CLOSING THE GAP: WEALTH

Orlando Watkins

Vice President and Chief Programs Officer, The Boston Foundation

IN THE EARLY DAYS OF COVID, A LOT OF MEDIA FOCUSED ON THOSE WHO WERE BEARING THE BRUNT OF THE IMPACT—LOW-INCOME PEOPLE OF COLOR AND THOSE WHO COULDN’T WORK REMOTELY AND HAD TO PUT THEMSELVES AT RISK. WHAT DO YOU SAY WHEN PEOPLE, ESPECIALLY THOSE AT FINANCIAL INSTITUTIONS AND BUSINESSES, SAY THEY WERE SURPRISED TO LEARN ABOUT THE WEALTH GAP BETWEEN WHITES AND PEOPLE OF COLOR?

As a Black man who’s been on the earth for 50 years, I’m very familiar with the policies and practices of people who control capital and who control policy decisions. It’s an exercise in dishonesty to be shocked that the outcomes are what they are when you look at things like redlining and you look at the declaration rate of loans to businesses and education outcomes. Either you are not paying attention or you’re being dishonest. Especially when you consider decades of disparities in education outcomes, redlining and denying loans to businesses owned by people of color.  There are huge, obvious disparities in outcomes based on zip code and based on race that are very apparent in this country. So, if you’re not paying attention, shame on you and certainly shame on you if you’ve been a part of the construction of the policies and practices that have led to these outcomes. We all have a responsibility here. None of us should hide from our contributions to the inequities that exist. 

DO YOU THINK WE HAVE A GREATER PROBLEM IN BOSTON THAN OTHER CITIES DO?

There is clear data that Boston is leading the way in the wealth disparities we have here. We shouldn’t hide from that. It is bad here. But I’ll also say that I’ve lived and grown up in many southern communities, such as the Mississippi Delta. My father is from Madison, West Virginia. So, there are equally disturbing disparities—examples of a lack of shared power, more blatant forms of racism that show up in a lot of communities in this country that, in some ways, are worse than being a Black man in Boston. But the data is clear here that the economic disparities that exist—in a place that is so resource-rich—and it is disturbing a more liberal place like Massachusetts. It’s bad here. There are very real issues of equity here—and that’s not just my words. That’s what the data bears out.

DID WE LEARN ANYTHING DURING COVID THAT PERHAPS WE CAN APPLY TO THE FUTURE? IS THIS A MOMENT OR A MOVEMENT? WHEN YOU THINK OF YOUR ROLE BROADLY AS VICE PRESIDENT OF PROGRAMS AND THINGS COME ACROSS YOUR DESK, WHAT STRIKES YOU AS THE MOST PROMISING THINGS?

I love this frame of moment vs. movement and what it forces us to think about, but what’s more important when it comes to folks like Michael Curry and others using that language. Given those signals, I’m hopeful about making advances in closing the racial equity gap in Boston. But we have to remember how often, in this country, we have been outraged by some revelation around inequities that exist and then, when there’s a new injustice to turn our attention to, we quickly move on from the fundamental issue of racial equity. We have to keep it ever-present. The fight to close the racial wealth gap has to be more than a moment. We need to use this moment to transition into something that leads to real change. We can’t take 400 years of oppression and think that we can quickly change minds and practices and policies. The fight is long.

I do believe that this moment feels very different than any other I’ve experienced.  There is no doubt that the interest in racial equity has increased dramatically in Boston. The level of conversation about equity and the realization by businesses that they are leaving so much value on the table by not using an equity lens is something I’ve never experienced before. 

Businesses that hire vendors and contractors should look at how many businesses of color they have engaged with and change their approach. Do it because it’s the right thing to do and because you have opened your aperture to see how you can make your business more successful. Not doing it is limiting the talent and potential of partnerships that can lead to better revenues and profits.

So that is leading to things like the Business Equity Fund. That is leading to things like the Coalition for an Equitable Economy. That is leading to the $50 million that the government put into the economic development bill to invest in BIPOC companies. So, I think there are a lot of exciting things that are happening on the economic development side. It feels like a shift in how people are approaching some of these challenges.

A lot of folks who have been fighting for equity in wealth creation and business supports, including the Boston Foundation, came together to develop a more ecosystem approach to supporting Black and Latinx businesses in the Commonwealth. That coalition has been a part of some important reports, such as the one they produced with MassINC, including Unleashing the Potential of Entrepreneurs of Color in Massachusetts and The Color of the Capital Gap report created by Boston Indicators, the Coalition for an Equitable Economy, and the Boston Foundation analyzed the dynamics behind persistent racial disparities in access to capital and presents some bold, equitable solutions. 

Folks have worked together in the past, but now, with the Foundation for Business Equity, the Coalition for an Equitable Economy, and other collaborative efforts, we have a more powerful, collective agenda for change. These coalitions are focused on access to capital; forming more, small BIPOC businesses; and gaining access to customers who traditionally have been blocked out. These are platforms for organizations to work more collectively and get more done, as great coalitions always do. 

THAT SEEMS TO BE A REALLY IMPORTANT STEP FORWARD.

I think at this moment, people really are stepping out of their silos and trying to figure out how to work more effectively. I think you see that in the coalitions dealing with business equity work and across many sectors. 

IS HOMEOWNERSHIP AN IMPORTANT INGREDIENT IN BUILDING WEALTH FOR PEOPLE OF COLOR?

Absolutely, business ownership and homeownership have been sources of wealth creation. So, in relation to homeownership, we look at what happened with red-lining and how communities of color have been locked out of that way of building wealth. If we’re really talking about equity, we have to remember that equity is expensive and if we’re serious about it, we have to be willing to commit real resources like helping families that don’t have accumulated generational wealth to make a down payment to own a home… We have to think creatively about solving these generational wealth issues that have been created by the very policies that this country has pushed forward. That takes real capital and resources. And if we’re serious about it, we have to be willing to invest in that. And philanthropy can play a role there. Philanthropy can be the first loss on loans. But the federal government and local government have to be equally committed to carving out resources to close that gap. So, a huge part of closing the racial wealth gap is homeownership for sure. 

WHEN IT COMES TO GOVERNMENT SUPPORT, DOES ADVOCACY PLAY AN IMPORTANT ROLE? 

Yes, absolutely. And that’s a really good question because I think there has been some hesitancy in philanthropy to fund advocacy on all levels. Not just the fancy research shop that’s doing advocacy, but the neighborhood leader who is closest to the community that has been underserved, funding and lifting their voices in the larger advocacy fight as well. Yes, advocacy needs to be supported adequately by funding sources. You can’t be afraid to do that.

Someone once told me that often they don’t support neighborhood advocacy because the leaders are bold and controversial. They say things that might be counter to what others might think. But you have to realize that those leaders often have huge numbers of followers and represent the very communities that we are trying to serve. So, they can’t be that radical, if large portions of the community are supporting them to try to create equity. Philanthropy has to be courageous enough to fund and lift up those voices that sometimes feel counter to the easy line—because at the end of the day they’re fighting for the same balance in the system and access to opportunities that we are. They might have a more aggressive approach, but they have a more informed approach because they’re closer to the people being impacted. And so we have to fund advocacy, but we also have to invest in community leaders and advocates who are much more proximate to the people we are serving. And philanthropy doesn’t have a good track record of that. We might make some grassroots grants, but big, multi-year grants to those leaders have got to be a part of the overall strategy.

LET’S TALK ABOUT THE BUSINESS EQUITY FUND (BEF) AND WHAT YOU'VE LEARNED ABOUT IT SO FAR.

I think our role in this ecosystem is exactly the role that philanthropy should play. We have a leadership role. Glynn Lloyd and Bob Rivers came to me three or four years ago and said, “Orlando, I think you should start the capital arm of this thing.” It was in partnership and collaboration with a whole set of things that were identified as needing to be in place if we really wanted to support a different set of outcomes for Black and Latinx-owned businesses. So, the Business Equity Fund has succeeded only because of the ecosystem of the partners that have come together. So, it’s not a fund by itself. There are a number of similar funds in the country supporting Black and Latinx folks, but without the partnerships, without the deep technical assistance and the relationships with the entrepreneurs and the businesses, without the consultants who have raised their hands, without the advisory committee that we recruited… All of these players in partnership is what has made the BEF successful. And I can call it successful because we have about 16 portfolio companies and only one of them is having some challenges. And so, that entire ecosystem of support beyond the capital is why we are having some success with these businesses.

A few other things about the BEF. Four years ago, we started with this idea that we could provide really flexible, patient capital because businesses just didn’t have access to that. Eastern Bank gave us $2 million to start and we’ve now raised, through a combination of sources, another $8.8 million), but still with that same idea: How do we give these businesses what they need to be successful? This is about racial equity, right? So, this is about realizing that some of these businesses might need access to this kind of patient capital to make up for all of the systems and structures that don’t invest in Black and Latinx businesses normally. And what we’re proving is that, with that combination of things: capital (real capital; we’re putting half a million dollars worth of capital in these companies), with much lower than market interest rates. When the companies struggle, we’ve been very flexible in meeting their individual needs, whether it’s additional technical assistance, or delaying loan payments, given the crisis. But that’s the kind of flexibility in the system, the kind of creativity that is required if you’re really about having different outcomes for this population. And what we have found—through the pandemic—is that almost every one of our portfolio companies is back to pre-pandemic levels in terms of revenue. And, in some cases, people are doing much, much better than pre-pandemic. Our portfolio is well out-performing their peers. It’s not something to celebrate, but it just indicates the kind of investment you’re willing to take if you’re about equity in the system.

WE’VE TALKED ABOUT WHAT PHILANTHROPY CAN DO. WHAT ABOUT BUSINESSES AND ORGANIZATIONS, LIKE THE GREATER BOSTON CHAMBER OF COMMERCE AND BECMA, DO? SPEAK FIRST ABOUT WHAT INDIVIDUAL BUSINESSES CAN DO.

I think, especially for companies that spend money on vendors and those kinds of things, the first thing they can do is interrogate their own biases and processes for deciding who they partner with. As a business, you have to first have to get to a point where you understand business and equity and the biases that are present when people select partners and select vendors. But if you’re willing to do that, first of all, look at your own policies and practices that have prevented you in terms of who you select as partners. So, on the one side, do it for equity and because you haven’t done it during your business life—or you haven’t done it well. And do it because it’s the right thing to do and you have opened your aperture to how you can make your business be more successful. So, I think the first thing is that big and small businesses that hire vendors and employ contractors should interrogate their own processes and practices and look at the data around how many businesses of color they have engaged with. I’d say that by NOT doing that, you are also limiting the talent and potential of partnerships that can lead to better profit and revenue. 

There are a lot of companies in town that are really looking at their procurement processes to unlock more opportunities for BIPOC businesses. But a lot more needs to be done.

YOU MAKE SUCH AN IMPORTANT POINT THAT ENGAGING WITH BIPOC BUSINESSES ISN’T JUST THE RIGHT THING TO DO; IT’S THE SMART THING TO DO.

That’s right.

SO, THE GREATER BOSTON CHAMBER OF COMMERCE HAS PLAYED AN IMPORTANT ROLE IN THE SUCCESS OF THE BEF. AND THEN BECMA PLAYS MORE OF AN ADVOCACY ROLE. TALK A LITTLE BIT ABOUT HOW ORGANIZATIONS LIKE THAT, OR ASSOCIATIONS AND AFFINITY GROUPS, CAN PLAY.

I think the Chamber of Commerce and other associations like the Chamber and BECMA are trusted entities that can encourage, push and train their partner companies to behave differently. As I said earlier, they can interrogate their policies and practices. The Chamber and business associations like that can really push their partner organizations—but also help them to answer the question, “How can we behave differently?” We can’t just shake our fingers at companies and even nonprofit organizations and hold them accountable. We should also find a way to support them in their racial equity transformational journey. 

I see BECMA as much more on the advocacy side, in that they can push lawmakers, push philanthropy, push majority businesses to really think differently about their responsibility. BECMA can say things that the Chamber can’t. BECMA can say and push things in a way that the Boston Foundation can’t. 

We have to be willing to support those advocates and leaders who may say things that make us all really uncomfortable. You’ve got to be willing to support that kind of innovation in the system because it will push us all to be better.

WHAT ABOUT PHILANTHROPY ENGAGING DIRECTLY IN ADVOCACY. WHEN WE’RE TALKING ABOUT HUGE DOLLAR TOTALS, IT LEADS DIRECTLY TO GOVERNMENT. THE BOSTON FOUNDATION WAS ONE OF THE FIRST COMMUNITY FOUNDATIONS IN AMERICA TO ADVOCATE FOR BILLS THAT REFLECT OUR GOALS AND VALUES. WOULD YOU RECOMMEND IT TO OTHER FOUNDATIONS? AND NOT JUST FOUNDATIONS, BUT BUSINESSES AND INDIVIDUALS.

This is the Paul Grogan legacy. Really the Boston Foundation is a civic leader first. We make grants, but they’re only in service to the bigger systems change that we want to see. And more and more that comes down to policy work. Lee is obviously excited about that. We should be an example of what a bold, courageous advocate can be. I realize that private foundations don’t have the same capacity to advocate. They can fund some advocacy but there has to be a firewall. 

I think it’s interesting to think about business coalitions getting behind certain legislation. We’re seeing that in the early childhood space. We’ve seen it over the years in housing. Employers have to think about workforce housing. It’s hard to run a business if people can’t live in a community. You’ve also seen it around things like transportation. There are some great examples of companies finding space to engage in advocacy policy work that benefits their businesses. But I would argue that racial equity work also benefits bottom lines for companies. 

 I think businesses finding ways to get serious about policy work around racial equity is smart. It’s the right thing to do, but it’s also the smart thing to do because it goes to how we build a more vibrant community and more successful businesses in many cases. And the level of talent that we’re seeing in chief diversity officer roles in many companies is a real indication that I think many companies are getting serious about thinking about diversity, equity and inclusion more broadly. So, I think what you’re seeing now is a real shift to thinking about the business impact of DEI work in an institution. I hope advocacy is a part of that and that the people who are taking these roles are taking them because they can have an impact inside the company but also impact in the community.

ARE YOU HOPEFUL THAT IT’S MORE THAN A MOMENT? ARE YOU HOPEFUL THAT IT’S A MOVEMENT?

I’m optimistic that it is different. There’s no doubt that the level of conversation, the level of interest around things like racial equity, inclusion, belonging and the value that we are leaving on the table—is something that I’ve never experienced before in my life. Given those signals, I’m hopeful about making advances in closing the racial equity gap in Boston. But I’m old enough to have seen a country that I love backslide when racial equity is no longer being fashionable. So, I’m hopeful and optimistic, but I think we have to continue to remind each other that the battle is not won. And the journey and the fight are long. We have to keep that ever-present. We have to remind our White allies and colleagues and business leaders and policymakers that it will take more than a COVID season to right the wrongs of 400 years or other communities that have been marginalized by the systems and structures of this country. So, we have to stay vigilant. And we have to commit to bringing people along to truly understand the level of disinvestment in communities of color. I think I’ve always been the kind of leader who, even in my own frustration and anger and pain, tries to bring others along, and help them understand why we can be better together. But expressing my pain while I’m doing that.