Risks for the Future We Want

(Illustration by iStock/katflare)

Over the last six weeks, thousands of people across America have been arrested at protests, with millions marching in the streets. Despite a pandemic, so many people (including myself) have been willing to take the risk, breaking stay-at-home orders and potentially exposing themselves to the virus, in the fight for racial justice. And these risks have had results: Long-time fearless activists, timely global protests, and many actions of solidarity have taken the Black Lives Matter movement mainstream. A majority of Americans now support the movement, according to a recent Civiqs poll, and politicians at almost every level are following suit. What was seemingly impossible was made possible in a matter of weeks.

How can philanthropists learn from the people in the streets and reimagine risk?

Formula for Change

Taking risk has always been part of the formula for change and securing racial justice will require risks like never before. That’s why those of us in philanthropy who are fighting for racial and social justice, advocating for racial equity, and working to close the racial wealth gap need to re-think how we calculate risk, and raise our tolerance for it. It has been thrilling to see large foundations, financial institutions, impact investors, and other resource holders commit to increasing their financial support to Black leaders, nonprofits, and communities. However, if we don’t fundamentally reimagine our relationship to risk—which dictates who we fund and how aggressively we address systemic barriers—we will be doomed to repeat the results of the past.

Over the last 50 years, grant-makers have poured billions of dollars into nonprofits, and there is no doubt that good work has been done. But the Black and white wealth divide is as wide today as it was in 1968. And as a recent research report makes clear, the racial disparities in funding that stymie social change remain broad: Organizations led by people of color receive less money—and funders trust them less to decide how to use the money—than those led by white people. The report also found that the unrestricted assets—which give nonprofits breathing room to be responsive, entrepreneurial, and sustainable—of organizations with leaders of color were 76 percent smaller than those led by white people.

We can give more money, but we must also change the way we give. We must accept that without addressing racism’s systemic roots—power, ownership, and capital—the targets will keep moving. To eliminate the interconnected systems that allow racism to plague the world, we, philanthropy and impact investors must build a new lexicon for risk and stronger muscles for taking it. Our risks should push back against decades of inequitable policies that have prioritized profits over people, especially Black, Brown, and Indigenous people, decades of failed employment policies that have not protected workers’ rights and compensated them their due share of the wealth they’ve generated for others, and decades of underinvestment in Black, Brown, and Indigenous entrepreneurs and fund managers because they are deemed too risky to be job creators and investors.

What risks are we in philanthropy and impact investing willing to take to make lasting change? Are we willing to continue to sacrifice the lives, livelihoods, and well-being of entire communities for the comfort of our well-polished theories of change?

Six Ways to Reckon, Risk, and Act for Racial Equity

As we mobilize to help our nation respond, recover, and reimagine a more thriving America, here are six things philanthropy and impact investors can do:

1. Get Comfortable With Being Uncomfortable

To have an honest reckoning on why we haven’t gone all in to support Black and Brown communities, we need to name and eliminate the practices in our institutions that prevent us from funding the leaders and ideas that, while they might feel uncomfortable and risky, could re-orient our economy towards greater inclusion. It’s on us to examine and release our need for perfect plans and PowerPoint presentations, and instead, expand our networks to find and fund Black-led organizations that have the proximity and power to respond to the challenges of structural racism. The imperatives created by the Association for Black Foundation Executives and tools to practice trust-based philanthropy are a great place to start.

2. Weigh the Risk of the Market Against the Risk of Discarding Millions of Lives

We need new risk frameworks that aren’t solely based on traditional market measures. In recent weeks, financial headlines read that the stock market had recovered all its 2020 losses and experienced a nearly double-digit drop. But the stock market is NOT the economy. It is a singular, dynamic measure of economic activity that reflects the realities of the wealthiest 10 percent of Americans who hold the lion’s share of stocks.  

Consider developing a risk tolerance that factors the unsustainable reality of continuing to exclude Black and Brown communities from economic prosperity. Pre-COVID data from W.K. Kellogg Foundation made a clear case that our economy was losing trillions (with a T), due to racial discrimination and inequity. Analysis from the Economic Policy Institute outlines the need to center Black women – who despite facing multiple layers of discrimination – are key to an equitable economic recovery for everyone. Yet, our risk frameworks don’t account for the realities that Black women (and similarly, Brown and Indigenous women) face when navigating the economy. Yet we expect them to get the same and often better results from investments that don’t take their needs into consideration.  

3. Give Black and Brown Communities a Runway to Recover and Reimagine

Let’s deploy financial products that provide the necessary low or no-cost patient capital that can rebuild communities. We’ve relied heavily on loan products that are saddling businesses and people with unsurmountable debt. Instead, flexible capital can provide the runway to weather the economic fallout of the pandemic, as well as the space to reimagine, innovate, and build their businesses and wealth in communities.

4. Create Transparency and Accountability Around the Use of Public Dollars

As more stimulus funding is released, we need to invest in the data collection, reporting, and watchdogs to make sure it goes to the small businesses and workers who desperately need the funding to survive and who make our communities thrive. All told the United States spends $100 billion on policing each year, and another $80 billion jailing people. Just a stone’s throw from my apartment in Brooklyn, police drove into a crowd of peaceful protestors.

Imagine if some of the public dollars that go into policing and jailing people went to rebuilding communities? Models like the Newark Community Street Team have demonstrated success and have required a different orientation to risk on the part of the funders and policymakers that sustain them.

5. Focus on Policies That Reward the Value Creators, Not the Extractors

Workers and business owners play a critical role in creating the economic growth that investors and asset holders benefit from. Investing in movements like Athena can help ensure that the workers who have been serving food and providing services to our homes and businesses are paid a thriving wage and can access the benefits, like paid family leave and affordable healthcare. These kind of multi-member, diverse stakeholder movements are often written as too risky, despite their efforts having a direct impact on our health and well-being as a society by protecting and supporting the frontline workers we all depend on.

Many small businesses are facing dampened demand under the constraints of social distancing. Recent research shows a 41 percent of active Black small businesses have closed since February 2020 when social distancing started, compared to a 32 percent reduction for Latin(x) owners, a 26 percent reduction for Asian business owners, and an overall 22 percent reduction in small business activity. How can our grantmaking help small businesses tap into new markets? Initiatives like the Path to 15|55 can build on existing efforts to strengthen entrepreneurship but need early-stage, risk-tolerant capital.

6. Fund the Frontline Organizations and Commit for the Long-Haul

There are hundreds of organizations working to advance inclusive, thriving economies across the US. Fund organizations that are helping to generate wealth and ownership in Black and Brown communities. Here are a small handful of organizations the Surdna Foundation, Inclusive Economies program is supporting:

• 1863 Ventures, which invests in and trains entrepreneurs to transform their potential into business growth.
• Boston Impact Initiative, an impact investor creating opportunity for people most oppressed or abandoned by our current economic systems. 
• Center for Urban Entrepreneurship and Economic Development, a state-based pre-accelerator program for Black and Latino founders in tech.
• Code Fever, a national ecosystem builder, expanding pathways for Black communities to participate in the innovation economy.
• Common Future, a nonprofit that uplifts and makes grants to local leaders so communities can own, transform, and create wealth that serves their interests.
• Good Jobs First tracks the use of public subsidies and ensures accountability in economic development.
• Higher Purpose Co. helps build Black communities in the rural south through entrepreneurship and ownership strategies.
• Jobs with Justice works nationally and locally to make concrete improvements in workers’ lives through campaigns to secure collective bargaining rights, employment security, and a decent standard of living for all.
• Partnership for Working Families, a national network of leading regional advocacy organizations that support innovative solutions to our nation’s economic and environmental problems.
• The Association for Enterprise Opportunity, a leading voice for microfinance that creates economic opportunities for underserved entrepreneurs throughout the US.
• Transform Finance supports social justice leaders to investigate, instigate, and deploy capital strategies that prioritize community goals.

The Biggest Risk Is Inaction

The risks we take must extend beyond our comfort zones, beyond diversity and inclusion efforts. They must be commensurate with the consequences of inaction.

This is a message to myself as much as it is to my colleagues. However, for me, this is not an academic exercise: as a Black woman, the consequences of inaction are a lived experience. I’ve benefitted from the sacrifices and risks taken by my ancestors and recently purchased my first home. In my moving process, I was stopped twice by the police. In one instance, an officer demanded to know what was in the large garbage bags in the back of my car. He insisted that people who were moving used boxes, not bags. He assumed I was transporting looted goods and demanded to see my ID to verify where I was traveling to and from. In reaching for my ID (at his request), his hand went to his holster.

He was a non-Black person of color. Diversity and inclusion are not going to solve the problem. Diversity and inclusion are not enough to rebuild a more just and equitable economy. They don’t go far enough to address systemic racism, and we must do better. We must accept and seek out greater risk and be more concerned about the consequences if we do not. It’s a risk worth taking. And one that will pay dividends for decades to come.

Read more stories by Mekaelia Davis.