Last week, Transform Finance attended CommonBound 2018, the New Economy Coalition’s biennial gathering.
The conversations ranged from inspiring to introspective to saddening, and the need for developing radical alternatives to business as usual stuck out more than ever. With the political situation getting more grim by the day, families being displaced and torn apart, and the primacy of shareholders and investors remaining fundamentally unquestioned, conference participants brought a sense of urgency to the table.
Topics covered a broad range of strategies and theories of the new economy: healing and care, equitable development, advancing feminism and racial justice through the arts, blockchain as a tool for entirely new alternatives, and more. We were incredibly fortunate to learn amongst fellow movement leaders, organizers, and doers in how to combat the forces of injustice while building anew.
Some themes we noticed stuck out across all of the panels, plenaries, and campus quad conversations (special thanks to Harris-Stowe University for providing a comfortable and welcoming space for this conference!):
Recognition of position, power, privilege, and leverage
Grappling with the need to both fix the old while building the new
Questioning how to integrate personal journeys with the broader quest for justice and equality
Translating the awe-inspiring work of our peers into hope in the face of unlikely odds and an antagonistic system
We brought these themes into our own panel and network gathering presentations, of which we had three throughout the weekend: Place-based Investing for Racial Justice, Creating a Just Capital Fund, and Scaling Employee Ownership. We’re happy to share some thoughts from presenting alongside such incredible partners, and the conversations we had with other CommonBound attendees!
PLACE-BASED INVESTING FOR RACIAL JUSTICE
Drawing from research done for its racial justice project, Transform Finance lifted up the need for a focus on a portfolio-wide approach to racial justice investing, and how to think about investments that may not be racialized on their face, but have racially unjust implications. For example, municipal bonds are funding police brutality in cities that are struggling to provide services for its low-income people of color. Similarly, pressures from private equity investors drive companies towards “just in time” scheduling and other burdens on labor, and workers of color are often the most vulnerable to these pressures. While muni bonds and private equity funds (not to mention the real estate market) are in theory race-neutral, their effects are hardly that.
With that framework in mind, we were thrilled to have such amazing partners to present real alternatives to business as usual. The Solidago Foundation shared its work supporting community-governed capital funds and building a national framework for the integration of capital vehicles like PVGrows into local power building, specifically with a racial justice lens. BALLE discussed its support of minority entrepreneurs and community foundations in creating the building blocks for racially just ecosystems, and how the BALLE network feeds inspiring projects around North America.
We turned to Boston to take deep dives into two case studies at the forefront of investing for racial justice. Boston Impact Initiative unpacked its investment approach, which spreads investment risk in accordance to who can afford to bear it through different tranches, an incredibly innovative approach that we are keen to follow. Another feature of BII is the broad engagement and accessibility to non-accredited investors with capital above $2,000. The Boston Ujima Project then shared its democratic ecosystem approach to including marginalized community voices into the investment decision process. All individuals are able to contribute to raising capital to deciding community standards to voting on capital allocations.
Key Takeaways and Questions:
Where are the limitations in current approaches to investing for racial justice?
It is impossible to ignore the need for not just capital, but political power building and organizing in developing community capital funds.
What is the role of philanthropy in supporting this movement? The Solidago Foundation made it clear that grant support is critical for capacity building at the local level, but participants observed that foundation endowments need to align more with their grantmaking in a two-pronged approach, in the context of place-based investing but also at a general portfolio level.
How can innovative investment structures create both democratic decision-making and inclusion, while not placing the risk of investments on the backs of communities? BII and the Boston Ujima Project, while filling different roles in the ecosystem, seem to provide a model for answering this question.
CREATING A JUST CAPITAL FUND
Building on Saturday’s session, Transform Finance, the Boston Ujima Project, and Solidago Foundation took a deep dive into one of the vehicles for place-based investing: community capital funds. The Boston Ujima Project opened up the session with a group activity. Participants were grouped by region and asked to imagine businesses their communities need, love, and want to replace. The activity flowed nicely into Transform Finance’s piece, breaking down the mechanics of a community capital fund, including its potential for good, limitations, and structure. The session closed with a handful of innovative fund examples, presented by Solidago Foundation and the Boston Ujima Project.
Even though our session was only an hour and a half, a few key takeaways surfaced:
- At the beginning of the session, presenters polled the room to see how many participants had financial background or expertise. In a classroom where every seat was filled, only one person raised their hand. Despite their lack of familiarity with finance and capital flows, dozens of folks were drawn to our session. Transform Finance takes this as a signal that there is a clear appetite from many that more understanding and engagement with finance is here. If this resonates with you, check out our trainings!
Innovation is happening in the community capital fund space. Thanks to efforts by Solidago, Ujima, and others, funds that are truly rooted in communities are popping up across the country. While much of what is discussed about community capital funds is from the traditional, CDFI-led model, it’s apparent that more responsive alternatives have arrived and are on the rise.
SCALING EMPLOYEE OWNERSHIP
On Saturday morning, Transform Finance joined Democracy Collaborative, The ICA Group, and Democracy at Work Institute to talk about scaling employee ownership. Cooperatives and ESOPs have been demonstrated to provide several pillars necessary for broad-based asset-building, particularly for low-income workers: stable jobs, higher wages, skill sharing, and tangible stakes in the business. These elements, alongside their tendency to benefit those most left out of the mainstream economy, have made strengthening and scaling the cooperative ecosystem a main initiative of many at CommonBound. But what are the best ways to do this?
It’s not an easy question to answer, as there are several approaches. The Democracy Collaborative has several programs on just that, from their Fifty By Fifty initiative to their work with the Evergreen Cooperatives in Cleveland (and, on another fascinating panel at CommonBound, Democracy Collaborative highlighted their work in supporting the UK Labor Party’s platform around cooperative development). The ICA Group, as a technical service provider that performs some of the best research on worker ownership and conversions, also grapples with this question.
Transform Finance’s approach to scaling this ecosystem is centered around its project on fostering employee ownership through conversions. We presented our fund concept, which is developing a model for a private equity-like vehicle to finance buyouts and hold a company after its owner retires before transferring the equity back to the hands of the workers. With the “Silver Tsunami” of retiring baby boomer business owners, there is a unique opportunity to scale worker ownership by preserving the values and mission of companies in the hands of the workers. Several companies we’ve spoken with are indeed considering this transition. We had the opportunity to present our findings – both encouraging and intimidating – on the panel.
Throughout all of our panels, and the conference as a whole, there was an intense eagerness to engage with new strategies and learn how organizations can tackle unfamiliar topics – even when, at first, they seemed oppositional. It is conversations like these that have motivated us to broaden our reach in providing social justice leaders the tools to work with finance, challenge investors, and develop new pathways for capital to strengthen the movement of the new economy.
If you’re ready to engage with the intersection of social justice and finance, come join us in New York this September! Ready to take an even bigger step? Why not bring a version of our Institute to your city, so you and your peers can learn about this intersection alongside each other?
For more information about our trainings, reach out to Eric at email@example.com.