Business ownership and entrepreneurship are some of the best tools we have to grow the wealth of Black communities. “The median net worth for Black business owners is 12 times higher than Black nonbusiness owners,” regardless of their level of wealth before beginning a business, according to an AEO report.
If Black businesses were fully resourced, the employment opportunities and resulting economic growth would be tremendous: AEO found that “if Black-owned businesses were able to reach employment parity with all privately held U.S. firms, close to 600,000 new jobs would be created, and $55 billion would be added to the economy.”
Something must be done to right this wrong and create a system that benefits rather than discourages Black businesses. Path to 15|55, supported by CapEQ, along with its partners the Surdna Foundation, the W.K. Kellogg Foundation, and the Brookings Institution, is a collaborative initiative reimagining how Black businesses are supported by activating strategic partners that understand the systemic barriers that hinder growth in every sector.
On behalf of all of our partners, I am proud to announce today over $100 million and counting in philanthropic commitments to support Black businesses. These commitments come from family foundations, intermediaries and other philanthropic initiatives that are all dedicated to seizing on the promise thriving Black businesses have for our economy. These institutions have committed to supporting Black businesses and using their flexible capital to fill gaps in the business ecosystem.
This capital will be used to support policy change at national, state and local levels, and to invest directly in Black businesses and the intermediaries that support them. These efforts will be guided by performance metrics defined by the partnerships involved in Path to 15|55. Most immediately, Path to 15|55 will be designing ways to make capital more usable and responsive to the needs of Black businesses.
Path to 15|55 brought together those strategic partners this summer for an intensive “hackathon” aimed at identifying which barriers could and should be tackled first. This event included investors, entrepreneurs and foundations, and one thing stood out as an immediate need: Getting Black business owners the capital they need, when they need it. Philanthropic institutions, because they can take more risks with their capital, were identified as a key actor which could fill this capital gap. We went to work, identifying which philanthropies were best equipped to step up and commit to supporting Black businesses, and determined how much they could commit.
The work ahead
The latest jobs report confirmed something that we all knew – America will not easily recover from the economic collapse caused by the COVID-19 pandemic. While the situation is not as bleak as it was in the spring, thousands of people have permanently lost their jobs, and in some cases, their entire industry. It will take hard work and coordinated action to bring us back to where we were before the pandemic.
Yet many are asking if we should be trying to get back to “normal.” For many, pre-pandemic life was unequal and unjust. It is not surprising that a massive racial awakening occurred during lockdown. The pandemic illuminated for all the reality that some people’s needs are prioritized in this country over others.
One small bright spot in the early days of the pandemic was that the Black/white employment gap had almost been eliminated. But this data belied a bigger truth: That a racialized employment gap is “built into the labor market.” Essential workers, which are predominately people of color, were kept on as white collar workers, which are disproportionately white, were furloughed or let go. As soon as the recovery began, the gap returned. Black unemployment was at a little above 12% in September, compared to 7% for white unemployment.
The pandemic has taught us that our economy does not function for everyone. If you are a white entrepreneur, you are able to benefit from a system that is set up to help you succeed. If you are a Black entrepreneur, you struggle to access capital and grow your business.
Philanthropic commitments are a start, but not enough. It will take the on-going, hard work of bringing together business leaders, policy makers, and entrepreneurs to ensure this committed capital is disbursed in a way that supports Black businesses in the way they need. Path to 15|55 will be doing this work with our partners and others to ensure we realize that $55 billion promise.
If you have a commitment to supporting Black business, fill out our pledge form and join us on our path.
Tynesia Boyea-Robinson is president and CEO of CapEQ.