The Service Corps of Retired Executives (SCORE), known for helping out cash-strapped entrepreneurs with free advice from former business leaders, is having cash-flow problems of its own. And that could force SCORE chapters to charge for some of their popular programs — which serve 300,000 people through some 5,000 workshops annually, the upcoming print edition of Business Week frontier reports.

Each year, Congress doles out $5 million to the group's 389 chapters, staffed by ex-execs who dispensed 1 million hours of consulting advice during 1998. The Small Business Administration has typically helped pay for chapters'administrative expenses, such as photocopying, advertising, travel, and Internet access. Now the SBA says it can't ante up its latest chunk — $400,000 worth.

While expressing regret for putting a burden on all-volunteer SCORE chapters, an SBA spokesman argues that the additional funding has always been discretionary. What's more, says the SBA, the agency needs the dollars to cover its own basic operations. Cutting funding to the popular SCORE program won't improve the SBA's standing with Congress. The agency is already in the doghouse with lawmakers for alleged mismanagement of funds, and is under political fire from Republicans for requesting $85 million to fund President Bill Clinton's "New Markets Initiative" for inner-city entrepreneurs. Republicans see the latter as a pre-election boondoggle for Democrats. As a result, Congress has taken steps to drastically cut SBA funding in the fiscal year 2000 federal budget.

The move has already drawn the ire of Senate Small Business Committee Chairman Christopher "Kit" Bond (R-Mo.). In a letter to SBA administrator Aida Alvarez, he warned the shortfall "will create a severe hardship to SCORE services and the Main Street businesses that use it." Bond wants the SBA to cut spending elsewhere to keep SCORE programs free.

SCORE executive director Ken Yancey says most chapters receive $500 per year from the SBA, with the largest groups taking in $4,000 to $6,000. "It's a small check," says Yancey, "but it's important to our chapters." In particular, says Yancey, the money reimburses travel expenses of volunteers who conduct on-site visits with entrepreneurs — one of SCORE's bedrock services. To help fill the gap, Yancey says SCORE is soliciting corporate sponsorships from the likes of Visa and Bank of America.

Yancey stresses the picture isn't completely bleak for those who count on SCORE's bargain help. Much of the group's traditional one-on-one consulting has moved to the low-cost Internet, where it fields more than 6,000 questions per month. "No one's going to shut down over this," adds Yancey reassuringly.

Still, the mood at the SCORE chapter in Miami, in Dade County, wasn't optimistic. Without the SBA's help, the group's volunteers may have to pay for newspaper advertisements out of their own pockets. To cover other sundry expenses such as postage and photocopying, chapter Chairman Louis Garcia is contemplating tacking on a small fee to the group's introductory meetings on entrepreneurship. "We have free seminars three times a month that draw 60 to 70 people," says Garcia. "If we start charging, it's going to get down to 15 or 20. I don't like the idea."

In Tyler, Texas, SCORE director Perry Smith says that without the SBA's $1,000 check, his chapter will put off buying business software for training entrepreneurs. Luckily, his office is housed at a local community college, which provides free rent and telephone. "If we had to provide for rent and telephone, we'd have to shut down," he predicts. Absent money, some of SCORE's retired execs are relying on humor to cope. The Tyler chapter has concluded that money that would have been SCORE's was spent for a more pressing need, Smith says. "The government spent all the money on the Monica [Lewinsky] situation," he jokes.

By Dennis Berman in New York
Dennis_berman@businessweek.com