Lupe Fiasco and Di-Ann Eisnor’s Neighborhood Start Fund — Inspiring and Leading a New Generation of Celebrity Impact Investors and Entrepreneurs to Transform Distressed Communities

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Hip Hop Star/Entrepreneur Lupe Fiasco and Angel Investor/Google Waze Exec Di-Ann Eisnor’s Neighborhood Start Fund is a laudable initiative that embodies innovative approaches to help revitalize distressed communities through private investment and entrepreneurship. Admirably, despite the oft-expressed skepticism, Fiasco and Eisnor have a strong conviction – which we share – that, but for, the unique challenges talented would-be entrepreneurs in these communities face with regard to access to patient capital, networks, etc., they can build successful businesses that will have substantive and sustainable economic impact in their neighborhoods. Given the limited public funding available and the limitations of traditional philanthropy, there are strong prospects that Fiasco and Eisnor’s fund and other recent efforts to foster black entrepreneurship, many of which are largely powered by African Americans themselves, will help to transform our distressed communities over the next few years. The expected substantial growth of the burgeoning impact investing sector and public policy developments such as President Obama’s “Promise Zones” initiative and the bipartisan “Investing in Opportunity Act” recently introduced in Congress will further boost such prospects.

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Black Tech Entrepreneurship: Insights, Perspectives, Initiatives and Trends

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Excerpts from and links to several articles, videos, blogs, websites, etc. on, inter alia:

  • Entrepreneurship, tech expertise, and innovation in the black community, including distressed neighborhoods
  • Diversity in the tech sector
  • Access to capital, resources, networks, etc.
  • Initiatives, investors, entrepreneurs, innovators, champions and advocates

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The Distressed Communities Index (Economic Innovation Group)

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Economic Innovation Group – Press Release (Feb 25, 2016) 

Over 50 Million Americans Live In Economically Distressed Communities

Economic Innovation Group Launches The Distressed Communities Index, A New Analysis of Economic Well-Being and Spatial Inequality

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Washington, D.C. – The Economic Innovation Group (EIG) today launched the Distressed Communities Index (DCI), an interactive heat map and analysis for identifying, visualizing, and evaluating economic prosperity and distress spanning nearly every community throughout the country. The DCI was built using data from more than 25,000 zip codes and covers 312 million Americans, or 99 percent of the population. Users can explore the dataset by zip code, county, city, state, and Congressional district.

“Good data are essential for good public policy,” said John Lettieri, EIG co-founder and senior director of policy and strategy. “The DCI gives us a deeper understanding of economic well-being through the lens of local geographies, providing a powerful tool for policymakers at the federal, state, and local levels.”

The DCI provides a multifaceted look at the circumstances underlying the prevailing economic anxiety for many Americans. While more Americans live in communities that have recovered from the Great Recession, there are large swathes of the country that continue to be plagued by disproportionate poverty and joblessness. The DCI reveals that more than 50 million Americans live in economically distressed communities.

“Millions of Americans continue to feel left behind by the economic recovery. The DCI helps us understand what is driving these sentiments and why, and how, place matters,” said Steve Glickman, co-founder and executive director of EIG. “Achieving the American dream should not be predetermined by the zip code where you happen to be born.”

An examination of economic well-being at the local level reveals that the country’s most prosperous and most distressed communities are pulling apart with particularly heavy concentrations of economic distress in Southern states and Rust Belt cities.

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Case Foundation: Changing the Face of Entrepreneurship / Inclusive Entrepreneurship

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Changing the Face of Entrepreneurship. Sheila Herrling, SVP, Social Innovation, Case Foundation Blog. Feb 16, 2016.

We’re celebrating the rich history of entrepreneurs of color and working to level the entrepreneurial playing field for all.

Excerpt:

… Myths of the Entrepreneur persist and are perhaps disproportionately holding back entrepreneurs of color when our nation needs them most. Let’s be reminded of some of the greatest innovations of our time, all led by entrepreneurs of color:

  • The carbon-filament light bulb invented by Lewis Latimer in 1881. Thomas Edison gets all the glow (no pun intended), but Latimer’s filament made it cheaper, more efficient and, therefore, more practical and profitable.
  • The gas mask invented by Garrett A. Morgan, first used in 1916.
  • Blood banks, made possible by the invention of Dr. Charles Richard Drew in 1940, which allowed plasma to be dehydrated and countless lives saved since.
  • Refrigerators, invented by Frederick M. Jones in 1940, modernized farming and shipping, and led to the introduction of modern-day supermarkets.
  • The automatic oil cup for train parts, invented by Elijah McCoy; his design was so superior to the many knock-offs that engineers ordering them asked for “The Real McCoy” (ok – really, how many of you knew that’s where that term came from?!)
  • The potato chip! Invented by George Crum in 1853, the potato chip industry became a billion dollar business, creating a massive amount of jobs and certainly changed my world.

And let’s highlight some modern-day entrepreneurs of color showcasing the power and potential of diversifying the current state of our nation’s entrepreneurship:

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After Baltimore: Revitalizing Distressed Communities through Impact Investing and Entrepreneurship

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Updated, February 2016.

From LivingCities.org:

The imperative, rationale and framework for an impact investment fund specifically targeted to distressed communities:

After Baltimore: Revitalizing Distressed Communities through Impact Investing and Entrepreneurship. By Michael J. Isimbabi, Ph.D.

Part 1: The Imperative and Rationale for an Impact Investment Fund Specifically Targeted to Distressed Communities. Nov 5, 2015.

Part II: A Vision for an Impact Investment Fund Specifically Targeted to Distressed Communities. Nov 12, 2015.

Part III: How Engaged Celebrities and Other Philanthropists, as “Pioneer Investors,” Can Jump-Start an Impact Investment Fund and Galvanize Other Investors and Communities. Dec 10, 2015

Excerpt:

….According to the Fast Company article, [Di-Ann] Eisnor and [Lupe] Fiasco met in May 2014 as Henry Crown Fellows at the Aspen Institute, “hit it off” and started discussing their shared concerns about “inequality in America, ghettoized neighborhoods, and the lack of diversity in the innovation economy. They had a shared belief that good ideas could come from anywhere, and began to wonder whether there wasn’t a way to start hunting for business ideas—and funding them—in neglected neighborhoods around the country.”

Their initiative is consistent with the concept of the EXCEL-TRANSFORM Fund. Indeed, in my eBook [Pooling Our Resources to Foster Black Progress: An Entrepreneurship and Impact Investing Framework], I posit that a group of five to ten successful, philanthropic-minded, respected, and influential people – arts/music/movie/TV/radio/sports/other celebrities, entrepreneurs, corporate and financial professionals, angel investors, etc. – could set up the Fund and hire competent and experienced professionals to run it.

Such a first-rate team, by virtue of their accomplishments, credibility, high profiles, and celebrity, would give the Fund the instant credibility, imprimatur and massive publicity necessary to enable it to overcome the trust barrier, galvanize large numbers of investors (potentially in the millions), and thereby raise enough capital to have transformational impact.

Some of these “pioneer investors” would be high-net worth individuals who can provide seed capital to start the Fund, and others could be highly-accomplished personalities who may not be wealthy enough to invest significant amounts but can lend the public respect and credibility they command, e.g., by helping to engage and galvanize communities.

As discussed in my eBook – and well-chronicled by blogs such as BlackGivesBack.com and BlackCelebrityGiving.com – such people already do substantial charitable giving in various ways. However, while they give to many worthy causes, e.g., education, health, poverty, museums, etc., in many cases, it is often difficult to determine the effectiveness of their giving.

For example, a recent UBS survey found that “while millionaires highly value charitable giving, they are not confident about the impact of their giving. Only 20% of millionaires rate their giving approach as highly effective, and only 41% are highly satisfied with the impact they have made on their broader communities and society.”

Similarly, a U.S. Trust study found that, in 2013, 98.4% of high-net-worth households donated to charity; of these, 53.4% monitor or evaluate the impact of their charitable giving while 46.6% do not, and only 40% of the latter category report achieving their desired impact through their giving.

As I argued in the previous post, people who are already engaged in philanthropic giving to uplift distressed communities are the most obvious prospective investors in the Fund. To the extent that they are convinced that the Fund, by virtue of its business/entrepreneurship focus and industry-standard transparency and accountability, would have greater impact than “traditional” charitable giving, while also providing them financial returns, some would find the Fund to be a more attractive option for their philanthropy dollars.

Furthermore, some may even consider investing in the Fund beyond their normal levels of charitable giving as part of their investment portfolios. Lupe Fiasco’s efforts, and other similar efforts by other celebrities – such as Grammy-winning songwriter/producer Bryan Michael Cox (100 Urban Entrepreneurs and other initiatives)– potentially could inspire more celebrities to become more engaged in impact investing, especially by pooling capital through collaborative partnerships to establish a national, large-scale initiative such as the Fund….. Continue reading

Related:

  • PODCAST: Revitalizing Communities Through Impact Investing. Goldman Sachs. On this episode of Exchanges at Goldman Sachs, Margaret Anadu, a managing director in the Urban Investment Group at Goldman Sachs, discusses impact investing and the firm’s efforts to help rebuild communities in Newark and New York City.
  • The Distressed Communities Index (DCI) is a customized dataset created by the Economic Innovation Group examining economic distress throughout the country and made up of interactive maps, infographics, and a report. 

Leadership and Innovation in the New Civil Rights Movement: Impact Investing as a Main Cornerstone

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Excerpt from:

Leadership and Innovation in the New Civil Rights Movement: Impact Investing as a Main Cornerstone. By Michael J. Isimbabi, Ph.D.  Emerging Practitioners in Philanthropy [EPIP.org] Blog. May 04, 2015.

…Given the limited public funding available even for proven, cost-effective initiatives (such as early childhood education), impact investing is increasingly gathering momentum as a means of addressing social problems.

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Nonetheless, it is unrealistic to expect that impact investment capital will be invested on scales large enough to have transformational impact in the communities where capital, especially equity, is most direly needed. Despite several examples of successful inner-city revitalization efforts in recent years, there remain significant negative perceptions and stereotypes of these environments. Also, many ventures that could have the most direct positive impact on poor communities tend to have high risk and provide relatively low financial returns. Furthermore, even as the impact investment market has grown, there is a disparity in opportunities for impact investing led by and for Black communities.

In order to attract substantial capital to under-resourced communities from impact investors as that market grows, the challenge is to devise feasible business models and strategies and provide persuasive evidence of investment opportunities that will appeal to different categories of impact investors. Some impact investors will accept very low, below-market financial returns if they are convinced a venture has the potential to have transformational social impact.

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So what are the alternatives to (futilely) waiting for the government?

This is where the leadership of visionary and entrepreneurial EPIP members can become a powerful force. Emerging social sector leaders can play a leadership role in the movement to ensure that venture-philanthropic capital flows to under-resourced communities, which, in the past, have either been exploited or ignored by other capital sources.

In my eBook, Pooling Our Resources to Foster Black Progress: An Entrepreneurship and Impact Investing Framework, I present a comprehensive framework for implementing such an approach through the establishment of a (primarily) for-profit venture-philanthropic impact investment fund, the Excellence and Ventures Transformation Fund (“EXCEL- TRANSFORM Fund”).

I argue in the book that the strong trends in impact investing provide a unique opportunity for African Americans to harness their resources on a substantial scale, through a vehicle such as the Fund. By investing in the Fund, African Americans will be able to more efficiently pool some of the money they already give away in the form of charitable giving – which is considerable – as impact investments in entrepreneurial ventures that will have greater impact compared to “traditional” charitable giving to nonprofits, many of which face challenges pertaining to cost-effectiveness and operational efficiency.

The Fund will be a vehicle for galvanizing large numbers, potentially millions, of African Americans as well as non-African Americans – philanthropic-minded individuals and organizations motivated by powerful altruistic, self-interest, and national progress reasons – to pool resources on a large national scale to transform under-resourced communities. ….

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Read the full article here:  

http://www.epip.org/leadership_and_innovation_in_the_new_civil_rights_movement_impact_investing_as_a_main_cornerstone

[Dr. Isimbabi is affiliated with this website.]

Baltimore and Beyond: Creating Opportunity in Places – Brookings Institution Forum

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For links to Video, Audio & Transcript: http://www.brookings.edu/events/2015/05/21-baltimore-and-beyond

Informative and insightful forum hosted by the Brookings Institution’s Metropolitan Policy Program, “featuring hands-on experts to reflect on promising practices to help young people and families in distressed communities participate in an advanced economy that works for all.”

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May 21, 2015

Summary: “Recent events in Baltimore and St. Louis underscore the enduring challenges the nation faces in trying to create neighborhoods of opportunity amid entrenched poverty, long-term disinvestment, and stark racial divides. Baltimore was an early pioneer in applying new comprehensive approaches to neighborhood revitalization. Since then, the practice of joining people- and place-based strategies has evolved, driven by both public and private sector leaders. The Great Recession has reversed progress in some ways as unemployment, foreclosures, and stagnant wages increased poverty. As the nation now focuses on its struggling urban areas, it is critical to broadly examine what cities, counties, and the nation have learned since the redevelopment of Baltimore’s Sandtown-Winchester neighborhood….”

Featuring:

Welcome by Jennifer S. Vey, Fellow, Metropolitan Policy Program

Panel Discussion

Amy Liu (Moderator) — Co-Director and Senior Fellow, Metropolitan Policy Program

Derek Douglas — Vice President for Civic Engagement, The University of Chicago

Frederick B. (Bart) Harvey III — Former Chairman and Chief Executive Officer, Enterprise Community Partners

Joel Miranda — Director of Leadership Development and Graduate Leadership, YouthBuild USA

Donald Hinkle-Brown — President/CEO, The Reinvestment Fund

Michael Smith — Special Assistant to the President and Senior Director of Cabinet Affairs for ‘My Brother’s Keeper’, The White House

Related:

Los Angeles 1992 to Baltimore 2015: Washington’s Changed Response to Urban Crisis. Bruce Katz. Brookings Institution. May 27, 2015.

Beyond Baltimore: Building on What We Know to Create Neighborhood Opportunities. Amy Liu. Brookings Institution. May 12, 2015.

Yes, There Are Two Baltimores. Jennifer S. Vey and Alan Berube. Brookings Institution. May 15, 2015.

Good Fortune, Dire Poverty, and Inequality in Baltimore: An American Story. Alan Berube and Brad McDearman. Brookings Institution. May 11, 2015.

 

Closing the Racial Wealth Gap – The 2015 Color of Wealth Summit

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The 2015 Color of Wealth Summit, organized by the Center for Global Policy Solutions (CGPS) and the Insight Center for Community Economic Development (ICCED), was held at the US Capitol in Washington, DC on April 30, 2015.

The annual summit seeks to “engage Members of Congress, Congressional staff, the media, and the public in a dialogue about the racial wealth gap, its effect on marginalized households, its impact on the U.S. economy, and solutions for closing the gap.”

The informative and insightful sessions featured, among others: Members of Congress, policy researchers, economists, academics, and nonprofit, community development, financial and media professionals.

Watch videos of sessions here: http://globalpolicysolutions.org/2015colorofwealthsummit/

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Pooling Our Resources to Foster Black Progress: An Entrepreneurship and Impact Investing Framework

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Check out the new book, Pooling Our Resources to Foster Black Progress: An Entrepreneurship and Impact Investing Framework. The book:

  • Examines the great potential with respect to the powerful nexus among: black earning/buying/investing power, philanthropy and resource-pooling, buying/banking black, entrepreneurship, business development, job creation, wealth-building, and economic and social progress 
  • Shows how a potent, large-scale resource-pooling vehicle with a comprehensive framework that is able to harness this potential, especially with the galvanizing power of online and social media, can have immense impact 
  • Presents a framework for establishing such an initiative, in the form of a national impact investment fund — the “Excellence and Ventures Transformation Fund” (or “EXCEL-TRANSFORM Fund”) — that would address unemployment and poverty and help finish the “unfinished business” of the civil rights movement.

[Full disclosure: the author, Dr. Michael Isimbabi, a finance and energy industry professional, consultant, and former professor of finance, is affiliated with this website.]

Look inside the book (the first 10%) for free and get it here (at Amazon.com): http://www.amazon.com/POOLING-RESOURCES-FOSTER-BLACK-PROGRESS-ebook/dp/B00HTWJ8BY.

Also join the discussion on the feasibility and establishment of the EXCEL-TRANSFORM Fund, innovative strategies for self-reliant resource-pooling, and related philanthropy, entrepreneurship, impact investing and empowerment issues at the book’s website, www.PoolingOurResources.com, and Google Plus.

The Racial Wealth Gap: Recent Studies

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Less Than Equal: Racial Disparities in Wealth Accumulation. Signe-Mary McKernan, Caroline Ratcliffe, C. Eugene Steuerle & Sisi Zhang. Urban Institute. April 2013. 

When it comes to economic gaps between whites and communities of color in the United States, income inequality tells part of the story. But let’s not forget about wealth. Wealth isn’t just money in the bank, it’s insurance against tough times, tuition to get a better education and a better job, savings to retire on, and a springboard into the middle class. In short, wealth translates into opportunity.

…How Did the Great Recession Affect Wealth, and Who Lost the Most? While the Great Recession didn’t cause the wealth disparities between whites and minorities, it did exacerbate them. The 2007–09 recession brought about sharp declines in the wealth of white, black, and Hispanic families alike, but Hispanics experienced the largest decline. Lower home values account for much of Hispanics’ wealth loss, while retirement accounts are where blacks were hit hardest….

How Do We Fix This? Families of color were disproportionately affected by the recession. However, the fact that they were not on good wealth-building paths before this financial crisis calls into question whether a whole range of policies (from tax to safety net) have actually been helping minorities get ahead in the modern economy. More fundamentally, it raises the question of whether social welfare policies pay too little attention to wealth building and mobility relative to consumption and income….

…A common misconception is that poor or even low-income families cannot save. Research and evidence from savings programs shows they can. When we examined families living below the poverty level, we found that over a decade more than 40 percent were able to increase their networth and save enough to escape asset poverty—in other words, they had enough assets to live at the poverty level for three months without income (about $3,000 for an individual and $6,000 for a family of four). The federal government spends hundreds of billions of dollars each year to support long-term asset development. But these asset building subsidies primarily benefit high income families, while low-income families receive next to nothing. Reforming policies like the mortgage interest tax deduction so it benefits all families, and helping families enroll in automatic savings vehicles, will help improve wealth inequality and promote saving opportunities for all Americans.

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How America Built the Racial Wealth Gap. Lawrence D. Bobo. April 9, 2013.  Straight Up: Will leaders ever step up to fix the mess that social policy and our checkered past created?

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The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide. Thomas Shapiro, Tatjana Meschede and Sam Osoro. Research and Policy Brief. February 2013. Institute on Assets & Social Policy. Brandeis University.

KEY FINDINGS:

1. Tracing the same households over 25 years, the total wealth gap between white and African-American families nearly triples, increasing from $85,000 in 1984 to $236,500 in 2009.

2. The biggest drivers of the growing racial wealth gap are: • Years of homeownership • Household income • Unemployment, which is much more prominent among AfricanAmerican families • A college education • Inheritance, financial supports by families or friends, and preexisting family wealth

3. Equal achievements, such as income gains, yield unequal wealth rewards for whites and African-Americans.

 

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Closing the Racial Wealth Gap Initiative – Publications and Materials. Insight Center for Community Economic Development.

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