The influential Aspen Institute has decided that the goal of their Future of Wealth initiative is to see Black family wealth grow ten-fold over the next twenty-five years. This would bridge a significant chunk out of the racial wealth gap; the average white family has 10x the assets of the average Black family. Aspen’s grounding question is, “What would it take, what are the scalable strategies that could get us there? What are the barriers to scale?”
They realized that this goal takes new capital.
“What are the next generation capital stacks and the full amount of investment that it would take to achieve some real change,” Aspen’s Ida Radamacher asked the people on Aspen’s subject matter expert call; the call included people with on the ground experience, leaders doing edge investment platforms that create economic justice and democratize market power, and some significant catalytic, locally-focused foundations.
The central subject was Lyneir Richardson of Chicago Trend. He is the de facto leader of the group of four neighborhood investment trust type commercial real estate projects that Neighborhood Economics has been gathering for regular calls and conference presentations. We’ve been trying to help shape a shared fundraising strategy for these cutting-edge platforms that enable the people in the neighborhood to own the neighborhood, buying a piece of the Black Wall Street. Richardson has saved strip malls from predatory hedge fund displacement through his investment in four of them, two in Baltimore, two in Chicago. This work had a crowdfunding element that, it turned out, also gave the projects some political cover to fend off the influential and connected would-be, gentrifying developers. When a councilman in Baltimore discovered a thousand people in his district had decided to own the block, he got out in front of it and smoothed the path through the city.
Of all of the four projects, Crenshaw Rising, Local Code, and Partners in Equity, Richardson was the farthest along in the work. He had raised over $10 million. My family invested; you get paid back 5% a year as the property appreciates. Richardson chases out the “dirty dollar stores” and looks for some local Black-owned business that neighbors will support.
He has proven his model four times. But he still is lacking the crucial catalytic, philanthropic dollars he needs to use as leverage to expand more rapidly. He and his peers see white-led models that look far less likely to succeed successfully bringing in the $2 million investment on average from their investors while the Black fund managers chase sales of a quarter of that.
Richardson was in a select cohort of successful Black fund managers brought together by the Surdna Foundation. These fund managers, one of which had raised $100 million, all shared the same problem. It was hard to get a check bigger than $1 million in the door. That made fund-raising lengthy and arduous. Their models are proven and need a shot of low cost capital to grow and reach their potential; they need the the low cost capital that would enable Richards to quickly add four new strip malls in other urban cities, that would pay off with that patient, catalytic capital making the rapid growth possible, making the new deals more easily bankable, making them able to get a loan at a bank. They needed philanthropic capital to bridge them to their clearly achievable goals fast enough to make a difference soon enough. They needed that catalytic capital.
Despite his success and being invested in by multiple catalytic national foundations, as well as a Baptist loan fund, Richardson has almost no connection with mission-focused, high networth people, an increasing number of whom are using donor advised funds to make philanthropic investments–giving to invest with the gift, returning as a loan is repaid, and that money going out again. They are not in his network.
In this case, the goal of Radamacher’s gathering would be to find the philanthropic capital that increases Richardson’s ability to replicate his model as fast as the market opportunity and his ability to execute allowed. There is a clear and relatively low-risk growth opportunity and potential for scale in Richardson’s model. Two of the other projects are uniquely placed-based and community centric, Local Code in Kansas City and Crenshaw Rising in Los Angeles; replication is possible, but not rapid scale because of the social complexity and community engagement required for success. Community engagement doesn’t scale; it grows at the speed of trust across race, class and zip code.
Because of Chicago Trend’s potential to scale rapidly, Aspen had used him as a plausible model that could be one part of Aspen’s ambitious Future of Wealth initiative, the plan to help grow Black family wealth by 10x in 25 years.
The group brought together important players in this ecosystem: the Pritzker Traubert Foundation, focused on the racial wealth gap in Chicago; Impact Assets, the $2.4 billion donor-advised fund that spun out of Calvert; the Chicago Trust, Arabella, the donor collaborative adviser; academics; other fund managers; and practitioners. The group will continue to meet, probably in October in Atlanta, and then again at Neighborhood Economics in San Antonio February 26-28. I intend to stay part of this collaborative. Richard calls me the passion matter expert, among the subject matter experts, because I work to energize those gatherings if I can. This working group will present its work in progress in San Antonio.