Veterans Assistance Centers, are in effect going to empower the
Veterans community to advocate effectively on their own behalf.
Then you're going to see agencies and also the Congress sit up
and take notice and give them a high priority.''
On September 9, 1999, Chairman Talent's statements in the
House of Representatives included in the following, in a
section by section analysis of H.R. 1568, a section entitled
``To Establish a Federally-Charted Incorporation, TVA, for the
Purpose of Guiding and Monitoring Public and Private Sectors'
Initiatives and to Assist National Veterans in their Efforts to
Form and Grow Small Businesses. The most significant purpose of
the corporation will be to work with the public and private
sectors and to establish independent nationwide network of
business and assistance in information centers. These centers
represent one third of TVC's total direct access to working
with clients and already stretched to the limit.''
Our center employs two full-time employees, two part-time
employees, three volunteers. Our area spans the six New England
States, New York, and Washington, D.C. We have one resource
center in Boston and a training and counseling office at Walter
Reed. We've received over $200,000 in donations this year,
including over 30 desk top computers, 15 laptops, 7 servers, a
resource library which would rival that of any small business
library, complete with over 300 audio and video training
programs.
Over the past four years, we've provided training and
seminars to over 4,000 clients from all over the country. We've
developed partnerships with major companies and organizations.
We've received support and donations from a wide variety of
corporate and federal donors and in 2007 our funding from TVC
was reduced by 20 percent.
TVC doesn't actually work with clients, the resource
centers do. Their website is a collection of links which all
lead to third-party activities. TVC maintains that they should
not be required to create a fourth network. That's us.
What this means is that they don't believe they should be
required to support the community-based training resource
centers and in their own words they're trying to get away from
Public Law 106-50. As you can see from my previous testimony,
this corporate direction is in direct conflict with the spirit
and intent of the law.
I have four recommendations to offer this Committee as you
consider re-authorizing the National Veterans Business
Development Corporation. Remove the training mission and
professional certification board mission from TVC and place
that mission with the SBA's Office of Veterans Business
Development with the licensing certification mission belonging
to the Advisory Committee on Veterans Business Development;
have future nominees to the board of directors of the Veterans
Corporation proposed to the Chairman and Ranking Member of the
Committees of Small Business and the Committee of Veterans
Affairs of the House of Representatives and the Senate be
recommended through the Advisory Committee on Veterans Business
Affairs; assign a permanent oversight committee to monitor the
progress of programs of the National Veterans Business
Development Corporation to ensure compliance with congressional
directive and Public Law 106-50. And lastly, a flagship
resource center should be created here in D.C., this center
should be established for the purpose of training, meetings and
conferences and should be offered to use to the Veterans
entrepreneurial training community as a resource.
The resource centers created and supported by TVC, St.
Louis, Flint, and Boston, have made a significant impact in the
area of Veterans entrepreneurial development and Veterans
advocacy. Unless Congress has a plan to grow and support these
centers independently of TVC, it would be detrimental to
Veterans on a national level to continue to underfund this
organization. The Committee on Veterans Business Development,
as well as my organization, stands ready to assist this
Committee with detailed suggestions for these recommendations
should you wish to pursue them any further.
Thank you very much for your time.
[The prepared statement of Mr. Celli may be found in the
Appendix, on page 53.]
ChairmanAltmire. Thank you, Mr. Celli, and since our final
witness, Mr. Cain, resides in our Ranking Member's District,
I'm going to allow him to make the introduction.
Mr.Gohmert. Thank you, Mr. Chairman. It's my pleasure to
introduce a constituent of mine, Mr. Allan Cain, who is owner
of Carthage Self-Storage and a distinguished Veteran of the
United States Army. I'm just kidding, he was a Marine, too.
(Laughter.)
And actually, I was delighted to hear a former Marine would
come back into the U.S. Army, actually after 9/11, I called the
recruiting office in Tyler, Texas and said I was interested in
coming back at 47 years of age or so and they said well, how
old are you and I told them and they said that's a little
beyond the 35. I said now I know people that are in older than
35 and they said well, you can come in if you can deduct your
years of service from your age and get to 35 and I said well,
let's see. I was in for four years, I'm not sure that I get
there. But anyway, I'm greatly respectful of anybody that's
served our country in the Armed Services and that includes Mr.
Cain's honorable service in the United States Marine Corps.
He's a member of the Texas Mini-Storage Association, a
former board member of the Panola County Chamber of Commerce.
He's a member of the Carthage Lion's Club and a former police
officer. Has a Bachelor's degree in Criminal Justice from Sam
Houston State University and it was from '67 to '70 that he
served honorably in the United States Marine Corps. Currently a
member of the VFW and formerly served as the Veteran Service
Officer from Panola County so is quite familiar with helping
Veterans on Veterans' issues.
He gained valuable experience dealing with the broad array
of Veterans' issues in that capacity. So I didn't realize until
we got into this that we don't provide the transportation costs
to witnesses so that makes it even more impressive that someone
would take time out of their schedule to come. So we appreciate
your being here. This is a man who has dealt with the issues,
is out there on the ground. We have folks here that care about
Veterans. Like I said, I tried to come back into the service,
but not able, so I had to revert to a far less honorable course
of service here in Congress.
Anyway, we appreciate all of you, but Allan, appreciate
your being here.
STATEMENT OF MR. ALLAN CAIN, CARTHAGE SELF-STORAGE, OWNER
Mr.Cain. Chairman Altmire and Ranking Member Gohmert, and
other Members of the Subcommittee for having me here today,
it's an honor to testify before each and every one of you.
I live in a rural East Texas town with a population of
6200. Our area is predominantly an oil and gas business with
very limited resources for Veterans wishing to strike out into
the small business world. Although I was fortunate in my
entrepreneur ventures in that I had a co-signer for my first
business, I worked very closely with many East Texas Veterans
in the numerous organizations and positions I've been in
including the Veteran Service Officer for Panola County.
I've seen firsthand the helplessness that overcomes many
Veterans as they return to a world that has sped past them. As
a combat decorated Veteran, I experienced the difficulties and
the troubles with adjusting to fit back in a society that left
me behind. I was able to finish college and enter into the
workforce, but all the while coming from a three and a half
year delayed start, with heavy combat experiences whose effects
continue to challenge me today.
As most Veterans in a rural community, I had no background
for business administration. I understood work and results. But
conducting business with the public, navigating the complicated
tax code, contracts, payroll, operating schedules, learning
curve on ordering supplies, and ordering reliable supplies,
employee issues and not enough money to turn a profit was a
challenge. Especially when frustration and lack of
understanding cost you money that you've worked hard for.
It can often develop into pressure that ends up in
bankruptcy and large legal tabs. A strong work ethic, coupled
with a forgiving God, got me through to where I am today. Most
Veterans I know are good at their specialty, reliable and
understand pushing through, but get very lost when having to
confront starting a business, especially with little capital to
put into a business while still putting food on the table at
home.
I believe that in the mind of the Veteran, when they hear
``assistance'' they hear someone is going to help me. But
instead, they get such a volume of paperwork in a language that
is foreign to them they just lay it aside. I believe that just
a small amount of help navigating the bureaucratic obstacles
will go a long way in providing Veterans returning from Iraq
and Afghanistan with a start they need to re-integrate into our
great nation.
An important first step for any organization wishing to
provide assistance to returning Veterans is an effective
outreach program. Outreach has always been a challenge when
delivering information to those who could benefit. How would
anyone get the intended information and even if they get it,
they may not remember it two years from now?
First, we must look at who are the targets, where do they
live, how do we get to them, hopefully without recreating the
wheel, sources could be tapped to place the information as
close as possible all the while understanding fiscal
restraints.
In my opinion, there are a few steps of an effective
outreach program. One, again, with numerous lending
institutions that participate or can direct a Veteran to a
program that will benefit the most. Get the information into
the hands of those who will be in front of the Veteran when
they drop by. Don't make it only the job of the Veteran to know
and understand all the options that he qualifies for.
Two, State Veterans Service Commissions would be a great
resource for the dissemination of information. The great State
of Texas has possibly the finest Commission for Veterans in the
United States. The organization has offices throughout the
state and also is solely responsible for training and
certifying County Veteran Service Officers. Again, these are
the folks who see the Veteran face-to-face.
Finally, there's an enormous volume of information given to
transitioning Veterans. This information is often overwhelming
and leads to more confusion than it's worth. This information
needs to be precise and distributed to the Veterans from the
folks that will help them transition most effectively.
Another important step would be for an extensive education
program that will be designed to give access to all Veterans.
In my experience, many Veterans have limited resources and lack
the understanding they need to truly understand how to begin
and manage a business. It's important that Veterans be given
the hands-on learning experience that they're used to from the
military.
One, provide more Internet courses. There's a very
effective, especially cost-effective mode of reaching and
teaching Veterans. Today's technology-advanced world, many of
our soldiers will be returning--and that should be Marines, I'm
sorry--will be returning home from abroad with a solid
understanding of computer technology. The Internet will provide
a fast and cheap mode of educating these Veterans on making the
transition into small business world.
Two, although the Internet has many benefits, there are
many who are not computer literate. These folks should not be
left out of the many benefits that they fought hard to
preserve. We should have seminars and classes available to
these people, possibly through their local Veterans
organizations. While I understand that there will always be
challenges in trying to reach out and provide education to
returning Veterans, it is a service that is owed to those who
gave up many years to defend our great nation. Providing
effective assistance to those returning home from abroad would
not only save as many Veterans from years of struggle and
financial hardship, but it will boost the morale of those still
fighting. They will not only have family and loved ones to come
home to, but they will have the tools they need to provide
better for their families.
I would like to end my testimony by saying thank you to the
Government of the United States of America for its gratitude to
those who serve through the military services and Coast Guard.
Without the assistance of our elected officials at the national
and state level, we, Veterans, would have a much more trying
time in readjusting after giving so much. There is no other
country or republic that honors and respects its Veterans like
the United States of America. My family and I thank you and I
look forward to answering any questions you may have.
[The prepared statement of Mr. Cain may be found in the
Appendix, on page 57.]
I was going to suggest that Mr. Gohmert, we will each do a
five-minute round of questions and then we'll do a second round
with follow-up.
Is that okay with you, Mr. Ranking Member? Okay.
So my first question is going to deal with, there's several
issues involved with what you've all talked about. There's the
issue of returning folks, but I wanted to focus my first set of
questions on people like Mr. Clair and others who are being
deployed that currently run small businesses and the issues
that are associated with that side of the equation, where they
have to keep this business somehow up and running during the
terms of their deployment.
So my first question for Mr. Celli is the Reservists who
operate the small business and are deployed face many
challenges maintaining their businesses while they serve
overseas. What is your experience working with these Reservists
and what types of resources do they need to most effectively
protect their businesses during the deployment?
Mr.Celli. Thank you very much. That's an excellent
question. The first thing that the business owner has to do is
make sure that their business has been built and structured
effectively to operate in their absence. What we like to do is
we call this the franchise mode. So that every task, every set
of daily operational procedures, are written down in some way
so that the business owner can step away, the key employee can
step away and somebody else can come in and pick up like an
owner's manual, almost like McDonald's say, and most
importantly after they leave, or before they get ready to
leave, they need to make sure that their bank accounts are in
order, that the right people have access to the funds so they
can still make deposits to the IRS so that they can still pay
their bills.
They also need to make sure that the proper legal paperwork
is in place to allow people to act in their behalf, depending
on whether it's a limited liability corporation or a C
corporation, they can move people around accordingly. That has
to happen before they even think about leaving that business in
a state that can still sustain itself.
The other real concern is the customer base. The customer
base in many times, especially with small businesses is reliant
on the personal knowledge and the charisma of the business
owner. And when that business owner leaves, there's going to be
a very difficult, it's going to be very difficult for that
small business to maintain that existing customer base. We see
this quite frequently with professional trades such as lawyers
or doctors or tax accountants, these types of professionals
that have built relationships with their folks and there aren't
a lot of people that can step in and take that over for them.
So they have to rely on a network of support that will watch
over their clients while they're gone and then have the decency
to give them back when they return.
So in preparation to deploy, they have to build their
business accordingly and properly which sometimes means
completely rewriting their business plan and while they're gone
it's going to require a very strong hands on support network
led by an organization that understands small business and can
work with either the family or the rest of that business.
ChairmanAltmire. Thank you, and I would also ask Mr. Sharpe
to address that question from the context of the changing
nature of these Reservists, given who the American Legion has
served in the past and now the time on active duty for many of
these Reservists has doubled or greater and what you see as the
challenges and the resources that would be required to keep
that small business up and running during the deployment?
Mr.Sharpe. I agree with everything Mr. Celli has said. When
my unit deployed to Iraq back in 2003 to 2004, I'm currently in
a civil affairs unit where there were quite a few business
owners, and when I first realized there was a problem was when
we returned, a couple of my friends lost their businesses and
others' businesses were under real financial hardship. And a
result of that is all those individuals leaving the military
because, of course, we're scheduled to return to Baghdad March
of '08. And they just could not survive another deployment.
And I think it's a real issue. I think for Reservists who
are business owners, there should be some sort of pre-plan to
assist them prior to their departure. With the new realities of
the way Reservists are being activated, a Reservist shouldn't,
especially a business owner, shouldn't have to make the
decision whether or not to serve his or her country because of
their business. And that's the problem right now. And I think
we definitely need more resource centers around the country. We
need to have centers on a lot of military bases, VA hospitals.
There should be some pre-education plan prior to a Reservist
even joining the military.
ChairmanAltmire. Thank you. I wanted to ask you, Mr.
Sharpe, one more question that will lead into my second set of
questions after we hear from the Ranking Member.
In your testimony, you state that the Veterans Corporation
increasingly cedes its responsibility for providing
entrepreneurial development and in your opinion this
responsibility should be shifted to the SBA. You suggest that
this would be more effective given the agency's existing
framework through its Veterans Business Outreach Centers and
Small Business Development Centers.
So I wanted you to just clarify that. If I heard you
correctly, that that's what you were saying and is your
suggestion to shift training responsibilities to the SBA, the
Veterans Corporation would permanently see a large portion of
its mandate and what do you think the outcome of the Veterans
Corporation would be if that change were to be made?
Mr.Sharpe. I just don't see the Veterans Corporation being
able to accomplish those missions as stated currently by 106-50
with the current resources that they have. I definitely believe
in hands-on training. SBA already has the SBDCs. They are
already funding five Veteran Resource Centers. It doesn't make
sense, I agree with the Veterans Corporation, for them to try
and duplicate those services. They have seemed to develop an
expertise on on-line training and I would prefer to see them
excel in those things that they do best. And I definitely
believe that the SBA should be the lead organization. They have
the expertise. They should be provided the funding to expand
and do the things that they do best.
ChairmanAltmire. Thank you. Mr. Gohmert?
Mr.Gohmert. Thank you. I was going to ask Mr. Elmore, has
the Small Business Administration Inspector General or any
other SBA organization or official ever examined the Veterans
Corporation?
Mr.Elmore. From my understanding, sir, no. We don't have an
oversight responsibility. The Veterans Corporation, obviously,
is in the Small Business Act, but we view them as a partner.
They're not a program of SBA. We've tried to do a lot of
cooperative work with them and we have accomplished some things
over the past few years. But from an oversight perspective, as
I understand the way the law is written that really rests with
Congress and perhaps with GAO.
Mr.Gohmert. Are you aware of any programs in the Veterans
Corporation that may be duplicative of what is offered
elsewhere?
Mr.Elmore. I don't think they're duplicative. I think the
point that Joe made is probably very accurate, that there's
really great value and we understand that and hands-on, face-
to-face, one-on-one assistance, especially for Veterans who
come back and the other testimony is correct as well. These men
and women have been gone for six months, 15 months, 3, 5, 6
years. They need some assistance if they're capable of pursuing
entrepreneurship as a real and viable vocation. So we focus
primarily on that, but we have on-line services.
I think there is great value in an Internet overlay that
helps coordinate and deliver those services because regardless
of how many programs or partners we have, we cannot be
everywhere. I mean the gentleman from Texas is correct. Those
County Veteran Service Officers with the State Departments of
Veterans Affairs, I think, are a critical piece in this whole
process that bluntly, since I've come to Washington over the
last seven years, there's a real disconnect between what we
talk about in this town and what happens where these men and
women return home to. And I think those pieces in concert with
what the corporation is trying to do with a robust overlay of
technical assistance and resources electronically can be a
really effective and important mix.
Mr.Gohmert. Thank you. Mr. Sharpe, has the Veterans
Corporation worked with the American Legion in outreach, making
known the services it has available?
Mr.Sharpe. When I returned back from Iraq, and the issue of
entrepreneurship, especially with the Reserve and National
Guard became so apparent, American Legion, we became more
active as far as working with federal agencies that are
involved in this particular situation and with the Veterans
Corporation.
We've asked the Veterans Corporation and Louis Celli who
works with them, as one of their resource centers, to
participate in many of our workshops. We've had, last year we
had our national convention at Salt Lake City and we had a two-
day workshop helping those Veterans who wanted to start a
business and those Veterans who --
Mr.Gohmert. I don't mean to be technical, but you said you
invited them to participate. Did they participate?
Mr.Sharpe. Yes, they did.
Mr.Gohmert. Okay.
Mr.Sharpe. Everything we've asked SBA and the Veterans
Corporation to do, they've done. They participate in
practically all our programs and they've been extremely helpful
to us.
Mr.Gohmert. What kind of feedback have you heard about the
effectiveness of Veterans Corporation from people entering the
American Legion?
Mr.Sharpe. The workshops that we've had have been quite
successful and the feedback that we've received has been
positive, but the positive statements have been directed to all
the federal agencies and the Veterans Corporation that you
know, everyone that's participated we've received a lot of
positive feedback and that went to VA, SBA, DOD and the
Veterans Corporation.
Mr.Gohmert. Thank you. Mr. Cain, do you know of particular
services that could be targeted to Veterans in rural areas?
Mr.Cain. Rural is the key, just getting these opportunities
before them. We have to drive 50 miles to get to a bank that
even might offer SBA services. And I think that's pretty
consistent with the State of Texas and with a lot of Veterans.
Disabled Veterans, it's a real challenge.
Mr.Gohmert. What's the best way to reach them, do you
think? We heard the Internet overlay mentioned. I don't know
what percentage of that's coming out, play with the Internet.
Mr.Cain. A lot of them, if they're steered properly through
the VSOs, Veteran Service Officers, and so forth, VA has a
great program, probably one of their best programs that I've
worked with and that was vocation rehabilitation. And they do a
marvelous job from diagnostics and assessments and aptitude and
they do all that stuff and so they're mostly in contact with
disabled Veterans.
And then they could give them that information as an option
and--or however the Committee wants to develop it, but that's--
from my little perspective, that would be a great place to put
the emphasis.
Mr.Gohmert. Thank you.
ChairmanAltmire. We'll do one more round of questions. I
wanted to give Mr. Elmore the opportunity to respond to what we
were discussing and what you heard about the idea of the SBA
recapturing primary responsibility for operating Veterans
outreach and training programs.
Mr.Elmore. Sir, I think my answer has to be that if we're
given that responsibility and that authority, we will. Clearly,
we have five centers now. I think they're effective. They
provide assistance to approximately 2,000 Veterans and
Reservists each year. Our Small Business Development Centers
alone last year provided assistance to almost 5,000 Reservists
and in '06 was the first year we got the forms changed so that
we could begin to track that kind of service, not just with
them, but with SCOR as well.
ChairmanAltmire. Is it your opinion that the SBA could do
it better?
Mr.Elmore. I don't know that I would say it better, but
given the size and scope of our reach, we're already in a
systematic mode where we have processes in place to go out for
competition to evaluate proposals, to look at who we think
could be effective in delivery and to oversee that delivery and
to support it as well with our other field resources. So in
that sense, I would have to say yes, sir.
ChairmanAltmire. Mr. Blackwell, would you like to comment
on that?
Mr.Blackwell. I think that two things need to be said.
First of all, I certainly appreciate my other panelists and
their comments. Many things I agree with, some things I do not.
And I'll be happy to get back to the Committee formally in a
written rebuttal if that's the easiest way to do that.
ChairmanAltmire. Please.
Mr.Blackwell. Let me just say that 1999 when 106-50was
finally placed into law was a very different economic and a
very different political and a very different need for Veterans
issues. Today, we're faced with monumental issues of multiple
different Veterans, Veterans that are literally from the World
War II era into those who will come back over the next several
years. Clearly, given the resources available to TVC, as you
know, our funding was cut another 25 percent last year. In
previous years, going before OMB, we've taken plans to both
enlarge and enhance services through our networks. Those have
not been granted to us. Again, I'll refer to that in the formal
rebuttal.
I would just tell you that given the resources we have
chosen to deliver as many programs and opportunities as we can
by being a virtual catalyst, an ability to assimilate materials
already available through agencies in a more readable format
and perhaps more grouped format. I think those are working
well.
Currently, our board believes that given our limited
resources, it's impossible to expand our network beyond the
three centers we have. I do believe that a fourth network is
not practical. I do believe in leveraging third party support
and I believe that our status as a 501(c)(3) should be utilized
to expand programs that are currently available in the public
sector that can be leveraged back into the community.
One of the main issues I would leave you with, although not
in my written testimony on this particular question, is that
our access to bonding and our access to capital programs are in
addition to those programs 7a and 7b by the SBA.
As you know, the SBA has a limit on the amount of money
that can be given out into loans and limits the amount of money
in bonding available to $2 million. Our third-party programs in
both of these areas have no caps. There are 50 state programs
and directly mentor and guide Veterans through these very
tricky processes.
It's been our experience that Veterans who go before a bank
too early, without a proper business plan, and without the
knowledge they need to talk to these folks, generally fail in
their first approaches. Our goal is to be with them from the
beginning of the process, through the middle of their
businesses and obviously be there for the transitions from
their businesses to other Veteran organizations.
So I would say the simple answer is given the funding, I
believe that our current programs are succeeding well and we
plan to leverage those in the future.
ChairmanAltmire. On the issue of funding, Mr. Blackwell,
the charter and the mandate obviously of the organization is
that you have the ability to go out and raise funds in a way
that to be candid has not necessarily been fruitful yet. The
numbers I had was that last year the organization spent
$230,000 on fund raising, but received back only $150,000 in
grants of which one came from $100,000 grant. So the question
is what is the reason that it hasn't been as productive as we
had hoped and what can we do to help you with that process?
Mr.Blackwell. The simple answer is private sector funders
believe that this is not a private sector issue. This is a
government issue and because it was created by a public law
that Congress has a definite interest in supporting the needs
of our Veterans, whether that's in healthcare, whether that's
well care, whether that's starting a business. They see that as
an issue that Congress should address directly.
I can tell you that in my first year, I'm not approaching
almost 27 months, in my first year, I approached 76 C-suite
executives personally. Although all of them embraced the idea
of what we were doing, none of them opened their pay books. And
the reason for that is they typically see that their dollars
are put into the local communities where their constituents of
their companies live. Think about it kind of as a Habitat for
Humanity model. We put our associates into work in communities.
I will tell you that we have been very blessed recently to
become affiliated with SMA Global. SMA Global is owned by a
Korean conflict Vet and SMA Global is opening doors to us that
we have not had opened doors to us before, including folks like
the folks at Hewlett-Packard and Aflac. I've been in meetings
with them on and off for the last three or four months and we
hold some promise with that. I will just tell you that
generally speaking private sector does not see it as their
issue and typically don't fund it.
Over the last seven years, 52 different approaches have
been used to raise capital on the outside. All 52 of those were
noble efforts. All 52 of those have not garnered enough dollars
to even offset minimal operation expenses.
ChairmanAltmire. I would just say in wrapping up before I
turn it over to the Ranking Member, we all agree that there is
no group that should stand ahead of our nation's Veterans when
it comes time to make funding decisions. There's no dispute
about that and it would seem to me in moving forward that we
should be in position to work with you and enhance the ability
to convince some of these folks that you've been visiting that
they do have a role and it is to their benefit to help
businessmen in their local communities and service areas to
position themselves in a way that when they're deployed that
business is going to stay open and when they return, it's going
to be fruitful.
So I would just say that we want to help and not just this
Committee, but Congress in general. So let's just keep the
discussion going on ways that we can reach out into the private
sector in a way that might be a little more productive than
what we've done.
Mr.Blackwell. We would welcome that, Mr. Chairman.
ChairmanAltmire. Thank you. Mr. Gohmert.
Mr.Gohmert. Thank you. And I am glad that this Committee
looks at financing situations, says that no one should stand
ahead of Veterans because we're taking up the Hate Crimes Bill
that came out of Judiciary last week where we've said we will
not, the majority said we refuse to put Veterans in a protected
class so that people are punished more severely if you attack
one of this group, because they're not entitled to the same
heightened protection that a transvestite with gender issues
has. But we'll keep working on that.
Anyway, with regard to the raising of capital, it is a
concern. You spend that much money and get less back than you
spent to raise money and I can't help but draw from my own
personal experiences, I hear people in East Texas talk about
yeah, we want to help the Vets. I can't help but wonder if
maybe if it was--if the fundraising was segmented in such a way
that people could donate money that would benefit Veterans in
their area, if that might not help. I don't know if the current
law or organizational or corporate by-laws would permit that
kind of segmentation, but Mr. Blackwell, what do you think
about that concept?
Mr.Blackwell. Actually, we have started that initial
concept through visiting with the Governors and in many cases,
currently in Texas, in San Antonio, with the Mayor's Office, to
talk about utilizing their offices to mobilize a local campaign
where giving could be done. By-laws of our organization were
changed last summer so that we could create a mentor membership
category. That category allows individuals and/or organizations
be they city or state, to give money and support Veteran
issues.
We have one member in that category at this point. We
solicit openly the support of both cities and states. As I say,
we continue to meet with those folks. It's part of our
outreach. It's part of our fundraising activity. And we'll
continue to do that.
Mr.Gohmert. With regard to your expenditures, it appears
that over $200,000 was spent for outside fundraising, isn't
that correct?
Mr.Blackwell. No, that's not correct.
Mr.Gohmert. That's in-house.
Mr.Blackwell. It's all in-house, yes. In fact, if you look
at our annual report, you'll see that over 68 percent of TVC's
budget last year was put directly back into programs and
activities. The remaining number of those dollars, that $1.5
million goes back in direct support of trying to obtain self-
sufficiency as mandated by Public Law 106-50. It is an enormous
effort. Also in this report you'll see all of the people we've
talked to, all the reports that have been written and our
success is growing, but it's very, very, very slow.
Mr.Gohmert. So what would it take to make itself
sufficient? We need some kind of tax incentive, tax advantage,
something to help give you the tools to draw in capital to help
the Veterans?
Mr.Blackwell. You already have the tax incentive available
to you because we're incorporated as a 501(c)(3).
Mr.Gohmert. But apparently it's not enough, that's what I'm
saying.
Mr.Blackwell. That's correct. Part of the problem is that
many corporations, especially large corporations, are going to
use marketing dollars and/or foundation dollars to do that, so
that to the extent of the law available to them it's not a
significant write off, if at all.
From a tax advantage, there's no real impetus for them to
go through that.
Mr.Gohmert. But I'm asking about potentially new tax
advantages, things that we could do to help raise the capital.
Obviously, what's there isn't helping.
Mr.Blackwell. That's correct. And I will tell you that
anything Congress can do to assist in this is most welcomed.
Mr.Gohmert. And I'm asking you what would you suggest is
that anything we can do?
Mr.Blackwell. I don't think that having a tax incentive per
se is going to encourage them. I think the vested self-interest
of private corporations is just that. What's in it for that
corporation, if they support this endeavor? And right now,
private corporations don't seem to believe that starting
Veteran businesses, basically underwriting the cost of
entrepreneurship in small business is an advantage to them
Mr.Gohmert. I guess that's why I was asking if there was
any heightened tax advantage that they would see to be to their
advantage to assist.
But anyway, let me throw that open to the other panelists.
do you have any ideas for how we could go about raising capital
from private enterprise? I realize it can be tough because in
some cases you may be asking people if they mind contributing
to helping set up a competitor, but --
Mr.Celli. Thank you, sir. And we, as a 501(c)(3), we share
and face some of the challenges, many of the challenges that
the Veterans Corporation face in fundraising. We have our own
fundraising efforts at the local level and what we find and
you're probably not going to believe this, in the fundraising
efforts, larger corporations have foundations that they've set
up which handles their philanthropy efforts.
On those web pages, it tells you who qualifies and who
doesn't and I can point to a very large number of corporations
that specifically say on their foundation pages, that they will
not donate to Veterans organizations. It's specifically there.
And --
Mr.Gohmert. Why is that?
Mr.Celli. That's a good question and I asked that very
question, because they group it right under the VSOs and then
they put it right next to lobbying activities. So I wrote a
letter and an e-mail to some of these organizations and I won't
mention any right now and I asked and I said is this exclusion
specifically designed to separate your company from that of
lobbying activities such as Veteran service organizations
because we are not, we're a training activity that reaches out
to Veterans to help them start and grow businesses and I got
back a very polite reply that says we've looked at your
website. We've looked at your application, but we do not find
that you are in our corporate giving arena. Thank you very
much, have a nice day.
So I gave them the opportunity to kind of re-look at that
and addressed it to no avail.
Mr.Gohmert. Could we get a list of companies.
Mr.Celli. I could supply that list.
Mr.Gohmert. I think it would be interesting if America knew
who took a stand against helping Veterans. But if I could get a
list or the Committee could get a list, either submit it to me
or the Committee, I would sure appreciate that.
Mr.Celli. Absolutely. And the primary focus with most of
these foundations is children who are seeking literacy
assistance and major diseases, that seems to really be the
thrust of corporate giving, so we're on the fringe and it's
very difficult.
Mr.Gohmert. I could see how that to some people wouldn't be
as important that we're allowing the children and the others
needing that help to live in a free country. I don't know.
Mr. Elmore, you had something before we close?
Mr.Elmore. Yes, sir. I'd like to try to help respond. In my
previous life before I came to this position, I had helped
create and managed a Veterans not-for-profit community program
in St. Louis for 20 years. And I for those many years looked at
foundations and they're both correct. There are more
foundations listed in philanthropic guides that specifically
indicate they will not consider Veterans than there are
foundations who say they will consider Veterans.
And if you really wanted to look at that, you might look at
some of the organizations that overarch a lot of the
philanthropic community like independent sectors and ask them
that question. I'd love to hear their answer, just as a guy who
has been doing this work for 33 years.
Mr.Gohmert. Could you give me--after the hearing, if you
could supply me the best way to get that information?
Mr.Elmore. I'll work with Lou and help him understand at
least from my previous experience, I have to be cautious
because obviously I'm a federal employee and I'm not looking to
attack anybody.
Mr.Gohmert. But you're here testifying and I'm asking for
your help.
Mr.Elmore. I will do that, sir.
Mr.Gohmert. Okay, thank you.
Mr.Elmore. A second point, in May of 2005, the
Congressional Budget Office released a paper about the
effective activation on small businesses that either employ
Reservists in key positions or they're self-employed Reservist
small businesses. And they raised what I think was a very
interesting question that nobody else has really seemed to have
paid a lot of attention to. They raised a question of
fundamental fairness. If I recall correctly less than one half
of one percent of the self-employed people in America are
Reservists. And if my numbers are correct, please don't hold me
to this, I think it was either four or six percent of
businesses in America employ Reservists. The question they
raised was through those small businesses commitment, through
USERRA responsibilities and so on, are they, those limited
number of businesses in America essentially subsidizing the war
effort because they incurred additional costs when they employ
Reservists?
And if you wanted to look somewhere --
Mr.Gohmert. That's a good question.
Mr.Elmore. It's a place that I thin really deserves more
scrutiny and more exploration and take a look at what might be
doable, if you will, to help spread that cost out across the
entire American economy, as opposed to just those businesses
that specifically employ Reservists.
I think that's an area that could take another looking at.
Mr.Blackwell. Congressman Gohmert, it occurs to me that
perhaps a two-plan that would allow companies and individuals
to take 100 percent tax donation, much like the Katrina 100
percent tax deduction was in the fall of 2005 might be a good
option. This would encourage individuals and companies, I
think, to leverage their donations.
Mr.Gohmert. You know, any structuring following the example
of relief to Hurricane Katrina would probably not be a good
idea.
Mr.Blackwell. No. Just a similar program like that. It
could be structured in a completely different manner, but a
program that would benefit at 100 percent those individuals who
gave.
Mr.Gohmert. Thank you.
ChairmanAltmire. That will conclude the hearing. I want to
thank the panelists. We heard some different points of view on
how to achieve a goal that I know that we all agree on. I look
at this hearing as the first step in this Committee's
investigation and offer to help what's going on, but I do want
to just reiterate the fact that this is not a one-time hit for
us. We want to work with you moving forward. We want to help
improve the program and most of all we want to make sure that
these returning servicemen and women who want to get into small
business and want to have the resources and the ability to do
that and pursue an entrepreneurial career are able to do so and
I know that you share that as well.
Thank you for coming today and we look forward to
continuing the discussion.
[Whereupon, at 11:20 a.m., the hearing was concluded.]
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