On Wednesday, February 10th, Priya Parrish kicked off Impact Engine’s 9th annual Chicago Impact Investing Showcase. In this session, we explored the various forms of racial wealth disparity in Chicago and how different types of investment capital and approaches are intentionally creating more equity. Specifically, the session focused on the People and Place P’s of our 5P Framework. Through opening remarks by Debra Schwartz (MacArthur Foundation) and a moderated conversation with Dr. Helene Gayle (The Chicago Community Trust) and local business leaders Jim Casselberry (4S Bay Partners), Julian Posada (LiftUp Enterprises), and Don Thompson (Cleveland Avenue), participants listened in on how businesses with underrepresented founders and operations that create opportunity for people historically underserved lead to powerful and lasting change for individuals and their communities. The speakers are real life examples of businesses that purposely base their operations/investments in areas with little upward mobility and who inspire each of us to act. Impact can be optimized by focusing on the root cause of so many of the problems (lack of access to high quality education, health disparities, violence, etc.) that plague this country. We cannot expect the country to move forward when we are holding close to ⅔ (the Latinx and Black communities) of it back. In spite of its virtual format, the session maintained the high energy spirit and rallying call to action that has come to be expected at Impact Engine’s showcase events.
Notwithstanding all of the increased attention, closing the racial wealth gap is not a new issue. Institutions like the MacArthur Foundation have been working to close the racial wealth gap and make financial systems more inclusive for over 35 years. Chicago has been a key battlefield in this war, with innovations like Community Development Financial Institutions (CDFIs), programs like Benefit Chicago ($100M in capital to support impact enterprises throughout the Chicago region looking to enhance job readiness, create jobs, or build wealth) and studies like Next Street’s (for Black and Latinx entrepreneurs in Chicago, 80% of their equity capital needs go unmet and that there is a gap of at least $146M between the supply and demand for equity capital for these communities). It's a case study for the power of combining traditional grants, donations, and public-private partnerships, with impact investing across all the P’s.
During the session, we heard from Cleveland Avenue and their efforts to bridge the gap for underrepresented entrepreneurs in the food and beverage space by giving them the support to overcome perceptions attached to them. Key to these efforts is utilizing structures that are aligned with the interests of those founders. Creative structures like convertible debt or bridge loans help avoid unnecessary dilution. Equity should only be used when there is a reason for it and to create alignment for long term success; it should not be the de facto structure.
LiftUp Enterprises explained how implementing best-in-class diversity and inclusion practices can be a source of competitive advantage. Furthermore, they shared some of their recent operational improvements like establishing weekly payroll and setting up a company sponsored emergency funding lender so workers do not have to go to payday lenders. These practices are not only solving liquidity issues for workers but become the foundation for paradigm-based impact by ensuring the creation of wealth at all worker levels (senior, middle, and entry).
Lastly, we heard from 4S Bay Partners, which strives to eliminate prejudice and inequities by helping create useful, wholesome economic opportunities for marginalized communities and amplifying their stories through private capital investments. As a single family office, 4S has the flexibility to engage in multiple different funding strategies like opportunity zones or setting up vehicles like Chi-Town Impact to drive wealth creation, which in their view is not a zero sum game.
The summer of 2020 was a rollercoaster for the city of Chicago, and not exactly the fun kind. Amidst a pandemic, election uncertainty, and racial equity marches, the city fluctuated from desolate streets to packed ones to desolate again in a matter of days. As a fellow Chicagoan, it was shocking to see empty streets due to numerous store and small business closings, packed streets filled with peaceful protesters, and again empty ones with the exception of National Guard patrols demanding to see identification. No amount of snow will make us forget the events that transpired this past summer in Chicago. Now more than ever, we know that systemic racism is unrelenting in our country. The events of the past months have crystallized how frustrated, saddened, and angry we all are. Despite some progress, we know that the stories of George Floyd, Ahmaud Arbery, Christian Cooper, and Breonna Taylor won’t be the last. With spring just a couple of days away, it is time to come out of hibernation, join Chicago’s vibrant impact community, and support efforts aimed at closing the racial wealth gap. Be loud, be bold, think outside the box, be impactful, listen to those who you are trying to impact, take the time to collect feedback, and above all:
“Just open your eyes, your paradigms, your perspectives, and increase the possibility to folks that are black, brown and women in this field...don’t make us overprove ourselves.”
— Don Thompson, CEO & Founder, Cleveland Avenue
Missed this session or want to revisit the full discussion? Visit here for a full recording.