Black Economic Power: Foundation Strategies to Support Black Businesses

“Black business owners are wealthier than their peers who do not own businesses, and business ownership creates new wealth faster compared to wage employment. At the same time, small businesses tend to hire from the community, creating jobs for neighborhood residents. Therefore, opportunities for Black entrepreneurs to succeed are critical for economic empowerment in Black communities…” – excerpt from “The Tapestry of Black Business Ownership in America: Untapped Opportunities of Success,” authored by the Association for Enterprise Opportunity (AEO), 2016.
 

With that in mind, ABFE: A Philanthropic Partnership for Black Communities, set out with the following agenda: to locate and share with the philanthropic sector, a compilation of interviews, that highlighted foundations whose work and investments in Black entrepreneurship and businesses have further contributed to the economic
empowerment of Black communities. Over the past decade, ABFE has been a strong voice in asking philanthropy—both foundations and donors—to step up in making sustained, long-term investments that stimulate economic development and build economic power for Black communities. Many have documented the widening wealth gap for Black communities. Among the solutions to this crippling disparity is a call for foundations to leverage their grants’ dollars by supporting Black
business expansion.
 

Why should foundations care? Well, according to the case study “The Tapestry of Black Business Ownership in America: Untapped Opportunities of Success” written
by the Association for Enterprise Opportunity (AEO), white adults “have 13 times the wealth Black adults do” (AEO 8). Even more alarming, “The Tapestry” case study also reported that Black households in the United States possess, on average, about one-tenth the median 2 net worth of white households….[a gap] perpetuated by a cycle of little to no intergenerational wealth trans- fer among Black Americans to their children”(AEO 4).
 

These staggering figures only serve as a reminder that philanthropic phrases like “advancing racial equity” an “applying a racial equity lens in our grantmaking” will
remain mere buzz words unless the focus of foundation investment strategies is intentional and immediately in Black communities, and more broadly communities of color.
 

Philanthropy, although not the single solution to closing the wealth gap, can be an instrumental step in driving economic mobility for Black communities through investments in Black businesses. This white paper explores how various organizations—The Annie E. Casey Foundation, Allegany Franciscan Ministries, Small Business Philanthropy at JPMorgan Chase & Co. and Black Enterprise—approached the issue of wealth gap disparities in Black communities through their support of Black businesses. Through their findings and observations, we hope this will encourage other foundations to increase investments in Black businesses and Black communities more broadly.