Making Deeper Commitments to Equity in Gender and Race
Themes from SOCAP18, the 2018 GIIN Investor Forum, and more
This blog explores themes in gender and racial equity that emerged during SOCAP18, the GIIN Investor Forum, and other Fall 2018 events. It is part two in a three-part series by Mission Investors Exchange on significant themes in today's impact investing community.
Click here for part one, which provides an overview of key themes. Click here for part three in the series, which focuses on the impact investing community’s response to some of the most urgent issues facing our time. Visit here to view information on MIE’s sessions on racial equity, inclusion, and diversity at SOCAP, including a recording of a mainstage event featuring Sharon Alpert of Nathan Cummings Foundation and Fred Blackwell of San Francisco Foundation.
While equality refers to the idea that all people are equal, equity acknowledges that all individuals are unique and have different needs. Racial equity, according to the W.K. Kellogg Foundation, further frames this recognition of difference in an understanding of deeply rooted racial biases in our systems, which fundamentally disadvantage certain communities— regardless of their skills, talents, or hard work. “Racial equity is about tapping into our core humanity,” noted Nadia Brigham from W.K. Kellogg Foundation at SOCAP. “It is the aspirational pursuit to create equal opportunity for all people.”
Yet the system failures are massive: according to “The Road to Zero Wealth,” a 2017 report by Prosperity Now and the Institute for Policy Studies, median wealth for African Americans will fall to $0 by 2053 based on the current trajectory. In this second blog in a 3-part series of reflections surfaced during SOCAP18, the 2018 GIIN Investor Forum, and the High Water Women's Conference, we share several ways that foundations and others are deepening their commitments to racial equity and advancing the field.
From Implicit Beliefs to Explicit Strategies
Being "race neutral"— removing biases that privilege certain groups— is not enough, noted many panelists throughout the racial equity track at SOCAP. In reality, conscious commitments, including explicit goals integrated into governance or investment policies, are critical to achieve change. Without them, noted several participants at MIE's Investment Forum, investing practices might end up at odds with the best intentions.
Changing a Biased Financial Ecosystem
Throughout SOCAP sessions, panelists and participants discussed the importance of understanding the structural barriers facing people of color in America. From redlining, to biased credit scoring, to racially targeted predatory lending practices, these barriers are deeply rooted in US financial systems. Progress will require addressing problems from multiple angles. Examples shared at SOCAP included Lumina Foundation’s investment in Upswing, which provides online tutoring, academic advising, and student mentoring to end college attrition; WKKF’s investment in SIXUP, which offers responsible loans to low-income students; and the work of Self-Help Credit Union, which has received investments from MacArthur Foundation, and many others.
Changing Paradigms of Decision-making
The need to incorporate more voices of people of color in the decision making processes and take a close look at internal leadership dynamics came up several times at SOCAP. At a session on moving from being 'race neutral' to racial equity and inclusion at SOCAP, Christine Looney of Ford Foundation noted the importance of diverse teams— across investors, fund managers, investees, and partners — as critical in effectively addressing systemic challenges.
In addition, asked several panelists and attendees, if you haven’t experienced the problems, are you best suited to solve them? It is important, noted Carolina Huaranca of Kapor Capital, “to support ventures led by people with lived experience, solving a personal pain point that they have.” Without taking this into consideration, leaders may in fact unintentionally bring their own bias to the solution.
Supporting Entrepreneurship Among Women and People of Color
MIE’s Investment Forum featured three deals focused on supporting entrepreneurs of color. The Entrepreneurs of Color Fund (EoCF), managed by the Detroit Development Fund, provides investments to Detroit-based entrepreneurs. Since its inception, the EoCF has made 68 loans, totalling $5.7 million. W.K. Kellogg Foundation provided a cumulative $5 million in lending capital and a $500,000 grant dedicated to pre- and post-loan technical assistance.
To address the gap in funding for entrepreneurs of color in the Pacific Northwest, Meyer Memorial Trust provided a $2 million investment in Elevate Capital, which provides venture funding to women and people of color. So far, Elevate Capital has achieved a 20% internal rate of return. To serve entrepreneurs and communities in New Orleans, Atlanta, and Memphis, Kresge Foundation and Annie E. Casey Foundation contributed $30 million in guarantees to a $100 million fund by Prudential Financial. Click here for a Q&A with Daryl Shore of Prudential Financial on how this fund was developed.
Gender Lens Investing
Gender lens investing and strategies to address the disadvantages women face in the workplace were a topic of discussion both at SOCAP and the High Water Women Conference. From funding initiatives that support women through the provision of clean energy, to accelerating the ability for women to access investment capital using blended finance, there is promising work being done in this area. During the High Water Women conference, Shelly Porges of the Billion Dollar Fund for Women underscored the economic benefits of investing in women, noting that it was “not just the right thing to do, but the economic thing to do.” Click here for MIE’s resource library on gender lens investing.
Click here for part three in this series, which focuses on a second recurring theme across Fall events: how the impact investing community is responding to urgent issues in our rapidly changing world. If we're missing a theme that you noticed, we welcome your feedback! Please email Anjali Deshmukh to share your thoughts.