Editor’s Note: Capitol Gains is a production of Court Street Group. The podcast is part of the ImpactAlpha Podcast Network.
Homero Radway, a senior analyst at Activest, joins Capitol Gains to explore the intricate connections between finance, community investment, and racial equity. With over two decades of experience in the financial sector, including roles at institutions such as JP Morgan, Morgan Stanley, and T. Rowe Price, Homero brings a unique perspective to his current work at Activest, where he focuses on creating more equitable financial systems. The discussion centers around a recently released report by Activest on the state of New Jersey, which serves as a lens through which broader issues of fiscal justice and community development are examined.
Capitol Gains is a production of Court Street Group an is part of the ImpactAlpha Podcast Network.
Fiscal justice
The conversation begins with Homero introducing the concept of fiscal justice—a foundational principle of Activest’s mission. Fiscal justice, as Homero describes, is about using data and research developed in collaboration with communities to highlight and address the risks posed by unjust practices and policies. This approach is not just about identifying problems but also about holding issuers accountable and driving change through targeted investor campaigns. “We use data and research developed by and with communities to better quantify and address the risks associated with unjust practices and policies and create investor campaigns that can hold issuers accountable for their behavior,” Homero explains, underscoring the critical role of transparency and accountability in achieving fiscal justice.
A key element of fiscal justice is its focus on tangible impacts in everyday life. Homero shares examples like California’s Baby Bonds program, which was designed in response to the COVID-19 pandemic to provide financial support for children who lost a parent. This initiative, as he points out, is a prime example of how community-driven projects can address systemic harms and foster long-term equity. “California’s Baby Bonds is a good example… a project that has resounding community support and engagement from the community in designing to address a harm is an essential part of the mix,” Homero notes, emphasizing the importance of community involvement in the design and implementation of such initiatives.
Investing in basic needs
The discussion then delves into the broader implications of fiscal justice, particularly how strategic investments in fundamental needs like income, housing, and healthcare can lead to more resilient and thriving communities. Homero highlights the strong correlation between household income and positive educational outcomes, arguing that investments in these areas can have a more significant impact than even direct funding for schools. “If we support families with income, housing, and healthcare, we’re off to a great start… household income has a much stronger correlation with positive school experiences than even per-pupil investment in schools,” he states, making a compelling case for a holistic approach to community investment.
This perspective is particularly relevant in the context of discussions around policing and community safety. Homero challenges the traditional view of safety, which often focuses narrowly on reducing violent and property crimes, and instead advocates for a broader definition that includes economic stability, wellness, and the reduction of chronic stressors for families. “We have to revise our concept of safety to include safety from harms other than violent or property crimes… a safe and resourced home to mitigate and neutralize the stressors faced by families,” he argues, suggesting that true safety is deeply intertwined with the economic and social well-being of a community.
Structural racism and credit ratings
A significant portion of the podcast is dedicated to exploring how structural racism is embedded in financial systems, particularly in the way credit ratings are determined. Homero discusses the historical and ongoing biases that affect the valuation of land and tax bases in BIPOC communities, leading to lower credit ratings and reduced access to capital for these areas. He explains that credit ratings are often based on median incomes, which are typically higher for white families than for Black families and other people of color. This disparity is further exacerbated by the legacy of redlining and other discriminatory practices that have systematically devalued properties in predominantly BIPOC neighborhoods. “Credit ratings are in part based on median incomes, which are higher for white families than for Black families and other people of color… generations of redlining have directly devalued land occupied by BIPOC families,” Homero explains, highlighting the entrenched nature of these inequalities.
This systemic bias in credit ratings has profound implications for communities seeking to invest in their own development. Without fair access to capital, these communities are often unable to undertake essential projects that could improve infrastructure, provide services, and create opportunities for residents. Homero calls for a rethinking of how credit ratings are applied, particularly in the context of impact investing, where the goal is to direct capital to areas that have been historically marginalized. He suggests that investors should consider alternative frameworks that prioritize equity and community impact over traditional metrics that reinforce existing inequalities.
Community investment strategies
The conversation also touches on successful examples of community-centered investment, with Homero citing Flint, Michigan, as a case study. Despite its ongoing water crisis, Flint has managed to implement several community-driven initiatives that have made a significant difference in residents’ lives. For instance, the Greater Flint Community Foundation has played a crucial role in supporting local projects, such as funding libraries, recreation centers, and transportation services, all of which contribute to the overall well-being of the community. “In Flint, the Greater Flint Community Foundation stepped in as a supporting part of government, funding grassroots organizations to provide essential services during the COVID-19 pandemic,” Homero shares, demonstrating how local foundations can act as vital partners in community development.
These examples underscore the potential of impact capital to drive meaningful change. Homero discusses the Fire Fund, an initiative aimed at addressing structural barriers to capital in marginalized communities by offering a range of financial products designed to meet the specific needs of these areas. The fund seeks to provide fair lending rates, support homeownership in Black communities, and facilitate the development of essential infrastructure. “The Fire Fund’s goal is to hit all layers of capital need along the debt spectrum, ensuring fair lending rates and access to capital for Black communities,” Homero explains, outlining the fund’s mission to create a more equitable financial system.
The future of fiscal justice
As the podcast draws to a close, Homero reflects on the long-term vision for fiscal justice, particularly in the context of New Jersey and other states facing similar challenges. He emphasizes the importance of redirecting public wealth and assets to support marginalized communities, creating an environment where all residents can thrive. “When we choose to start redirecting our public wealth and assets to surround these parents and children with physical, economic, and cultural safety, the whole landscape can begin to change,” he asserts, offering a hopeful vision for the future.
Homero also highlights the need for ongoing education and engagement to ensure that these efforts are sustainable. He notes that Activest is currently in the process of refining its report based on community feedback and is preparing to launch the Fire Fund as a registered investment advisor. The goal, he says, is to build a broad coalition of partners who can contribute to the fund’s mission and help scale its impact across multiple communities. “We need a lot of partners to be able to pull this off and to be able to give communities… the money they need to build that, yeah, we need a lot of people involved,” Homero emphasizes, calling for collective action to support fiscal justice.
Matt Posner is a principal at Court Street Group.
James McIntyre is an expert in municipal, affordable housing, and clean energy finance. The opinions expressed in his writing or any other media publication are his own and do not necessarily represent the views of his employer or any affiliated organizations.
