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A Roadmap for Addressing Economic Inequality

Prosperity Now Oct 25, 2019
This article is deemed a must-read by one or more of our expert collaborators.
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A Roadmap for Addressing Economic Inequality
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According to our research, over three out of every five Black households do not have enough savings to replace income at the poverty level for three months in the event of a financial emergency. This is more than three times the reality for White households.

2019 marks the 400-year commemoration of the start of African American enslavement in the land that became known as the United States. Its legacy has manifested in many ways in our country, including in the racial wealth divide, which has grown three-fold over the past 25 years.

While popular narratives often frame the racial wealth divide in terms of individual behaviors, evidence demonstrates that racial economic inequality is primarily the result of long-term investment in some communities and a lack of investment in others.

As a national intermediary we believe a key strategy for addressing financial insecurity is ensuring that people of color and the community-based organizations that serve low-wealth families are centered in decision-making processes to collectively inform and advance their own solutions to systemic problems. We also recognize that there is never a “one size fits all” approach to how we work with organizations serving communities of color. With this in mind, we build relationships with communities and rely on their perspectives to guide how we work together.

To truly address this systemic inequality, advocates and philanthropists must work in service of communities of color by ensuring they have access to the most emergent knowledge, data, and tools to help them achieve economic equity and justice for their communities.

You can join us in this movement by:

Investing in the capacity of organizations led by and serving people of color.
Organizations led by and serving people of color receive a fraction of the individual and institutional philanthropic and corporate giving (for example, in 2005: Of the $4.1 billion analyzed, just over $327 million or 8% was awarded to minority-led organizations). At Prosperity Now, we support local nonprofits of color through our Building High Impact Nonprofits of Color. These organizations are knowledgeable of the history and presence of financial and economic trauma in their affected communities and are best positioned to develop programs, advocate for policies, and share practices that are informed by the community.

Promoting a more accurate narrative.
We know that narratives have power. We challenge the prevailing narrative that working families’ struggles are a result of individual choices. In fact, many of those families are working multiple jobs, earning a degree, saving what little money they have left over at the end of the month—and continue to fall further behind. In order to promote economic equality, we use research and data from sources such as our Prosperity Now Scorecard to cast light onto the real financial challenges and realities communities face.

Supporting coalition building.
In order to truly scale this work and bridge this economic divide, national organizations must work alongside locally led organizations to reach the needs of communities and advocate for policy change at the local and state level. For example, our Prosperity Now Community brings together more than 24,000 practitioners, advocates, and researchers from nonprofits across all 50 states and the District of Columbia to build strong connections and mobilize action to create lasting social change.

We recognize that the drivers of economic injustice are complex, and that any solution must also account for this complexity. We hope that our findings in doing this work will help you begin a roadmap for your commitment towards amplifying the voices of communities of color.

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Original contribution by Ana Maria Argudo-Lord, Director, Strategic Partnerships & Donor Engagement at Prosperity Now.

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If you are looking for more articles and resources for Race and Ethnicity, take a look at these Giving Compass selections related to impact giving and Race and Ethnicity.

  • This article is deemed a must-read by one or more of our expert collaborators.
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    The Importance of Women in Impact Investing

    Giving Compass' Take: • Alicia Robb argues that women in impact investing are essential because they are more likely to invest in other women, who have traditionally been left out of venture capital and angel investments.  • How can women be brought into the impact investing sphere? How can all investors work to expand their investments to women and people of color who have been traditionally marginalized?  • Learn how to build a gender-lens investing strategy.  Alicia Robb is he founder and managing partner of the Next Wave US Impact Fund, an early-stage investing fund focused on bringing more women into angel investing — with a focus on social innovation and impact investing How did you become involved with impact investing? Was there a pivotal moment? I’ve written a few books about women and minority entrepreneurs and entrepreneurial finance. When Stanford University Press came to my co-author and I and asked if we would write a follow-on book focused on high-growth women’s financing strategies, we said we would if we could also look at the gender gap on the investor side. When you look at the gender and racial gaps in high growth entrepreneurship, one reason is because they get only a tiny fraction of venture capital and angel financing. What are your goals with Next Wave Impact, specifically with metrics and measurement? We have two sets. With the investor piece, it’s to educate and train new people in angel investing. Outcomes are measured by participation in the fund through the due diligence and screening of companies, and whether they go on to be active angel investors. With the investment piece, we want to invest in companies that are successful in scaling and/or becoming profitable while having a significant impact. However, because we’re a generalist fund and investing across a wide spectrum of industries, the specific metrics used to track each company will depend on the sector they occupy. Read the full interview with Alicia Robb about women in impact investing at Medium.


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