On money, race, and power
Deb Nelson, RSF’s vice president for client and community engagement, spoke with two financial leaders who are restoring the dignity of low-income communities.
Deb Nelson: I have had the good fortune of working with both of you and would love to hear more about the work that you’re doing to build a more equitable economy. Can you tell us about what you do?
Deborah Frieze: I cofounded the Boston Impact Initiative, a place-based impact investing fund focused on closing the racial wealth divide. We work in Eastern Massachusetts, which has one of the highest rates of economic inequality in the country. As I learned from RSF, we are deploying integrated capital — a combination of equity, debt, and grants — to address this problem, which has been decades and centuries in the making. Our purpose is to restore the productive capacity of communities of color by putting ownership and control over assets — buildings, land, and the means of production — back into the hands of communities.
Konda Mason: I work with Jessica Norwood, the founder of the Runway Project nationally. I am cofounder of the Runway Project Oakland. We believe that business ownership creates wealth in communities. At the very beginning stages of an entrepreneur’s journey, finding institutional or bank funding is not an option. It’s the time when people advise you to get money from friends and family. Money from friends and family opens the door for entrepreneurs. In the U.S., $60 billion passes hands at that friends and family level yearly.
But the wealth gap is reprehensibly wide in America. Currently, the average wealth of a white family is $143,000. The average wealth of a black family is $11,000. That gap is both structural and intentional. When it comes to getting friends or family money, it typically just doesn’t exist for the black entrepreneur. It’s not that black entrepreneurs have fewer ideas or are less innovative; it’s the economic gap that holds them back from getting their businesses off the ground. The Runway Project is filling the gap with very friendly loans, at a 4 percent interest rate and interest-only payments for the first 18 to 24 months. Twenty-three thousand dollars is the average friend or family loan. We try to replicate that as much as possible, and we’re committed to keeping it as friendly as possible.
Rebuilding, regenerating, restoring
Deb: This kind of work is what will help speed the transition from an economy that’s based on extraction to an economy that’s regenerative and restorative. Can you share more about your personal background and what motivated you to think about money and capital in different ways?
Konda: I come from Southern California, and I’m the youngest of four. I came from the most amazing family ever — so much love. We had a lot of love capital and not much financial capital. The goal back then was to move into the white suburbs and get out of low-income neighborhoods, and that’s what we did. I was suddenly exposed to people with financial means. We were one of only four black families in the entire town — that was in 1968. It wasn’t pretty. It wasn’t fun.
It was then that I discovered racism and began my journey towards understanding the racial inequities in America. I was exposed to white people with money, and I had never been exposed to that before. That was the beginning of my understanding that the world was different from the fun-loving community I knew in my old neighborhood. Suddenly, I was in this other world.
My mother was an activist and always taught us to stand up for those less fortunate or whose voices were silenced. In 1973, I went to the University of California at Berkeley, and my life exploded. I began to understand the world as a political machine and what my role was in it. I spent my college years as an activist — and never stopped. I had an older brother, Larry Mason, who was ahead of me at UC Berkeley, who was an amazing activist and taught me a lot. All that led me into the kind of career that I’ve had, and it’s ingrained in me.
Equity is important. I had the lived experience of a world that is very inequitable on many levels in this racialized society. Then there’s the fact that I was able to go to college, the fact that I was able to get beyond where I came from and where my parents came from. They didn’t make it to college. I had a responsibility, and I feel a total responsibility to my community; I feel a responsibility to the planet. I feel a responsibility to all of us because nobody’s winning, even those who feel like they’re winning; nobody’s really winning with this racial wealth divide. I’m working for all of humanity because if we don’t get this right, all of us will continue to suffer, to lose our humanity. So that’s where I’m coming from; I can’t help but to participate in shining a light on what is going so wrong both internally, within us, and externally, in the world we are creating.
My work is not just for my personal welfare. It’s for the welfare of everybody, that we may tap into our deepest humanity because it is a lack of humanity that allows us to create this kind of world that’s filled with racial oppression and gross inequity and division. I hope that we can all wake up to the understanding that we’re so deeply interconnected.
Deb: That is so true and beautifully said.
Deborah: Konda, I feel like you were channeling my great-grandmother, which is where my story originates. My great grandparents came over as immigrants escaping anti-Semitism in Eastern Europe. My great-grandmother died when I was very young, so I didn’t know her, but she’s a legend in the family. She was a poor, outspoken immigrant in Boston who had very strong opinions about our economy and about justice — and she was a Communist. She was even put on McCarthy’s list! In the family lore, she said, “What happened to us over there, when no one stood up for us, is happening to black folks here. And now we have to stand up for our humanity.” That pre-Civil Rights legacy came down to my aunt, who was a Freedom Rider jailed in Mississippi, and on to me.
On the other side of my legacy, my great-grandfather came over, and he was an entrepreneur. Everything he touched turned to gold. He was creative. He was inventive. He was playful. There were hilarious stories about his successes. My father is an entrepreneur. I became an entrepreneur.
I started an enterprise, along with several classmates, while I was at Harvard Business School during the middle of the dot-com era. Before we had even graduated, a venture capitalist came along and gave us $2 million. A year later, we were 25 young people with one million dollars of revenue, and a private equity shop came along and handed us $100 million.
There’s inequity for you! There was no clear business model, no plan for break-even. It was completely irrational. Investors were betting on the brand of our degrees and the prospect of fast growth. When I share that story, especially among entrepreneurs of color who’ve had to hustle just to get $20,000, it’s so disheartening — and it’s also part of our cultural reality.
As I watched the dot-com boom and bust, I witnessed a lot of people behaving unethically, which challenged my belief that people were fundamentally good. I was lucky at the time to meet my mentor, Margaret Wheatley, who introduced me to systems thinking and the notion that good people are playing by the rules of a very flawed game. The economic game that our culture has been playing is organized around the beliefs that we’re self-focused, rugged individualists; our biological reality is survival of the fittest; we’re out there competing to win, and the winners are smarter while the losers are less capable and need our help. Those beliefs have given rise to today’s competitive, selfish, and separate economic system.
The belief system that I hold recognizes that humans are, by nature, generous, interdependent, and cooperative. The economic system that emerges out of that is the solidarity economy, the regenerative economy, and the local living economy where we turn toward each other. We move from separation and competition to relationship and interdependence.
After the dot-com bubble burst, I spent a lot of time in Zimbabwe, South Africa, India, Brazil, and other cultures where people lacked economic opportunity yet sustained their connection to one another and the earth. It was a huge lesson for me in how, in the face of systems collapse, people turned toward each other. Coming back home, I became curious about how capital could be used as a relationship-building tool rather than a tool of separation. So, the Boston Impact Initiative operates in co-creation, relationship, and interdependence with folks here so that even decision-making about how capital flows is part of a community conversation. I think the story that Konda tells about the Runway Project and the one we tell about the Boston Impact Initiative are very similar in terms of the values and the beliefs in how we restore our communities using the tools of entrepreneurship and capital.
Interrogating the myth of success
Konda: There’s a story of healing that Deborah is telling and the story underneath it about why we’re doing what we’re doing. We have been so off base. The whole thing, particularly this idea of a society based on merit, this meritocracy, makes you feel like if you’re not making it, it’s because you are not trying hard enough. The American rugged individualism, the hyper-individualism myth that’s our narrative in this country, people have absolutely bought into it. Some people are born on third base while others are born behind the backstop, yet we pretend as if we were all born with the same advantage, and it’s just not true.
Deborah: We, impact investors, tend to get excited about our issue areas. We get excited about food systems. We get excited about clean energy. However, investing for justice is not just another choice of focus area. In every kind of investment we make, we need to consider who has access to products or services and who benefits from ownership and control.
When our impact investing products continue to build wealth for folks who already have wealth and don’t work to restore productive capacity for low-income communities, we are perpetuating economic inequality.
Konda: That’s right.
Deborah: I want to invite folks in the RSF community to consider the question of who has an opportunity to build wealth through the companies we’re investing in. It ought to be part of our lens.
Deb: It does. Konda, I really appreciated what you were saying about how this system is not working for anyone. If you look at it financially, it sure looks like it’s working for some people. The rich are getting richer; the poor are getting poorer. However, really, what everybody needs is safety and connection, and our current economic system is not fostering that. None of us can truly be safe or connected when so many people are suffering.
Konda: Right, and those who are seemingly benefiting from this system of gross racial and economic inequity tend to isolate and build literal walls around themselves and their homes to create some so-called version of safety when the human heart actually longs for connection.
Deborah is talking about looking holistically at the system. If we were to look holistically at the system, those walls would come down. They would have to because we’d understand that we have to look over that wall, reach over that wall, actually grab somebody’s hand over that wall, and understand that we are deeply interconnected.
That’s why I say we’re all losing, because we’ve lost our connection to each other, to humanity, when that’s really all we really want. We think “things” are going to bring it back. You buy things, accumulate, and spend lots of money, but they aren’t going to make you feel connected. It just gives you things that one day, when you die, you will either belong to someone else or end up in a landfill.
Deb: Right. And that’s not the way we naturally are, which is what Deborah touched on. We’ve been socialized to believe these myths. This is what you need to do if you want to feel safe. This is what you need to do to feel smart and powerful. And it doesn’t bring us safety. It doesn’t bring us comfort or connection.
Konda: It does the reverse of safety.
Deb: Right. Connection leads to safety. And one thing that gives me hope is that the next generation of leaders, connectors, influencers, financial activists — they get this. It becomes transparent, in part, because it becomes grotesque, absurd to build walls. The incredible wealth divide that people are seeing. It isn’t working. What can we do individually? What can we do collectively to question assumptions about money and capital, to flow capital where it’s needed most, and to create an economy that works for everyone?
Aligning values with money
Deb: Can you both share a bit about your personal journey around questioning assumptions about money and aligning your values with your money?
Deborah: It was not a hard decision to move my money out of conventional finance into impact investing, eventually divesting predominantly from public markets and reinvesting in local and direct opportunities. What’s been more challenging has to do with decision-making, which is, am I willing to give up or to share power in decisions about where that money goes? That’s the frontier for me. Our partnership with the Boston Ujima Project is an exploration in creating a community-controlled capital fund. Together, we’re exploring what it looks like to shift decisions about capital from the oligarchy into a participatory and democratic process.
Konda: I love that, and I love a piece that you wrote recently, Deborah, an article on Next City called “Why I Want Community Investors to Tell Me Where to Invest.” It was wonderful because it is a matter of equity. What is equity? Equity is shared power, and power is very hard to abdicate, very hard. I’ll give you my money before I give you my power, and I mean that’s what most of philanthropy is.
Deborah: Yes, exactly.
Deb: Konda, how about you? Questioning your assumptions about money, working on flowing money where it’s needed most, working with different forms of capital — what’s that journey been like for you?
Konda: As I mentioned, I’ve been connected to the entrepreneurs and the communities where capital doesn’t flow, where in fact, there is disinvestment of resources. Why is it so damn hard to get it capital into the hands of where it’s needed the most? What’s in the way? I always thought, isn’t this a no-brainer? I mean, you’ve got money, you’ve got a need — meet each other.
I never understood the process and the challenge to deploy money. So, my learning curve has been around that. Coming from a background without access to much capital, I was never stumped with what to do with money should it come my way. I knew that given a chance, I would find a way to lift up communities of color by sharing resources. Now, having a fund and being involved in finance and understanding it, as you said, there are a lot of dimensions and a lot of complexity to it based on the way the system is set-up.
What prompted me to go deeper is when, as an entrepreneur raising capital, I began to understand how the system is built for those who have the capital to continue to have it, plus more due to the concept of interest. It’s also for those who are in need of capital to be at the behest of those who have — asking, begging, trying to get some capital. I started to dig deep. Why is it set up the way it is? How can we change the system that has inequity built into it? That was my doorway as an entrepreneur into this realm. My leading edge right now is to help disrupt the system and create alternatives. The Runway Project is a part of that alternative. In the last nine months, we’ve deployed ten loans to ten amazing African American entrepreneurs who would not have been capitalized otherwise. I’m really proud of that.
Currently, what we have are loan products at a 4 percent interest rate. The integrated capital model is what we’re working towards. These black entrepreneurs are at that point in life where they need that “I believe in you” money. It’s difficult at this moment to get money that is not loan capital for them, but that is what we’re working on. One of the things that I just want to say right here, right now, is that RSF has helped tremendously our Runway Project by giving us some gift capital.
Reframing and reconnecting
Deb: If you could issue a call-to-action that gets people to think differently, act differently, do things that will help speed this transformation — what would it be?
Konda: I think that there’s basically two sides of life: being and doing. We are great at doing. And I think we need to develop the being side. We have bought into a mindset of lack, of not-enoughness, of hyper-individualism, creating disconnection. We have bought into that system, and we support that system. So, it begins with our minds and opening up and moving through that ignorance. The root word of ignorance is ignore. Ignoring is a willful act. There’s an abundance of information everywhere. Be curious and move with that curiosity. Create an internal space to understand who we need to “be” to create the world that we really want. We’re smart enough. We learn about so many things, but there are certain things that we avoid. So, slow down enough to allow yourself to get in touch with that internal essence and give yourself moments to eliminate all of the external noise that keeps us distracted from touching into who we really are. This is where mindfulness practice is extremely helpful. Then, you can begin to come face-to-face with the cognitive dissonance that we experience to know something is terribly wrong and that you are contributing to it. It’s facing our fractured nature that’s actually really painful when we stop and acknowledge it. I believe that humans are built to care for each other and to have compassion, and it is painful when we realize we are contributing to others’ pain.
It begins with feeling life inside and outside of you, internally and externally, and knowing that you are connected to all life. As you look deeper, you begin to see what’s really happening. You’ll understand the extractive systems we have created. The desire and the courage to interrupt those systems begin to arise. There are so many ways to participate in transforming the systems of inequity — just look at what the Boston Impact Initiative is doing. They are raising capital funds right now. At the Runway Project, we’re also raising funds. Get involved. Move your money. Money has to move. Have the courage to let go. Open up the hand, open up the heart, and let it flow. Get connected to life. We need to move from the “me” economy to the “we” economy. None of us wins until all of us win; that is just the interconnected nature of reality, as Dr. King so beautifully said.
Deborah: I couldn’t have said it better than Konda. I’ll just add in terms from the external side. Back in 2013, when we started the Boston Impact Initiative, we couldn’t find many funds oriented toward economic justice. There has been a recent explosion, which is wonderful!
One thing we can do is look inside our own portfolios, even where we hold our savings and our mortgages, and pay attention to the leadership team page. If you find that everywhere you look, the team is all white, you might want to make some different choices.
Know what you own and know that you have an abundance of choices. Your advisors may tell you that there aren’t options out there, but they’re wrong. There have been funds out there for decades that have been led by Black and Latino entrepreneurs and other folks of color that have been overlooked by the advisory community. You can move your money to local Community Development Financial Institutions (CDFIs), or you can move it into credit unions (such as Self-Help Credit Union) and local banks.
Instead of racial justice being another sector that you choose to invest in, it can be a lens that accompanies you in every choice you make about the direction of your capital, both philanthropic and investment.
Deb: I have one last question. You both are collaborating and innovating in some pretty extraordinary ways. Is there anything that you’d like to share about what you’ve learned from collaborating?
Deborah: Well, doing this work, you all fall in love with each other. This is work that comes from love and comes from trust, and Konda is my sister. I want to go wherever she’s leading, and I suspect it’s the same for her. We need each other in ways that are so profound. I don’t know of any way to do this as just a business partner — that’s not the place that this collaboration arises from. The collaboration arises from falling in love with each other and trusting each other and wanting to walk through the world together.
Konda: I love that. Thank you, Deborah. I feel the same way. What comes up for me, as we collaborate, is love. It is love. And we have to be able to say that word. We have to be able to say that word in connection with business and finance. And I think there are a couple of other words in that intersection that we should all be saying, and those are: love, money and race. It’s about love, money and race.
People don’t want to talk about race, not in this country. We don’t want to talk about love. And in little groups, we’ll talk about money. We need to come out. We all need to come out of the closet, out of the love closet, the race closet, and the money closet. Come out of those closets and come together honestly and authentically because it’s not about shame or blame. It’s about our humanity and this beautiful earth that we are sharing with other species. We’re sharing information, we’re sharing resources, and we’re sharing our hearts, and I feel free. I feel really free. And it’s a beautiful thing.