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Boston Impact Initiative has issued a call to action for impact investors and philanthropic organizations: Adopt a trust-based catalytic approach in backing first-time, locally-based funds led by women, Black, Indigenous, and other community leaders of color.
“Emerging impact fund managers are ready to deploy hundreds of millions in capital to build lasting wealth in communities of color – they just need the right infrastructure and support to succeed,” said Betty Francisco of Boston Impact Initiative, which has released the report, “Fearlessly funding economic and racial justice.”
Raising a fund as an emerging impact manager, often as a one-person show, can be an arduous journey. For place-based impact managers raising first and second funds, getting an investor to write even the first check into their fund can be even more taxing — both financially and mentally. For fund managers of color, who are often investing critical dollars into their communities, launching a fund is even harder.
Boston Impact Initiative since 2013 has deployed $15 million of catalytic grant, debt and equity capital in social enterprises and real estate projects led by women and people of color in Massachusetts.
“By investing in community leaders starting impact funds and supporting them as they launch and scale their funds, we can drive more capital into long-marginalized communities to create equitable and inclusive economic opportunity,” the report concludes.
BII’s report draws from the experiences of 17 fund managers from its Integrated Capital Emerging Fund Manager’s program, which has trained 69 community leaders since 2020 to launch first-time funds. More than half of the new fund managers are Black and women.
The 17 managers in the report are looking to raise a collective $378 million over the next year or two to invest in community-based small businesses, housing and mixed-use real estate projects, and Black farmers. The majority of the managers are seeking between $1 million and $10 million for their funds.
“We need foundations, high-net-worth individuals and donor-advised funds to come in and support this movement,” BII’s Aliana Pineiro told ImpactAlpha, “not only with capital, but also with influence, connections and access.”
Emerging managers express concerns around a lack of unrestricted grant capital to support operations during the long fundraising period for first-time funds. Mounting legal fees and access to investor networks and philanthropic programs for first-time managers present major challenges amid growing attacks on diversity, equity and inclusion, or DEI.
“There’s been such a coordinated effort to dismantle the efforts and the strides forward that we feel like we’ve made in the past several decades,” says Pineiro. The nonprofit impact fund brought in law firms to help emerging managers develop legal strategies against such attacks.
Communities of color
Boston Impact Initiative’s report spotlights Karen Washington, Melanie Allen and Olivia Watkins of the Black Farmer Fund, which is raising a $20 million second fund to provide flexible financing to 30 Black-owned farms and food businesses in the northeastern US region.
Because discriminatory and predatory practices have historically driven Black farmers and land stewards off their land, Black Farmer Fund is taking a regenerative financing approach to support Black farming communities build inclusive wealth (see, “Road to justice for Black farmers leads through flexible finance”).
Also in the report is Avery Ebron and Nikishka Iyengar of The Guild, a worker-owned cooperative working to drive community ownership of land, housing and real estate in Black communities and other communities of color in Atlanta.
The social enterprise is looking to raise a $17 million integrated capital fund to finance a mixed-use real estate portfolio that includes affordable housing and community retail spaces for local small businesses. Ownership of the building is placed in a community stewardship trust, owned and governed by local residents and community members.
In Massachusetts, Andrew Brennan and Kofi Callender’s Black Economic Council of Massachusetts, or BECMA, is raising capital to invest in local Black-owned businesses in the state.
And in upstate New York, Christina Hollenback’s Justice Capital invests in community-owned housing, energy and other green infrastructure in Black, Brown and Indigenous communities (see Hollenback’s guest post with Nonprofit Finance Fund’s Aisha Beson, “How community ownership benefits investors and communities”).
