I wrote earlier about the concept of how church youth could engage across race, class, and economics to design the future, fueled by the money they earn investing friends and family level capital in black and brown entrepreneurs who don’t have a rich uncle. This post is on the nuts and bolts of how that can work.
- When a congregation wants to invest to help eliminate the racial wealth gap it starts by a member writing a check to the church or its local mission fund, designated to what we’re calling the Thriving Communities Fund, for which the member gets the standard tax deduction. That check is deposited in a Donor Advised Fund (DAF), a charitable vehicle that allows people to both give to non-profits and invest in mission aligned for-profit businesses. For simplicity’s sake, we are using the national investment advisory firm Edward D. Jones’ DAF platform for the churches in the pilots we are working with across the country.
- Once the donations from a particular church are deposited in the DAF, in North Carolina they will go to Eagle Market Streets, the non-profit Community Development Corporation (CDC) leading the Community Equity Fund. In other states, Stephanie Swepson-Twitty, who leads Eagle Markets, partnering with Kevin Jones, of Faith+Finance, will work with congregations to find a local CDC who can take the money and invest it in the portfolio of a local Community Development Financial Institution (CDFI) fund that is investing in local minority businesses. We use a CDC as the conduit to the CDFI, because, unlike a CDFI, a CDC is unregulated. The local CDFI knows how to pick investable businesses owned by black and brown entrepreneurs. It performs due diligence, picks probable winners, makes the loans, and collects loan payments.
The church doesn’t have to choose the businesses. It just gets paid back, with interest, when the loans are repaid.
If there is no CDFI doing small business lending, Stephanie Swepson-Twitty and Kevin Jones can work with the church to find suitable alternative places to invest philanthropic dollars that will get a financial return that can be given or invested again through the DAF.
- When the loans are repaid, we are recommending that the proceeds be split in two. Half of it goes to the church’s local mission fund. It can’t go to Africa or fund a mission trip to Guatemala; it has to be deployed locally or reinvested in the CDFI fund. The other half is given to the youth of the church (in some churches that means people under 18, in other churches that includes people under 26 years of age).
We are calling the money given to the youth with every loan paid back the Future Resilience Bond.
There are two design parameters around the Bond:
- It should be put toward something that will take at least five years to accomplish. This encourages the young people to take a long term perspective, which can enable them to look at systemic issues and root causes that will require patience and persistence and adult allies to address.
- Second, the decision about what to focus on should be undertaken with youth from the black and brown communities they are investing in. These can be young people from a local church, or kids involved in the local Boys or Girls Clubs, or sometimes a YMCA or YWCA or other non-profits.
In Asheville, NC, two non-profits that have been recommended to us are the Center for Participatory Change, which helps people in marginalized communities express their voice, and Asheville Youth Mission which gives young people of all races and ethnicities a variety of experiences working in several justice focused non-profits. Both perspectives seem important for this project – partnering with a non-profit rooted in listening to marginalized community voices, and one that knows how to engage them in projects where they learn.
Faith+Finance will curate an initial pilot cohort of no more than half a dozen churches to help them learn from each other and make needed connections.
We will be blogging continuously about the progress of the project, our successes, our failures, and our learnings. Once we’ve validated the proof of concept, we plan to launch other cohorts of churches using their local mission donation dollars to invest to create systemic change.