Warren Buffett, Goldman Sachs to help small businesses

NEW YORK — Goldman Sachs Group said Tuesday it is teaming up with billionaire investor Warren Buffett to invest $500 million to provide thousands of small business owners across America with college scholarships and boost their access to capital.

Goldman's philanthropic effort, called "10,000 Small Businesses," includes a $200 million contribution to community colleges, universities and other institutions to give grants to small business owners to further their education.

Goldman also will invest $300 million through a combination of lending and charitable support, with money to be funneled through community development institutions to boost assistance to small businesses in underserved communities.

In addition, Goldman Sachs executives, in partnership with national and local business organizations, will aid small businesses with advice, technical assistance and professional networking opportunities.

An advisory council co-chaired by Goldman Sachs CEO Lloyd Blankfein will oversee the initiative. Legendary investor and Goldman's largest shareholder, Warren Buffett, and Harvard Business School Professor Michael Porter will serve as co-chairs as well.

"Our recovery is dependent on hard working small business owners across America who will create the jobs that America needs," Buffett said in a statement. "I'm proud to be a part of this innovative program, which provides greater access to know-how and capital — two ingredients critical to success."

The initiative comes as Goldman has started to see a rebound across many of its businesses even as the broader economy and consumers continue to struggle with rising unemployment and mounting loan losses. The bank, which has outperformed other financial companies for years, has been the strongest in its industry throughout the financial crisis. It had less exposure to toxic mortgage-backed securities than other companies and also has been more aggressive in its trading.

Its continued strength throughout the downturn allowed Goldman to quickly repay the $10 billion government bailout it received at the height of the credit crisis. That repayment was also done, in part, to rid the bank of restrictions on annual compensation that were attached to the loan. Goldman has been criticized for setting aside billions for employee paychecks despite the continuing weak economy.

10,000 Small Businesses, which has been in development for nearly a year, is a five-year program modeled on the Goldman Sachs 10,000 Women initiative, which creates partnerships between academic institutions and nonprofits to provide business and management education to women around the world.

Lawmakers, unions, and media commentators have criticized the firm's compensation.

"Goldman Sachs seems to salute no flag but their own corporate logo," Andy Stern, president of the 2.1 million-member Service Employees International Union, said at a rally Monday in front of Goldman Sachs' Washington office.

In November 2007, a month before awarding bonuses that were the biggest ever in the securities industry, the company announced plans to raise as much as $1 billion for a philanthropic fund called Goldman Sachs Gives.

The program was unveiled six months after John Whitehead, who retired as co-chairman of the firm in 1984 and oversaw its foundation, criticized Goldman Sachs' "shocking" pay and said he'd tried unsuccessfully a year earlier to persuade the firm to donate $1 billion to charity.