FOR IMMEDIATE RELEASE
Contact: Claire Daviss
Economic Opportunities Program, The Aspen Institute
202-736-3578 | [email protected]
Contact: Jennifer Farland
Asset Funders Network
202-297-1261 | [email protected]
New Strategy Spotlight Highlights the Potential for Microenterprise to Help Close the Racial Wealth Gap
Lower rates of financial and business assets seen as a cause for the racial wealth gap
Washington, DC, November 10, 2015 –– Micro- and small- business development strategies can help tackle the growing racial wealth gap in the United States, according to a new Strategy Spotlight released by the Asset Funders Network (AFN). The Strategy Spotlight, Narrowing the Racial Wealth Gap through Business Ownership, was co-written by Joyce Klein, director of FIELD at the Aspen Institute, with support from Capital One.
More information and a digital copy of the Strategy Spotlight can be found at: http://fieldus.org/Projects/donorResources.html
The link between business ownership and the racial wealth gap
In the Strategy Spotlight, Joyce Klein examines the available research on business ownership and the connection between business ownership and wealth creation for diverse populations. Because lower levels of business and financial assets held by African-American and Latino households are one of the key reasons for the racial wealth gap, she suggests that business ownership may be an important means to narrow the gap.
“It is important that as we seek to address rising inequality in the United States, we focus on wealth as well as income equality,” said Klein. “The hope is that this Strategy Spotlight provides funders with insights that will increase their understanding of the role that business ownership can and should play in addressing growing wealth and income inequality.”
Lower rates of business growth and survival among Latino-owned and African-American-owned firms remain significant challenges to wealth creation. The Strategy Spotlight highlights three core causes for lower growth and a lack of success amongst African-American and Latino-owned businesses: lower levels of financing; lower levels of education and business experience; and lack of market access.
Recommended tools and strategies for funders
The Strategy Spotlight describes specific tools and strategies investors can employ to strengthen effectiveness of business ownership as a means of building wealth and reducing the racial and ethnic wealth gap. In particular, the Strategy Spotlight highlights microenterprise development organizations and worker cooperatives as effective strategies.
“Microenterprise is a proven yet underutilized strategy for increasing household wealth as well as worker income,” said Joe Antolin, director of AFN. “Through this guide, grantmakers wanting to tackle inequality and invigorate opportunity in our nation are provided a collection of strategies leveraging business ownership to focus on narrowing the wealth gap for blacks and Latinos.”
“Capital One sees microbusiness as an increasingly more important and relevant asset building strategy that can help bridge the growing racial wealth gap and promote financial well-being,” said Senior Vice President of Community Development Daniel Delehanty, responsible for community development activities in the field of economic and small business development at Capital One.
Research, conducted by FIELD and included within AFN’s new Strategy Spotlight, indicates the following outcomes for non-white individuals who received assistance from microenterprise development organizations:
- 95% business survival rate.
- 64% business start rate.
- Workers were paid a median hourly wage of $15.16.
- Median business revenues were $45,000.
- Business revenues increased by $12,777.
The Strategy Spotlight reaffirms the critical role grantmakers play in the research, programs, and policies that can allow African Americans and Latinos to realize the wealth-building potential of becoming business owners. Investment recommendations include:
- Invest in mission-based lenders that provide capital to firms and worker-owned cooperatives owned by African Americans and Latinos.
- Invest directly in worker cooperatives.
- Support services that develop the business ownership skills of African-American and Latino entrepreneurs, and expand their ability to access broader markets.
- Invest in incubators and co-working spaces for African-American and Latino entrepreneurs.
- Fund research aimed at gaining a deeper understanding about the role of business ownership in building assets among people of color.
- Support the development of models that promote savings and build credit for potential entrepreneurs.
FIELD thanks the Asset Funders Network and Capital One for partnering to produce this Strategy Spotlight.
The Asset Funders Network is a community of national, regional and community-based foundations and grant makers using philanthropy to make more effective and strategic funding decisions that allow each dollar invested to have greater impact in bringing economic opportunity and financial security to low- and moderate-income Americans. Learn more at: www.assetfunders.org.
FIELD‘s mission is to identify, develop, and disseminate best practices in the microenterprise field, and to educate funders, policy makers and others about microenterprise as an anti-poverty strategy. FIELD is one of three main initiatives of the Economic Opportunities Program (EOP), a policy program at the Aspen Institute in Washington, DC. EOP focuses on advancing strategies that connect the poor and underemployed to the mainstream economy. For more information about FIELD and its work, please visit www.fieldus.org.
The Aspen Institute is an educational and policy studies organization based in Washington, DC. Its mission is to foster leadership based on enduring values and to provide a nonpartisan venue for dealing with critical issues. The Institute is based in Washington, DC; Aspen, Colorado; and on the Wye River on Maryland’s Eastern Shore. It also has offices in New York City and an international network of partners. For more information, visit www.aspeninstitute.org.