Inclusive Economy | March 8, 2024

Tanay Tatum-Edwards, FreeCap Financial: We Can’t Change What We Don’t Measure

Tanay Tatum-Edwards

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Guest Author

Tanay Tatum-Edwards

Editor’s Note: On this International Women’s Day, we’re pleased to share important moments in the lives and careers of five women in impact investing, in their own words. The stories are excerpted from “The Social Justice Investor: Advance Your Values while Building Wealth,” by Andrea Longton. Pre-order the book and RSVP for the April 23 launch party at LISC’s headquarters in New York.

In 2018, I attended a conference that changed my life. Well, that might be giving too much credit to the event itself. 

Instead, the fancy conference hotel was the backdrop for the moment when all the thoughts and fears racing around my head finally crystallized into the concept that would become the company I didn’t yet know I would build. 

When I look back at that day, a few moments stand out. First, the panel of middle-aged white people discussing how investors could address gun violence through financial choices. 

And how I grew more and more baffled when they failed to make the connection between gun violence and racial equity. 

Looking around to discover that, within a sea of faces, only one person looked like me. A hair tie held her box braids in a ponytail, and her blazer contrasted elegantly against her chic teal dress. 

I watched as she extended her hand into the air, eyes connecting with the moderator’s gaze, to ask the question I was quietly thinking: “Have you considered the link between gun violence and racial equity?” 

My new hero paused to listen to some unsatisfactory response about it being outside the scope of the panel’s collective methodologies. 

“I see. Do you have any recommendations for people seeking to address racial equity through investments?” 

Nothing. None of the expert panelists invited to share their insights on financial approaches to reduce gun violence could provide a single example of an investment that addressed racial equity. 

When the remainder of the question-and-answer session concluded, I made a beeline to my new friend. I introduced myself and thanked her for bringing a racial equity lens to the conversation. We then walked toward the hotel’s ballroom, where conference attendees were encouraged to meet, mingle, and exchange business cards. 

But I was uninterested in speaking with anyone else except my new friend. I was absorbed in learning everything I could about this wicked smart, Black Millennial woman who had so expertly navigated a career as an investment analyst, a field dominated by white men. 

She shared her story and invited me to share my own. 

After providing my general background in international development finance, I began describing my frustration about the prevailing metrics for measuring an investment’s social impact. From my perspective, the investment industry had accepted cursory, check-the-box impact measurements that wouldn’t and couldn’t move the needle toward real change. 

“Tell me about the impact measurements you’d like to see,” she encouraged. 

My mind soared, excited to share my dreams for how investment measurements could be shaped to reflect the on-the-ground realities of communities like ours. 

“I want measurements grounded in the lived experiences of people who are most impacted by social injustices. I’m tired of measuring impact in terms of ‘number of jobs created’ or ‘square footage of community facilities financed.’ Instead, I want to dig deep into a social justice issue and determine authentic metrics against which investors can manage their success.” 

My new friend peered intently at me before nudging me forward. “It sounds like you’re thinking of something specific.” 

I paused, looked into her eyes, and was honest. 

 “I can’t help but notice a lack of diversity at this conference. All I see is a sea of white. How can we honestly decide what impact issues are most important if we don’t have diverse perspectives in the room? 

“I don’t know about you, but I grew up in a small town in the rural South. We didn’t care about the number of low-wage jobs created. Or how many low-income housing units were built. We wanted full ownership of our labor and our homes. 

“We wanted freedom. Economic freedom. But also freedom from fear. We were too busy figuring out how to hold our families together without our incarcerated loved ones. And how to break the cycle and protect our kids from the school-to-prison pipeline. We wanted a world where we didn’t fear the police. 

 “I know this is wonky, but I want investments that measure outcomes that measure wealth creation, defund the prison–industrial complex, and move us closer to ending mass incarceration.”

I stopped to gauge my friend’s reaction. Was I asking too much of our industry? 

She looked at me with heavy admiration and let out a sigh. “It won’t happen unless someone like us creates it.” 

Personally and professionally, I was fixated entirely on correcting the problem of inadequate investment measurement metrics. It was the last thing I thought about at night and the first thing I thought about when I woke up in the morning. I was reading Morgan Simon’s Real Impact for fun and pushing my supervisors to refine our own impact metrics. 

So what was holding me back from leading? I was certainly intelligent enough. I was young-ish but well-connected, and as Beyoncé once said, “I don’t like to gamble, but if there’s one thing I’m willing to bet on, it’s myself.” 

 But I still had doubts. How would the industry perceive me? 

My friend could tell I was thinking and asked me to share more. 

My response revealed, even to me, how much I had let the investment industry infiltrate my understanding of what it took to step out and step forward. I felt like I was confessing a deep secret when I replied: 

“I could do it in the future. But I don’t have an MBA from an Ivy League or a CFA Charter. You need both to be taken seriously in finance, especially as a Black woman.” 

A moment of incredulous silence swirled around us. “Wow,” my new friend sighed. “Those are some crazy high standards for people who want to create change.” 

I blinked, dumbfounded, while I processed this new truth. I had convinced myself that I couldn’t create change because I hadn’t met the arbitrary, not-quite-relevant success metrics defined by people who benefit from maintaining the status quo. 

Yes, I know about the irony. 

 But in that moment of clarity, new possibilities stretched out before me. 

I could use my own lived experiences to define authentic, relevant success metrics grounded for impact investments. Metrics informed by the realities of the very people and communities for which the investments were designed to help. 

I didn’t lose any time in executing my vision. Within a year, I received seed money from Echoing Green, a prestigious fellowship for social entrepreneurs, which I used to launch FreeCap Financial, an investment research company. Our data and insights make it easier for investors to align their portfolios with the social justice causes they care more about.

Since then, I’ve refined my approach by listening to communities closest to the problems we hope to solve. My goal is to convert their solutions into measurable investment metrics. 

Our first product is a scorecard that helps investors dismantle the prison– industrial complex—a necessary step to end mass incarceration. There are 2.2 million people incarcerated in the United States, representing over 20% of the global incarcerated population. Black and brown communities, immigrants, and those who suffer from mental illness are disproportionately impacted by this crisis. 

Companies routinely lobby to keep prisons full and pay below-market rates to access prison labor. To make matters worse, the discrimination justice-involved workers experience in the workplace leads to unfairly high unemployment rates and increases the likelihood of recidivism. 

FreeCap monitors and rates companies’ impact on the justice system to highlight industry leaders in racial equity and expose those exacerbating the prison–industrial complex. Our company rankings give investors and those who manage their money the information they need to invest according to their values. When investors make decisions to align their money with specific impact objectives, companies take notice, and will often choose to improve their behavior so that they perform better on the benchmark. 

In other words, we make it profitable not to profit from racial injustice. 

We achieve this with data transparency, so that everyday people can invest in a socially equitable future. 

Impact measurement requires us to constantly listen and refine our process to accurately measure outcomes that can truly benefit society. It’s an iterative process that requires constant listening and vulnerability but will always be needed. 

I’m so glad I took a leap of faith to bet on myself. I hope investors can use FreeCap’s work to invest in their own vision of a better future. 

Tanay Tatum-Edwards is the founder and CEO of FreeCap Financial Inc., an innovative data company specializing in Environmental, Social, Governance (ESG), and racial equity investing. Tanay has multiple loved ones impacted by mass incarceration and is committed to using her expertise to address it