February 27, 2023
While Black History Month is coming to a close, our commitment to advocating for racial equity and justice continues beyond the month of February. One of the most significant issues facing Black Americans today is the racial wealth gap, which has been perpetuated by centuries of systemic racism and discriminatory policies. Closing this gap requires a concerted effort from all sectors of society, including the investment community.
As impact investors, we have a unique opportunity to address the racial wealth gap by shifting who holds power in making investment decisions to influence positive change and close disparities in wealth. Tackling the complex and challenging issue of racial equity is essential in our collective pursuit of a more just and equitable society.
By committing to investing in Black-led businesses and funds, we can help address the lack of access to capital that has historically hindered the success of Black entrepreneurs and instead redistribute wealth and resources more equitably.
In 2021, Black founders in the US raised a record-breaking $4.34 billion dollars. That amount of money equates to just 1.3% of all capital raised in the US alone. Last year, that number dropped to about 1% or an estimated $2.254 billion out of $215 billion in US venture capital.*
The urgency of this work cannot be overstated, and it requires a concerted effort from all of us, whether as individuals or as part of larger organizations. It requires a willingness to examine our own biases and to challenge the status quo. It requires us to take action, to educate ourselves, to engage with our communities, and to invest in change.
Earlier this month, as part of our workshop series Investing with an Equity Lens, we hosted Erika Seth Davies of the Racial Equity Asset Lab [REAL] and Rhia Ventures to lead an action-oriented workshop focused on shifting investor decision-making and resources to reflect a commitment to racial equity.
In partnership with Toniic, a global action community for impact investing, we convened asset owners and allocators to explore the complex and dynamic interaction of systems, policies, practices, and cultural norms shaped by a history of extractive capitalism, racism, and white supremacy. The workshop had two primary objectives.
- First, to explore what it means to transition from a color-blind approach that upholds and reinforces racialized outcomes, to an equity-focused system that promotes access, opportunity, and performance aligned with values.
- Second, to identify the key decision-making factors that can be leveraged to create more inclusive and equitable policies, processes, and outcomes that advance racial equity.
Together, we created a compilation of resources that can aid in your personal and professional journey towards greater inclusivity and equity. These resources have been selected to help expand your knowledge and understanding of the challenges faced by marginalized communities, as well as to provide practical guidance on how to build more inclusive and equitable environments.
We know our racial equity work is ongoing, and look forward to collaborating with our community to advance this work through equitable capital allocation and intentional investment practices.
Resources for Impact Investors
The Path to Inclusive Capitalism: An Asset Owner Guide for Investment Portfolios
A guide for asset owners that are considering or have committed to taking this path, consultants who advise them, and asset managers that seek to become part of their investment portfolios. Download the guide here.
Diverse Manager Directory
Directory of minority, women, veteran, and disabled-owned firms. Access the full directory here.
Due Diligence Commitment
A commitment to catalyze the movement of capital to BIPOC managers. The Due Diligence 2.0 Commitment has been undersigned by asset owners, consultants, and financial intermediaries, on behalf of asset owners who value BIPOC manager inclusion, to commit to making the following shifts in our due diligence processes. Sign the commitment here: https://www.duediligencecommitment.com/
Primer: Targeted Universalism Policy and Practice
This primer, which Erika referenced in her presentation, covers Targeted Universalism, which means setting universal goals pursued by targeted processes to achieve those goals. As such, targeted universalism opens up the possibilities for experimentalist, manifold pathway policy regimes. It is a framework that adds nuance that can complement and accommodate the best work within the domain of innovating policy change. Download the primer here.
Case Study: Investment Manager Diversity, the Hardest Taboo to Break.
A case study that examines how one community foundation – Silicon Valley Community Foundation with assets under management of $4.7 billion – approached the issue of increasing investment manager diversity with its investment advisor – Crewcial Partners which advises $30 billion of capital. Read the case study here.
The Case for Reparations: PDF Version
The Curb Cut Effect, Angela Glover Blackwell: Read Here
The State of Black Venture, BLCK VC: Download Here
* Source: TechCrunch