Now well into 2023, it's crucial to maintain the momentum towards equity and inclusion in all aspects of our society. Equity capital, in particular, plays a vital role in supporting businesses, organizations, and communities that have historically faced barriers to accessing traditional forms of capital.
Equitable capital is behind Blak Koffee, which is in its soft opening phase this week
However, as the pool of crisis- and Covid-inspired funds trickles down, what the NY Times calls our European-Style Welfare State, while black-led businesses and equitable developments are still just ramping up, an equity capital gap may be created.
How will we ensure that gap gets filled? Here are 8 kinds of equity capital that we need to keep the momentum going:
Creative Lending Practices: Banks and other lenders must find innovative ways to move away from old lending practices that require borrowers to have 100% collateral to access loans. Such practices often exclude owners and creators with limited assets from obtaining the capital they need to start or grow their businesses. It's essential to encourage lenders to adopt more inclusive lending practices that provide access to capital based on the viability of the business idea rather than strict collateral requirements.
Ending Use of Home for Business Loan Collateral: Banks should put an end to the practice of requiring lower income owners to put up their homes as collateral for loans. This practice disproportionately affects marginalized communities and can hinder their ability to take risks and make mistakes in pursuit of their entrepreneurial endeavors. It's crucial to advocate for fair lending practices that do not disproportionately burden certain communities.
Foundations Overspending: Foundations that have experienced lower investment returns in 2022 should continue to support equity initiatives by overspending relative to their returns. This is not the time to pull back on funding. It's critical for foundations to prioritize equity and allocate resources to organizations and initiatives that promote inclusivity and support underrepresented communities.
National Fundraising and Capital Raising: Organizations should consider expanding their fundraising and capital raising efforts beyond local or regional boundaries. Going national in fundraising can help organizations access a broader pool of equity capital grants and investments from entities that are committed to promoting equity. This can provide a much-needed boost to organizations that are working towards creating a more equitable society.
Continue Disproportionate Investment: Civic leaders should maintain their focus on investment in underinvested communities. This can involve leveraging creative funding mechanisms to put as many "shovels in the ground" as possible, promoting economic development, job creation, and wealth-building opportunities in communities that have historically been overlooked.
Wealth and Expertise Sharing: Individuals with wealth and expertise should continue to reach across divides and invest in their communities. Many inspiring stories abound of individuals who are actively contributing to their communities by providing capital, mentorship, and resources to aspiring entrepreneurs and developers. It's crucial to foster a culture of wealth and expertise sharing that can create a ripple effect of positive change in marginalized communities.
Advocacy for Equity Capital: Volunteers should continue to fight for equity and equity capital from governance boards across various institutions, including associations, educational institutions, government-related entities, and nonprofits. Advocacy efforts can help raise awareness about the importance of equity capital and influence decision-making processes that allocate resources towards promoting equity.
DEI Leadership: Continued leadership and advice from individuals who are well-versed in diversity, equity, and inclusion (DEI) matters are essential. These leaders can help stem the flight of marginalized individuals from institutions by advocating for inclusive policies and practices that promote diversity at all levels of leadership. It's crucial to have a new face of leadership that reflects the diversity of our communities and ensures that everyone has an equal opportunity to thrive.
In conclusion, equity capital is a critical driver of progress towards a more equitable society. It's imperative to continue advocating for and supporting initiatives that promote equity in all aspects of our society, from lending practices to fundraising efforts, from leadership representation to investment strategies. By keeping the momentum towards equity capital in 2023, we can create a more inclusive and just society for all.