Growing a strong workforce and economy in Central Minnesota

By Susan Stehling

Does it surprise you that the goals of the U.S. Small Business Association (SBA) and those of the Initiative Foundation have a lot in common?

Both organizations recognize the huge importance of small business to the economy, both help individuals start and grow small businesses, and both create jobs and other leadership opportunities so all may prosper.

Then it shouldn’t surprise you that Matt Varilek, previously chief operating officer for the SBA in Washington, D.C., is now president and chief executive officer of the Initiative Foundation in Little Falls, Minnesota. Matt has been in charge since January 2017, and is proud to be serving in an organization that improves the lives of others.

“I’ve held various roles in the public sector,” he says. “All of those jobs were really about helping to increase prosperity, and here at the Initiative Foundation, that’s most certainly what we’re all about.”

Opening the Door for Others

Working in philanthropy is new for Varilek, but philanthropic organizations have touched his life several times along the way. He grew up in rural South Dakota and graduated from Carleton College with significant student debt. He says, “I wanted to go on to graduate school for training in economics, but at the time, it just didn’t seem possible.”

Scholarships from the Rotary Foundation and the Bill and Melinda Gates Foundation helped make it possible. “That opportunity changed my career path in a significant way, in particular by giving me economic development training. Ultimately, I feel like that’s what led me here,” says Varilek.

“The opportunity to lead an organization that opens doors for kids in similar circumstances to what I grew up in. That was very attractive.”

Varilek and his wife had targeted Minnesota for his job search, and maybe it was meant to be. “When I was exploring possibilities, there was a two-week stretch when four highly-respected individuals independently suggested that I should look at the Initiative Foundation. With their encouragement, I began the process,” he says.

He says the work and the organization are “as advertised.” “From the outside, I heard that the Initiative Foundation had a great reputation of being nimble and adaptive to the challenges of the region, which has proven to be true.”

And he’s pleased with the strength of community he found in Minnesota. “I didn’t fully appreciate what a robust philanthropic community we are a part of in Minnesota,” he says. “It’s so interesting to me, for example, that we are the product of a collaboration with The McKnight Foundation, a private foundation, and that we’ve had so many great partnerships with other private foundations, community foundations, the MIFs [Minnesota Initiative Foundations], etc.”

Varilek believes the number of community-minded people and community-oriented nonprofit organizations and employers all make it easier for him to do his job. “Everyone wants to build on the great quality of life we already have here. At the foundation, we like to think we do great work, but it’s only possible because we’re in an environment where the opportunities for collaboration are so numerous.”

Varilek is also proud of the wonderful natural amenities in the region. “People often remark that we’re lucky enough to live in a place where others come to play,” he says. “We think that makes this an attractive place for businesses to grow, especially when people can work from so many locations because of the flexibility that technology provides.”

Strong Workforce and Economy are Imperative

Attracting a workforce is always on Varilek’s mind. “It’s common in many parts of the state and the country to be concerned about the availability of employees or human capital. It’s partly a matter of providing people with the right skills, and it’s partly a matter of population growth,” he says.

Varilek believes central Minnesota has it better than some other parts of the state, as it has seen some increase in population. “We’re fortunate, as we have seen some growth, partly associated with new Americans or immigrants.”

The foundation focuses on how to best engage its new neighbors, connecting them with opportunities to grow their skills to become more valuable employees and making them aware of opportunities to become business owners.

In addition, the population as a whole in central Minnesota, as in much of rural America, is aging. “Many people are stepping down from nonprofit boards, or choosing not to run again for a county board or a city council, and there aren’t as many people waiting in the wings to take on leadership roles,” says Varilek. “That’s another place where we as a foundation try to make a helpful contribution by cultivating the next generation of leaders.

“We encourage people to consider leadership roles, and we provide some of the skills to help them succeed in those roles.” Varilek believes in the gravity of the work. “The quality of leadership that we see at those organizations—whether in the public sector, nonprofits and even for-profit businesses—they need to be well run, as they impact our lives in so many ways.”

Another aspect of the foundation’s work that attracted Varilek was its provision of gap financing for small business. The foundation has a revolving loan fund, but typically when they make a loan they are not the only or even the main source of funding. Instead they partner with the business owner (the borrower) and another financial institution such as a bank or credit union. Typically the financial institution provides the bulk of the financing, but often they can’t provide all that the entrepreneur needs, so there’s still a gap of 10 or 15 percent of the total project.

“We fill the gap and provide the last piece of financing that makes it possible for the deal to happen,” explains Varilek. “For each dollar we lend, there are lots of other contributions in the mix as well. It’s a ratio of about six to one. We lend about $2 million per year, and that accounts for financing of about $12 million per year.”

 

Susan Stehling specializes in mission-driven organizations and their work. She has experience with Minnesota-based philanthropy and nonprofits on print, digital, social and other communications. She spent 8 years as a communications and media specialist with MCF. Stehling loves doing research, learning new things and translating the knowledge into accessible communications for others.