CNN Hero Establishes Business Academy for Entrepreneurs in Low-Income Communities

Written by Margie Fishman Tuesday, June 12 2012

More than 1.4 billion people around the world live on less than $1.25 a day. Alfa Demmellash, co-founder and CEO of Rising Tide Capital, was one of them.

Growing up in Ethiopia’s capital city of Addis Ababa, where a ruthless military regime shot and killed children before asking their parents to pay for the bullets, Demmellash was sensitized to the fragility of life. Her mother fled the country when Demmellash was only 2, leaving her in the care of her maternal grandparents and a teenage aunt.

At age 8, Demmellash was kidnapped by her estranged father who gave her daily beatings in the Ethiopian desert. Located 18 hours from the capital city, she escaped after a year by hitching a ride with two truckers.

Demmellash’s mother, Genet Melesse, who was now living in Boston, carried a picture of her daughter in her wallet as a reminder to fulfill the promise of reunification. A decade later, the two finally stood face-to-face. Melesse prioritized her daughter’s education, working as a waitress by day, a seamstress by night.

Demmellash, in turn, encouraged her mother to boost her earnings by developing a business plan, enrolling in accounting classes and raising her prices to reflect the market. Melesse found the entire process overwhelming, flatly refusing to take her business to the next level.

That experience and others prompted Demmellash, who graduated from Harvard University in 2003, to establish a nonprofit organization with her now-husband Alex Forrester dedicated to educating budding and more established entrepreneurs in low-income communities.

Rising Tide Capital operates an 11-week Community Business Academy, along with year-round coaching that stresses foundational knowledge, social networking and access to capital. Students only pay the course’s supplies fee, from $125 to $295. The Jersey City, N.J.-based program, which links students with micro-lenders who provide financing for the businesses, has helped more than 500 people since its inception eight years ago. The average participant is a 39-year-old single mother with two children who earns $33,000 a year — about $15,000 less than the state’s standard for financial self-sufficiency. More than half have not continued their education past high school.

“We’re figuring out a way to meet them in that place of need,” Demmellash says. For her, helping the less fortunate become economically empowered is a moral imperative.

Common challenges encountered by entrepreneurs involve under-pricing services and not getting contracts in writing, she explains.

After participants account for their expenses, “it’s a big aha moment when they realize that they’re actually paying their customers to use their products or services,” she adds.

Lori Childs first enrolled in the Rising Tide program in September, after her temporary job at a medical billing company ended. The 51-year-old single mother now lives with her 25-year-old daughter and her two young children. She held a variety of jobs — making toothpaste, folding boxes, retrieving car parts and filing papers. Through Rising Tide’s business training, she developed marketing strategies and practiced client presentations.

Today, Childs runs BCBL Credit Repair Solutions in Maplewood, N.J. She counsels 13 clients on methods to get out of debt and stick to a budget. One client recently became a homeowner.

“I learned to trust myself and to not be afraid,” Childs says. “If you really want to do something, you just need to take the steps and do it.”

The success of Rising Tide has garnered Demmellash international attention. In 2008, Demmellash addressed the United National Global Summit on Women. A year later, she was honored as a CNN Hero. President Obama also spotlighted Rising Tide’s efforts at a June 2009 event on innovative nonprofit programs.

“It was unbelievable, Demmellash remembers. “Our tiny little nonprofit made it on President Obama’s radar.”

The exposure did not translate into more donations, however. Rising Tide’s funding comes from state and federal governments, private foundations and corporations, including Goldman Sachs and J.P. Morgan.

But with public funding cuts, Rising Tide is seeking increased support from individual donors to double its annual budget to $2 million. The organization has considered licensing its model to smaller nonprofits, churches and community organizations that want to take up the cause around the country. It is now working with a grassroots group in Chattanooga.

In February, the organization hired a new strategy director, Michael Caslin, former CEO of the National Foundation for Teaching Entrepreneurship, to expand the organization’s national reach. The goal is to help 100,000 entrepreneurs across 100 communities within a decade. Big businesses are shrinking, particularly in urban centers, notes Demmellash.

Despite her mother’s sacrifice to give her daughter a better life in America, Demmellash maintains that she was never pressured to achieve the extraordinary.

“The only thing that she wanted me to have in life was the freedom to choose,” she says

Check out these heroes as they not only save the day, but also save lives in their communities:

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Edit Schlaffer founded Women Without Borders to unveil to the world the "missing link" to combating violence and extremism in our communities. Find out how Schlaffer is getting women to realize that often we are the missing link to resolving conflict. 

Margie Fishman is an award-winning journalist with more than a dozen years of experience contributing to national newspapers, magazines, websites and trade publications. As a former beat reporter for The Philadelphia Inquirer and Raleigh News & Observer, she covered politics, business, housing and education, and was dispatched to the field to report on Hurricane Isabel in 2003. Margie’s list of freelance clients has included Atlanta Woman, National Geographic, Newsday, Wise Bread, The Atlanta Journal-Constitution, Emory University, Georgia Magazine and many more. She writes frequently about trends in personal finance on her website, www.margiereports.com.