Why I would invest $25 million of MacArthurs $100 in the Runway Project.

The Runway Project needs attention and capital. We could replicate the Runway Project all across the country for $25 million, out of MacArthur's $100 million to build the network in the way that would create an easily replicated models of creating community wealth, using our analysis and strategy and action tools coupled with friends and family funding gap bridging tools. The Runway Project would ride on top of the CD buyers network in Impact Hub communities. These would be places where people had seen, lots of people and stakeholders in the city had seen, through the door to door sales and events and local media campaign that you really can invest in justice and make money.  We could build the SOCAPLocal or Neighborhood Economics Network event off of that epiphany. People who buy will have acted their way into a new way of thinking; able to invest in all of us and invest intelligently in themselves at the same time.

But why is the Runway Project worth getting one fourth of the $100 million? Because it's that important to get the smartest poor kids in the game, the entrepreneurs whose talent and ideas we need to react well to climate change and the systemic risk of wealth disparity. 

The Runway Problem exists to solve the friends and family gap for entrepreneurs whose friends and family can't come up with the $30,000 the Census Bureau says an entrepreneur needs to launch.  It's a problem everybody sees, but very few are working on. 

Summarizing the Summit

It was 10AM on a mid-April day and the members of Jessica Norwood’s brain trust, after months of anticipation, was finally assembled face-to-face around a 14th floor Manhattan conference room at theNathan Cummings Foundation. Almost everyone in the group had taken part in phone conversations with Jessica, Kevin Jones, and myself during the previous months, but this meeting marked the first time many of us would meet each other in person. A graspable energy seemed to bounce around the room and the group seemed primed for the conversation to come. There was a feeling that the people there in that room, at that moment in time, couldn’t have been better selected. You could see it their faces and in their words that there was an expectation for progress, that by the end of day, the question everyone had grappled with for so long would be wrestled with in a meaningful way. Not that we necessarily were seeking an answer, but more so a next step, a meaningful direction forward.

No time was wasted reminding everyone what precisely this question was. Soon after everyone was gathered,Marcus Littles, acting alongside his colleague Ryan Bowers as the discussion’s moderators, ushered the room and stated the session’s core concern: “How do African American entrepreneurs access seed and pre-seed friends and family capital?”

Before when describing this project, I’ve used many concepts to capture what we are looking at. I’ve called our focus building culturally-appropriate financial tools, catalyzing wealth creation, forming capital infrastructure. All these things are true, but I figure the last thing the social change world needs is more catch-all or potentially amorphous phrases to describe a new initiative. So here I want to offer a bit of concentration. While the general concepts we are studying are broad, complex, and various in nature, a lot of work was done on behalf of Jessica at the initial stages of this project to focus these concepts down into a single question, which is the one stated above. That is, when African Americans go to start a business what can be done to overcome the significant differences in access to pre seed and seed capital from their friends and family?

When Marcus got up at the beginning of the day and framed our discussion around this one specific question, it wasn’t merely a matter of a moderator carrying out a formality. It was because this specificity is really what’s at the heart of the entire project. By looking at such a singular issue Jessica’s goal was to be able to understand a much more “nebulous” one, as she would describe it. Furthermore, figuring out the friends and family capital piece could lead to what Jessica highlighted as three important goals:

  1. It increases the pipeline of investable deals – To this Jessica commented: “[African Americans] can usually pull together pots of money here and there, but things falls apart when looking for a good pipeline of investable projects.”
  1. It increases personal equity – “Being able to tap into the equity of one’s business can be a source of important wealth.”
  1. It builds up a robust structure for social capital – “I would assert that having a bomb network, having people you can go to, can be so invaluable. [African Americans] are deathly low in this aspect because it’s linked to access to friends and family capital.”

Each member of the brain trust was chosen for their unique perspective on these issues. And they were as diverse as they were brilliant. Members like Jeff Ashe and Napoleon Wallace of Self Help offered a ground level familiarity of financial tools while others like Lauren Williams and Andrea Levere of CFED provided a research-focused backbone around economic opportunity. And while each voice had an expert level grasp of the larger trends around of African American pre seed and seed capital, everyone also seemed to have a personal, anecdotal way of relating to this issue.

Whether Connie Evans of AEO or Dominik Mjartan of Southern Bancorp the conversation that flowed throughout the day showed how institutional knowledge is most powerful when complemented by firsthand experience. At one point Connie made a remark about her experience with character lending and how she first gravitated towards the concept after seeing her mom employ it in the vending business she operated during Connie’s childhood: “I started doing this because I grew up with it.” Similarly, Dom used his own day-to-day experience as a banker in the south to comment towards the wider trend of racism in lending practices, and ultimately the broken state of trust between banks and African Americans.

As the day went on, it seemed like there was never a silent moment. ‘Mmhm’s’ and outspoken ‘yes’s’ were nonstop, and certainly not because of fear of disagreement. The momentum of the conversation was a result of sheer overlap. Although we all were coming from different geographies (DC, Baltimore, the rural South, Southern New Jersey) and professional backgrounds (foundations, finance, think tanks, community development organizations, startups, consulting, academia, corporations) it seemed like we were all speaking the same story. And that story was the one of recognition. Everyone agreed that this problem was real and pertinent.

This was something that didn’t surprise Jessica. As she hypothesized at the day’s start, “I think this is a problem that we all recognize, but that just no one has done anything about.” Or maybe it was simply that the right question, and specifically the right scope of question, was being asked for the first time.

As the afternoon approached, the conversation gradually found its way out of talking about the problem, and towards talking about how to address it. This is usually the place where these kinds of conversations falter. Diagnosing might be easy, but prescribing the right treatment is another thing. Our strong progress didn’t fall victim to stagnation though—which one again most likely ties back to the strategic scope of the question being asked in the first place.

The plan that began to build momentum was to create three pilot projects in key cities. In each of these cities a community leader, from the area and versed in its specific cultural constraints, would be supported to carry out to and test various capacity building programs. This role would look not unlike what someone like Rodney Foxworth does in Baltimore. Jessica was cautious to predict the exact activities of this player though. The role needed to be slightly open ended, as to allow for site-specific flexibility. She echoed lessons learned from her time spent working on rural agriculture projects in Alabama. “You can’t go into these places already thinking you know what the people there will need.” It is this overly top-down planning that makes these sorts of projects fail. The needs of people are unpredictable sometimes. It takes experience to both adjust for this and to also make something that is actionable. Luckily Jessica is exactly this experienced leader.

Finally it was 4pm and Marcus gave everyone a chance to commit to an action item and an offering for the project moving forward. The offerings were generous. Better yet, they were sincere. You could tell that the commitments being made were not merely acts of posturing. Antony Bugg-Levine, who was part of the trust, among many other generous things, offered use of his organization’s (Nonprofit Finance Fund) brand new office space. The way he unequivocally offered it up reminded me of the kind of gesture family members would make to one another. It hinted at the solidarity that had formed between the group in only six short hours.

Although the formal summit had come to an end, conversations about the project continued for a few days. More focus was placed on what exactly the pilot programs were to consist of. Kevin and Jessica were even able to give a panel discussion at the New York Impact Hub to a lively audience.

Despite the great progress that was made during these several days, this period was really only meant to be a start—a leaping off point for future discussions and eventually the pilot programs. And so I’m afraid this is all I have to report at the moment. But as always, keep your eyes posted on this blog for more updates as more milestones are reached. Also, a website specifically for the purpose of hosting material for this project is in the works. Look out for that as well.

Assembling the Tool Kit - Ours to Own

An unfortunate reality lies at the core of most economically challenged cities in the US– there is a desperate need for funding of infrastructure projects, yet governments and charities cannot meet the full financial need. Ours to Own, a crowdsourced investment initiative from the Calvert Foundation, arises out of this scenario.

The program offers a simple fix to the problem of vanishing funds from the government and charities. It asks residents of the very communities being invested in (or really anyone at all) to pitch forward small amounts (starting at $20) as not donations, but investments that they will earn competitive returns on. These small investments are pooled together, and in the end allow large scale impact.

Rodney Foxworth is a respected change-maker on the ground in Baltimore, one of three cities where Ours to Own is being implemented. As a social entrepreneur, nonprofit advisor, and philanthropy consultant, he has found himself in a diverse range of roles all with the aim of making a notoriously disadvantaged city great again. Besides working with Black Male Engagement, founding and co-founding Invested Impact andImpactHub Baltimore, Rodney has taken a major role in seeing the success of Baltimore Ours to Own campaign.

We spoke to Rodney recently to learn more about his path and the rollout of Ours to Own Baltimore. Just like our previous conversation with Jeffrey Ashe, the goal of this conversation was to deconstruct a unique financial model and see what it can tell us about how African Americans across the country are engaging with entrepreneurship, and ultimately how they can better generate wealth.

What is Ours to Own?

 

Let’s briefly go into more detail about the Ours to Own program and how it works. The program exists mainly in three cities (Baltimore, Twin Cities, and Denver) as well as within a small national context. The tight geographic focus is intentional. For one, all of these cities are confronted by complex development issues, grappling with how to grow in a healthy way and looking for funds to do this. On top of this, having a place-based focus allows for the program to tap into the spirit of localism and self-determination. Ours to Own is centered around the belief that residents of cities like Baltimore are actively desiring positive change in their communities, but need new ways to put their money to work.

But like I said, Ours to Own is not a charity fund. It’s an investment fund, promising loaners competitive returns to that of mainstream savings accounts. The way this happens is more complex than the cleanly-designed website might lead you to believe. “Ours to Own works through the Calvert Investment Note to raise local capital to be deployed locally,” said Rodney. “I see it as a tool that can create opportunity to catalyze a community of stakeholders to develop solutions about how to best leverage the notes.”

Ours to Own has two key features to ensure its projects are successful and profitable. First to note is the strong CDFI presence within the program. These institutions, which vary from city to city, allow for the best funding targets to be identified. Along the same lines, Ours to Own requires local actors to play the role of brokers and on the ground sources of knowledge and connections. They help draw connections between deserving projects and fund dollars. In Baltimore, one of these actors is Rodney Foxworth.

“My work is grounded in economic inclusion, wealth building, and entrepreneurship … particularly for underrepresented entrepreneurs,” Rodney told me during our conversation. “Effectively what I’m doing is pulling together a pool of investors to support minority entrepreneurs in Baltimore.” It’s this very ability to pull together that allows Rodney to be so helpful with the Ours to Own campaign. Rodney sees that the reality of a place like Baltimore is that it is a city “fractured” on many levels. To ensure a successful program, it takes someone who understands these fracture lines, and who knows what it takes to repair them.

When everything comes together right, the catalytic potential of any given Ours to Own project is impressive. Out of many examples, one of the most successful case studies is Baltimore’s Remington Row. Ours to Own was able to provide a $1.5 Million loan which helped this housing, retail, and mixed space project get out the ground.

“One of the things I love about Ours to Own is its accessibility,” Jessica Norwood told me when we sat down to discuss the program and its transferability to other areas and projects. “Its online presence is really clean, straightforward.” But she emphasized the importance of recognizing elements that hide behind the curtains. She points out that “you’re running on the financial due diligence of a CDFI and their ability to find a portfolio of projects that represent a local community that you would be excited to support.” It’s hard to overstate the “money and hard work” that this relationship requires.

In order to create an Ours to Own program in a new city you need to assess how effective and well resourced the local CDFIs are. And as it is for our project, if your goal is to create infrastructure specifically for African Americans, Jessica notes that sometimes CDFIs are not set up for this. Also, in terms of cashflow, some CDFIs are better than others. In those that struggle to aggregate funds, this ends up impacting the overall viability of the projects they support. For investors this might mean a lower final return, which is critical when the difference between competitive and undesirable is 5% vs. 3%.

The other important asset that Jessica pointed towards is the broker (Rodney) on the ground who knows the community and can help focus the project. She stressed the hidden importance of establishing this stakeholder, something necessary to consider before transferring the Ours to Own methodology to a new location:

“Often types these sort of folks are under resourced. Program implementers might see the value in them, but they don’t understand why it’s important to pay someone to play this bridge building role. In my own research, people are very excited about funding the institution because you can measure this. Or they’re really interested in the entrepreneur who eventually got the money, but nobody wants to talk about the really unglamorous, very expensive role of the people who broker and bridge build.”

Jessica asks, “there’s probably a Rodney in every city, but can this person be found and then resourced?” This is one of the main questions of viability that needs to be considered before any attempt of implementing an Ours to Own type program in another setting.

Ultimately, the discussion here echoes a theme that has been brought up in almost every conversation we’ve had with financial tool builders leading up to our summit in NY next week (April 14th). When creating these types of projects you cannot overlook the value of the local–the unique blend of places, people, and culture that makes a place what it is. Jessica poignantly closed with this point during our conversation: “The way youenter something matters … if you don’t enter with with understanding of the local history and relationships, you can miss out on building something that matters for most.” For Ours to Own in Baltimore, this took the form of being able to understand how a project like Remington Row has potential achieve both financial and social good–and how a community of local investors believing in financial self-determinism can help spark such a project. Generally speaking, this same kind of awareness is necessary in every project. Development is not a proven recipe, and what works in Baltimore won’t work in Mobile, Alabama. What works for a racial majority in this country will not necessarily work for a racial minority.

Assembling the Toolkit – Savings Groups

In attempt to start filling out our toolkit of culturally appropriate financial solutions for African Americans, last week, Jessica, Kevin, and I spoke with Jeff Ashe who is an expert on all things related to Saving Groups. Ashe worked for years abroad figuring out the most efficient way to create wealth amongst rural and impoverished communities where cost intensive finance models (like microfinance) wouldn’t work. He found that Savings Groups filled this role.

What are Savings Groups?

What exactly are Savings Groups? Even if you’ve never heard of them, there’s a good chance they won’t appear too foreign. They are evolved from common sense, basic human nature, and cooperation. Their goal is to work well in demanding and diverse scenarios. Like your grandfather’s trusty hammer, their simplicity is the reason for their effectiveness. There are no hidden moving parts or outside influencers. It’s all right there in front of you.

While there is certainly room for variation, the Saving Groups Ashe worked with in countries like Mali all tended to fit a similar structure: the groups are made up of women who meet weekly, bringing a fixed amount that they had saved to be put into a locked collection box. Members of the group can take out one-month loans as they are approved by other members. All of the group’s money is split according to contributions at the end of an agreed-upon cycle (usually 6–12 months after starting). The share-out usually coincides with a time in the year such as dry season when there was a predictable need for cash. Records are mainly memorized, with all transactions carried out in front of the group. Organizers of the group are democratically elected.

Logic, fairness, and simplicity are some of the core themes of the Savings Group. Most importantly, Ashe saw how the groups also relied upon and benefited from an environment of trust. The reason why women frequently made up the groups was because they faced financial exclusion for a variety of reasons in many settings. In a Savings Group they rely upon themselves and the trust they held in each other to create financial opportunity. The only decision makers are the other women. This is one of the major reasons why these groups work so well-there is a culture of deep trust that holds each member accountable. Defaulting on a loan is the equivalent of defaulting yourself and therefore doing so comes with tremendous social pressure.

Because of the emphasis of Savings Groups on social bonds and trust, Ashe became curious to see how these same groups would perform back home in the US. After all, such conditions were by no means specific to Sub Saharan Africa. Trust can be replicated anywhere. The next population he observed interact with Savings Groups would be immigrant populations throughout the US, who struggle with xenophobia and the general difficulties of making it in a new country. Whether it was in Delaware, or Burlington, VT (whose mayor at the time was Bernie Sanders), Ashe saw the facilitation of several domestic Savings Groups with lots of success. Just as predicted, the key ingredient of communal trust was what drove these groups. While the root causes for financial exclusion may differ from those faced by women in Africa, the remedy was remarkably universal. The desire to persevere and the bonds they felt towards each other was the binding element needed to ensure that the groups ran smoothly. In some programs, the success evolved a step further. “By placing their lump funds in local credit unions, the groups essentially created a mini-bank,” said Ashe. From this, the otherwise off-the-books loans that take place within the group could be documented by credit bureaus. Over time, Savings Group members build up a credit score to the point where they can take out formal loans from any bank.

Whereas initially, capital was increasingly difficult to come by, just by trusting each other and remaining accountable, immigrant populations were able to shield themselves from a great deal of financial volatility while simultaneously increasing their access to capital.

Just as Ashe suspected Savings Groups to be transferable to immigrant groups, Jessica sees this system working potentially working for African Americans, but only under certain criteria. The basic problem facing African Americans is the same problem facing other populations where Savings Groups work well–financial exclusion. And one part of the atmosphere needed to incubate an effective Savings Group is also the same–a shared commitment to financial prosperity matched with strong presence of communal trust. “We do have a really deep history of pulling our resources together,” Jessica said referring to the black community at large. But she added an important distinction. “This group saving has only been associated with things like burial funds or insurance, and it has mainly happened through the church.”

Jessica’s hunch is that even if there is a strong collective desire for financial independence in the African American community, there are a few lacking components that are required for the instant success of savings groups: “my hunch tells me is that it may not be as directly aligned as one would imagine” For one, she thinks that the built in peer-pressure that brings necessary internal safety to these groups is not present. “We live in a very capitalistic, very segregated society and live by the american dream which is pulling yourself up by your bootstraps and making it.” While American capitalism might be creating pressure for financial well-being, this is ultimately pointed towards the individual pursuit, not peers. In addition, Jessica doesn’t think there is a true generational culture around facilitating these types of groups like there may be in Africa or in immigrant populations: ”Once again, maybe this might exist with special philanthropic activities like fundraising for your choir to sing at the Macy’s Thanksgiving Day Parade, but not with the broader idea of community led savings.”

“We may be able to find another stream of relationships in the black community where this would work though,” says Jessica. The way to supplant this, both Ashe and Jessica hypothesize, is through the church.“You have to have an institution that they will not find fallible, and there is probably not for black people any other institution that they will defend more than christianity,” Jessica says. Related to our earlier discussionabout instilling financial tools with cultural components, she also sees much potential in the quasi-celebrity status of influential ministers with household name churches behind them. These churches and their ministers hold tremendous sway in their communities and Jessica thinks they can mobilize something like a Savings Group where pure cultural tradition couldn’t. “I think it has to be a bigger church with a bigger name brand in order to convince people that this is a new way of doing things. You have to have a lot of press and lot of people talking about it.” 

Ashe pointed towards an interesting example that supports the notion that specific cultural environments dictate the success of Savings Groups. In one of his case studies of immigrant Saving Groups, he found that AVON (the makeup company) saleswomen were the best at organizing these groups. Why? Because they were the most closely aligned with the culture of the group. These were the people who had already been immersed in the community, travelling from house to house as part of their job, who were best at understanding the needs and desires of others. Ultimately, they were the most persuasive at delivering a product that their customers trusted. Whether they were facilitating loans or makeup purchases made no difference.

The parallels between this case study and the African American community at large shouldn’t be hard to see. Right now, the landscape of financial services for blacks is organized by the equivalent of seedy used car dealers. There is an element of mistrust in these figures from the start and as such, the first order of priority in any financial solution, especially savings groups, should be finding the equivalent of the an AVON saleswoman. 

As this example points at, Savings Groups, even if they end of consisting of just one component of the larger financial toolkit Jessica is developing, offer many important lessons for all financial tools. It’s for this reason that Jeff Ashe will be coming to NY in April to sit on Jessica’s Braintrust. We are excited to see Ashe’s cutting edge work in this sector cross-pollinate with other compelling solutions, most of which will be documented on this blog in the next upcoming weeks, so stay tuned.

Using the Lens of Culture to Craft Financial Tools

(Above: One of Thornton Dial’s pieces, “Don’t Matter How Raggly The Flag, It Still Got To Tie Us Together“)

Using the Lens of Culture to Craft Financial Tools

In Mr. Dial Has Something to Say we are told the story of an artist named Thornton Dial. Growing up poor in the Black Belt of Alabama, Thornton got his start not in art but in metalworking. He worked at a factory that manufactured trains for the better part of his life and during this time he maintained a steady art practice. By the the early 80s he had built up a significant personal collection.

Like many other African American artists in rural Alabama whose art making was a personal endeavor, his art would be largely hidden from the eyes of the public. It was only until 1987 when a man named Bill Arnett was introduced to Dial that this would change.

With the help of Arnett, Dial’s brilliant pieces, which explored a wide range of themes from history to politics, slowly trickled into galleries and collections. But the artist suffered from a strange problem of interpretation. Instead of labeling his work as simply ‘modern,’ the art community stamped Dial as narrowly belonging to an African American southern vernacular. As a result, his success suffered. Years later, after Dial’s work had been accepted into the Museum of Modern Art and other highly regarded museums, art historians would look at this past classification as a troubling act of mislabeling. They would come to see what is hopefully clear to readers of this post- that “outsider” implies being African American, self-taught, poor, or from rural Alabama disqualifies any artist from being seen as normal. They are not simply artists. They are “outsider” artists.

In a planning conversation a few days ago for a new project surrounding wealth creation in African American communities, Jessica Norwood pointed towards Dial’s story as a potent comparison to the work she is trying to do.

Jessica believes that the same type of false lens applied to Dial is being applied to how many see the world of financial tools and services for African Americans. To her, there exists a clear dominant narrative, an ubiquitous Picasso standard for what is preferred, for what is acceptable in the financial world. When this standard is placed in different cultural contexts like modern day African American communities, it fails to conform in any useful way. The “outsider” community is forced to conform to the Picasso-esque vision of normal, or else get shut out from the financial tools and services they need.

It was only after years of effort from patrons like Bill Arnett that allowed the art community to shift to accept Dial for the artistic genius he was. Dial never changed his style to conform to critics. The critics conformed to him. Jessica’s aspiration is to create a similar shift. Instead of making African Americans shift to accept financial tools and services designed for a different cultural majority, the tools must shift to conform to African American culture.

In order to fix this, we need to identify the cultural norms of African Americans that aren’t being addressed. Jessica identifies two:

For one, currently existing financial tools and projects are deprived of social reputation. There lacks an element of not only trust, but glamour. When the dominant financial narrative has been controlled by white voices for so long, being able to reintroduce trust into this space is essential. And to go the extra mile, to get users to not only trust but use a given service, we are going to be thinking about how to make it “sexy” too, as Jessica says. “You have to have a person or organization that has a social status or symbol attached to it.” Finding our own “Magic Johnson,” as she puts it, will be a unique challenge for this project.

 

Another important topic to address has to due with the consumer identity that has been placed on the shoulders of African Americans. Jessica believes that the psychological narrative of being the consumer has forced many African Americans to exist in a place of passiveness to larger corporations and institutions (financial service companies being a major culprit). She sees a strong source of potential in this mindset: “You have to be able to understand how they are marketed to in a consumption framework to be able to turn it on its head and get it into an ownership network.” Flipping this mindset is something that “we keep missing,” Jessica says, but something that this project will try to put a strong emphasis on.

Courtesy the Beinecke Rare Book & Manuscript Library, Yale University.

Courtesy the Beinecke Rare Book & Manuscript Library, Yale University.

We’ve seen what it looks like when African American culture is the foundation of a financial solution. In the 40s and 50s in Harlem, renters who were low on rent money held Rent Parties. Although on the surface these parties were a medium for apartment owners to cover rent costs, they also served the purpose of strengthening the community and reinforcing cultural practices. In an environment of discriminatory pricing and lower wages for African Americans, these parties fostered a crucial sense of ownership.

In order to create new financial tools that capitalize on cultural ownership, we will also need to look at past solutions that haven’t been as successful as the Rent Parties. One example can be found in the South Carolina with credit unions that were successful for certain ethnic groups, but not for the African American community. According to Jessica, case studies like this one help with “understanding what those cultural push points and differences are that would make a system work.” In the failure of past projects lies critical feedback for this endeavor.

Diving deeper into what has and hasn’t worked is one of the major reasons Jessica is assembling her brain trust of experts. These surveyors will play a crucial role in understanding the landscape of African American culture and how this translates into appropriate financial tools.

In the next few posts on this blog, Kevin and Jessica will be sitting down with a handful of these experts who each will be speaking towards their experience implementing a specific financial service.

Check back soon for posts capturing these conversations.

The Missing Infrastructure for Black Wealth Creation

 

In the first blog post of a new project aimed at understanding and improving the state of wealth creation in black communities, much was left unsaid about the origin of this problem. With this second post, some gaps will be filled in.

Let’s start with a hypothetical example. A young, new entrepreneur (who happens to be a black woman) wants to start a startup. Brilliant, gifted, and motivated, she is an ideal candidate for starting a business. But for the simple reason of bad luck, whenever she pitches her idea to traditional investors like venture capitalists, they don’t bite. After all, this is an extremely difficult market, and great ideas led by great people fail to secure funding all the time.

Without true bootstrapping as an option, she decides to pursue another common path to secure funding for her capital intensive idea–asking family and friends to invest. Once again though, a bad stroke of luck occurs. It turns out that her parents spent the last of their savings (and even took out loans) helping her receive a top tier college education. All of her friends are too young to have any money either.

What if this last let-down wasn’t just bad luck though, but the manifestation of a single concept?

A straightforward statistic explains how this might be the case. Looking at the latest Pew Research wealth gap trends we see that the assets of black individuals is, on average, around $11,000 while white individuals have an average of $144,000. Thus simply because she is black, our entrepreneur’s chance of finding money through the medium of friends friends/family is significantly lower than her white counterparts.

And what if this story wasn’t actually hypothetical, that it is actually true?

It turns out this is the story is the story of Jessica Norwood, who’s working alongside Kevin Jones and myself in this new project surrounding wealth creation in black communities. Jessica faced this situation when she was denied a business loan for lack of collateral, and when her parents could not provide any further assistance after paying for her school and other more immediate expenses.

This wasn’t a new phenomenon for her. She saw this story repeated in many of her peers and could recall countless examples of entrepreneurs of color who suffered as a result of lack of access to capital. After all, blacks in America have only had access to capital, and limited capital at that, for 50 years. That’s less than one generation.

These stacked odds have been Jessica’s main motivation in rethinking how capital spreads to and through black communities. They have been the impetus behind a handful of her already successful projectssurrounding this theme. And most recently, they are what has led her to partner with Kevin Jones.

As the person behind projects like Neighborhood Economics and SOCAP, Kevin has established himself as a successful convener. At his fingertips are the global networks of NE and SOCAP, and within these networks lie many organizations who have designed innovative wealth creation tools. Jessica and Kevin’s partnership is all about sharing these tools.

The ultimate goal will be to take these wealth creation tools, break them down to their working components, and rebuild them in the communities that Jessica is working in. As I wrote about in my first post, a problem that has come up when others have tried this process is the pitfall of inclusion. Mere financial inclusion often has the connotation of fitting a square peg in a round hole. Unless the transferred tool is culturally appropriate, it doesn’t work in its new environment. Rethinking financial tools through the lens of black culture is the heart of this project.

In addition to cultural diversity, our new solutions will exist as part of a wider taxonomy with the objective of being situationally diverse. For example, we’ll be looking at the differences between crowdfunding, b2b credit unions, and lending clubs, and how a specific entrepreneur or community’s needs might warrant the use of one over the other.

The team behind building the taxonomy will not end at the three of us. In addition we will be recruiting the help of other experts, who will all be meeting at a summit taking place in NYC in April. Here 15-20 key leaders representing the entrepreneurial space, investment space, researchers and scholars, community and government, philanthropy and people who command networks or aggregation points of black dollars will be joining Jessica to serve as her brain trust.

Just as competent as the human capital for this project will be, it will be matched by an equally competent tool. Sphaera, a social purpose tech platform focused on finding the best way to share solutions, will be hosting this taxonomy on a custom created ‘solutions hub.’ We’ll be talking more about this later, but if you want to see an example of what this will look like, visit the Resilience Exchange [Full Disclosure: I’m an Intern at Sphaera].

Leading up to the summit, we’ll have the opportunity to learn more about what Jessica’s vision  of community investing entails, and how this leads to wealth creation. After these first few overview posts, we’ll be diving into much greater detail and documenting specific examples of what ‘culturally appropriate’ wealth creation tools look like. All of these explorations and conversations will be contained within this blog, so stay tuned.

Creating Wealth in African American Communities

This post informally announces a new project and partnership that Neighborhood Economics is taking on surrounding wealth creation in African American communities. It is written by Bryan Lehrer, an intern at Sphaera, who has teamed up Kevin Jones and N.E. as a content/communications creator. Please stay tuned for more posts and interviews captured by Bryan as our exploration of the topic unfolds. 

I’ve done a lot of thinking during the past four months about what it takes to create change—who’s responsible, how it’s generated in the first place, whether it can be genuine or not, how it persists. My work with Sphaera has landed me in front of countless change makers and organizations with all sorts of answers to these questions and I’ve picked up on a few common themes.

One of these themes that the best change makers try to consider is inclusion. Whether it is in regards to race, gender, or any other fracture line, countless aid organizations are figuring out how to reset the playing field and ensure a fair and equitable world for all. But what does this recalibration really mean? If the game’s rules have been formed around a majority group, does “inclusion” merely entail adopting this majority groups practices? Does inclusion actual promise equity?

In some cases (voting rights for instance), this might not be the right question to ask, but in the case of race-based economic empowerment, these considerations are leading to both novel and impactful approaches.

Most recently I’ve begun to work with Kevin Jones and Jessica Norwood on a new project that is very much about this idea of setting a higher bar than just financial inclusion for African American communities. It’s about creation in itself.

How we’re going about tackling this problem is a reflection of our personal strengths so let me further introduce the players. First and foremost is Jessica Norwood. In her work with the Emerging ChangeMakers Network (which she is the founder of), Jessica has established herself as a leading voice in understanding “how money behaves.” After years of work in this space, she’s developed a keen awareness of the systemic nature of this issue, and how a diverse, systems-level approach is needed to understand it. At her very core, Jessica is a leader and a force for positive change. Although she’s been addressing black wealth creation for years now, most recently she has decided to host a summit this April which will gather experts on the issue from around the country.

This is partly why she has partnered with Kevin Jones, one of the other players in this project. Kevin is known for his work with SOCAP, the Bay Area Mission Hub, Good Capital and of course Neighborhood Economics. Where Jessica is a leader, Kevin is a convener. His past ventures all point towards his skill of bringing together innovative thoughts and people, and producing something real as the result of it. The same will hopefully be true of the summit come April. Ultimately any exchange of ideas will be only as important as the change it inspires on the ground (‘Main Street’) level.

But for the moment as things just are getting underway, exploration is the important precursor of change.

This is where I will come in. As this project unfolds, I will be documenting case studies, research, interviews, and general thoughts by myself, Kevin, Jessica, and others. The aim of these posts will be to create a cohesive body of knowledge leading up to the conference, but also to allow these ideas to exist freely in a space that anyone can stumble upon.

I hope you join me along the way and take part in the conversation whenever possible. This week stay tuned for a more in-depth post about the rabbit-hole that is wealth creation as well as an interview with the community building expert, Clay Forsburg.

Follow me @BryanLehrer for more updates.

Learn more about Jessica’s organization, Emerging Change