II

106TH CONGRESS

1ST SESSION S. 619

To provide for a community development venture capital program.

IN THE SENATE OF THE UNITED STATES

MARCH 15, 1999

Mr. WELLSTONE introduced the following bill; which was read twice and

referred to the Committee on Small Business

A BILL

To provide for a community development venture capital

program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Community Develop5 ment Venture Capital Assistance Act of 1999’’.

6 SEC. 2. FINDINGS.

7 Congress finds that—

8 (1) there is a need for the development and ex9 pansion of organizations that provide private equity

10 capital to smaller businesses in areas in which eq11 uity-type capital is scarce, such as inner cities and
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1 rural areas, in order to create and retain jobs for

2 low-income residents of those areas;

3 (2) to invest successfully in smaller businesses,

4 particularly in inner cities and rural areas, requires

5 highly specialized investment and management skills;

6 (3) there is a shortage of professionals who pos7 sess such skills and there are few training grounds

8 for individuals to obtain those skills;

9 (4) providing assistance to organizations that

10 provide specialized technical assistance and training

11 to individuals and organizations seeking to enter or

12 expand in this segment of the market would stimu13 late small business development and entrepreneur14 ship in economically distressed communities; and

15 (5) assistance from the Federal Government

16 could act as a catalyst to attract investment from

17 the private sector and would help to develop a spe18 cialized venture capital industry focused on creating

19 jobs, increasing business ownership, and generating

20 wealth in low-income communities.

21 SEC. 3. COMMUNITY DEVELOPMENT VENTURE CAPITAL AC22 TIVITIES.

23 The Small Business Act (15 U.S.C. 631 et seq.) is

24 amended—
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1 (1) by redesignating section 33 (as redesignated

2 by section 206(b)(2) of this Act) as section 34; and

3 (2) by inserting after section 32 (as added by

4 section 206(b)(2) of this Act) the following:

5 ‘‘SEC. 33. COMMUNITY DEVELOPMENT VENTURE CAPITAL

6 ACTIVITIES.

7 ‘‘(a) DEFINITIONS.—In this section:

8 ‘‘(1) COMMUNITY DEVELOPMENT VENTURE

9 CAPITAL ORGANIZATION.—The term ‘community de10 velopment venture capital organization’ means a pri11 vately-controlled organization that—

12 ‘‘(A) has a primary mission of promoting

13 community development in low-income commu14 nities, as defined by the Administrator, through

15 investment in private business enterprises; or

16 ‘‘(B) administers or is in the process of es17 tablishing a community development venture

18 capital fund for the purpose of making equity

19 investments in private business enterprises in

20 such communities.

21 ‘‘(2) DEVELOPMENTAL ORGANIZATION.—The

22 term ‘developmental organization’—

23 ‘‘(A) means a public or private entity, in24 cluding a college or university, that provides

25 technical assistance to community development
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1 venture capital organizations or that conducts

2 research or training in community development

3 venture capital investment; and

4 ‘‘(B) may include an intermediary organi5 zation.

6 ‘‘(3) INTERMEDIARY ORGANIZATION.—The term

7 ‘intermediary organization’—

8 ‘‘(A) means a private, nonprofit entity that

9 has—

10 ‘‘(i) a primary mission of promoting

11 community development through invest12 ment in private businesses in low-income

13 communities; and

14 ‘‘(ii) significant prior experience in

15 providing technical assistance or financial

16 assistance to community development ven17 ture capital organizations;

18 ‘‘(B) may include community development

19 venture capital organizations.

20 ‘‘(b) AUTHORITY.—In order to promote the develop21 ment of community development venture capital organiza22 tions, the Administrator, may—

23 ‘‘(1) enter into contracts with 1 or more devel24 opmental organizations to carry out training and re25 search activities under subsection (c); and
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1 ‘‘(2) make grants in accordance with this

2 section—

3 ‘‘(A) to developmental organizations to

4 carry out training and research activities under

5 subsection (c); and

6 ‘‘(B) to intermediary organizations to pro7 vide intensive marketing, management, and

8 technical assistance and training to community

9 development venture capital organizations

10 under subsection (d).

11 ‘‘(c) TRAINING AND RESEARCH ACTIVITIES.—

12 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a

13 developmental organization that receives a grant

14 under subsection (b) shall use the funds made avail15 able through the grant for 1 or more of the following

16 training and research activities:

17 ‘‘(A) STRENGTHENING PROFESSIONAL

18 SKILLS.—Creating and operating training pro19 grams to enhance the professional skills for in20 dividuals in community development venture

21 capital organizations or operating private com22 munity development venture capital funds.

23 ‘‘(B) INCREASING INTEREST IN COMMU24 NITY DEVELOPMENT VENTURE CAPITAL.—Cre25 ating and operating a program to select and
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1 place students and recent graduates from busi2 ness and related professional schools as interns

3 with community development venture capital or4 ganizations and intermediary organizations for

5 a period of up to 1 year, and to provide sti6 pends for such interns during the internship pe7 riod.

8 ‘‘(C) PROMOTING ‘BEST PRACTICES’.—Or9 ganizing an annual national conference for com10 munity development venture capital organiza11 tions to discuss and share information on the

12 best practices regarding issues relevant to the

13 creation and operation of community develop14 ment venture capital organizations.

15 ‘‘(D) MOBILIZING ACADEMIC RE16 SOURCES.—Encouraging the formation of 1 or

17 more centers for the study of community devel18 opment venture capital at graduate schools of

19 business and management, providing funding

20 for the development of materials for courses on

21 topics in this area, and providing funding for

22 research on economic, operational, and policy

23 issues relating to community development ven24 ture capital.
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1 ‘‘(2) LIMITATION.—The Administrator shall en2 sure that not more than 25 percent of the amount

3 made available to carry out this section is used for

4 activities described in paragraph (1).

5 ‘‘(d) INTENSIVE MARKETING, MANAGEMENT, AND

6 TECHNICAL ASSISTANCE AND TRAINING.—An inter7 mediary organization that receives a grant under sub8 section (b) shall use the funds made available through the

9 grant to provide intensive marketing, management, and

10 technical assistance and training to promote the develop11 ment of community development venture capital organiza12 tions, which assistance may include grants to community

13 development venture capital organizations for the start up

14 costs and operating support of those organizations.

15 ‘‘(e) MATCHING REQUIREMENT.—The Administrator

16 shall require, as a condition of any grant made to an inter17 mediary organization under this section, that a matching

18 amount equal to the amount of such grant be provided

19 from sources other than the Federal Government.

20 ‘‘(f) REQUIREMENTS.—The Administrator may pro21 mulgate such regulations as may be necessary to carry out

22 this section, which regulations may take effect upon

23 issuance.

24 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There

25 is authorized to be appropriated to carry out this section
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1 a total of $20,000,000 for fiscal years 2000 through

2 2003.’’.

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