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Advantaging Best Practices to Democratize Access to Capital

By Michael B. Marks Ph.D.

I am pleased to comment on the tremendous workshop held Saturday morning (5/14): Democratizing Access to Community Capital. It was not just informative but it was inspiring, learning about innovations that move capital downstream to economically distressed communities.

Betty Francisco from Boston Impact Initiative (BII) was the initial presenter and is an absolute dynamo. When Hélène Lesterlin from GWI asked Betty if she is contemplating running for office, I, like I believe many, were hoping for a positive response (she gave us a response of ‘no-go’). In a short period of time, BII developed a $7M fund to support 63 community enterprises, providing access to an integrated mix of equity, debt and grant capital. I was most enthused with BIIs efforts at furthering ‘impact investment.’

BII seeks to develop a closed loop ecosystem where investments build on each other to create identified, measurable local impact. The focus is not just on supporting each enterprise but how each enterprise fits together to reduce inequality, create livable wage jobs, accrue new wealth, etc., with these goals front and center in selecting enterprises to invest in. 

I was blown away when Betty stated that the next cohort of investments would include ‘impact covenants’ whereby impact goal attainment would impact the financial terms of the investment. For example, interest rates on loans provided to entrepreneurs or teams of entrepreneurs would be reduced if identified impact metrics are attained. This is groundbreaking!

I would have loved to have included this kind of innovative investment scheme when I worked on Social Impact Bond projects in a prior life at American Institutes for Research, where investors only wanted to focus on financial returns on investments. Not surprisingly, BII is developing an integrated capital teaching model to share with other jurisdictions seeking to democratize access to community capital.

Olivia Watkins from Black Farmer Fund (BFF) also presented. BFF was created in response to the inadequate funding and systemic roadblocks to USDA loans available to Black farmers, resulting in a historic reduction of Black-owned farms in the US. BFF utilized knowledge gained from BII to develop a community-led investor fund, providing small farms with access to philanthropic and loan capital. Of import was the process and tools developed by BFF to empower local communities to govern capital distribution to farms, putting stakeholders in positions of power and influence.

Olivia described the piloting of local investment committees as decision-makers, including lessons learned in developing accountability and transparency processes used in reviewing applications for funding and funding decisions. Initial committee members reviewed 50 funding applications with 8 awardees selected. Like BII, the learnings here are being translated and made available to new jurisdictions, providing a pathway for other local investment committees to democratize the process of awarding funding through local control and empowerment. In other words, Olivia and BFF have done the hard work that other communities can now adapt for their own use.  

Tim McQueen and Ethan Pomerance from the Hudson Valley Prosperity Network (HVPN) followed with a brief overview of activities occurring locally. The presenters shared that an initial investment club structure is being contemplated, to allow for unaccredited investors to participate, avoiding the headaches of having to comply with Federal SEC rules and regulations in establishing an investment fund.

I am heartened that HVPN and GWI are seeking to develop and lead a process of  community engagement and decision-making to build on work to date in determining ways to democratize access to community capital locally. Kingston and environs provide an excellent locale to innovate, given its manageable size and myriad of assets (e.g. universities, strong NGO sector, foundation supporters). 

Betty and Olivia provide pathways for us to explore. We ought to send a diverse group of community representatives to participate in BII’s 18-month accelerator to learn its integrated capital model, to adapt learnings to Kingston. Also, we ought to study BFF’s methods of community engagement and empowerment in the food sector and use them to empower our communities, perhaps starting in Midtown Kingston or even smaller in Ponckhockie. My hope is that we collectively stay visionary and productive as it increasingly appears that it will be up to us locally to make systems change, with limited assistance expected from the Federal and State government. This event provided Kingston stakeholders with new tools to use, to reduce extraction of capital and address the racial wealth gap.      

I work as a researcher, educator and activist, supporting the development of community-led social innovations and social enterprises that reach upstream to address health, educational, financial and social challenges. Current positions include serving as a Network Developer and Researcher for THRIVE ON! Network in Kingston, an advisor to the Kingston Trust Hub and an adjunct professor at the University of Albany, School of Social Welfare. My first 35+ years of work life included serving in practitioner, managerial, and executive roles with juvenile justice and child welfare organizations where I developed and implemented community-based alternatives to incarceration and out of home care with local stakeholders, domestically and internationally. These experiences allowed me to understand the limitations and unintended consequences of government funded policies and interventions and sparked my interest in systems change work.

Rooted Resources posts give us a clearer vision of what “democratizing wealth” means, refracted through the living experience and emerging projects of people making change today. This series grows out of the Rooted Resources Festival (May 12-15, 2022) and the Community Fund design project.

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