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Impact Investing -- with a racial healing lens?

Updated: Jan 6, 2020

Building wealth. Growing capital. It’s the goal of many American families and individuals. Preserving wealth too.

With August in the rear-view mirror, we've surpassed 400 years since the birth of the American slave state. Articles and essays commemorating this haunting anniversary have been captured in The New York Times’ 1619 Project

It’s undeniable that the wealth of the United States was created on the free labor afforded by slavery. The country became an economic leader because of the labor-intensive cotton trade that was fueled by forced labor. Landowners, cotton-producers, other farmers, and families gained wealth from the economic fruits of the slave state. Families “invested” in people they could own and bequeath to their children. Even white people who were not wealthy enough to afford enslaving other people benefited from the wealth they could create and bequeath, while African Americans—including freed slaves—were not able to own property, acquire an education, and accumulate wealth.

While the effects of slavery on our time are clear and many, I’m compelled to ask, what is the relationship between our country’s slaveholding history and the growing field of impact investing? Does impact investing have a role to play in correcting the ongoing effects of slavery (and of the oppression of indigenous groups and other people of color)?

If the goal of Impact investing is to make financial investments that generate a positive social or environmental return in addition to a financial gain, is slavery the antithesis of impact investing? Categorically imprisoning a group of people based on race and subjecting them to the cruelest treatment, all with the express goal of financial gain? 

Is it possible for today’s impact investing strategies to do anything at all to repair or heal the 400-year old legacy of slavery that has been entrenched in our institutions, laws, and lives? In his book Decolonizing Wealth, Edgar Villanueava, proposes that wealth can be used to heal, and philanthropy in particular can begin distributing capital to communities of color, the people from whom it was stolen and who built wealth for white people. 

Of course there is a broad spectrum of financial investments that can be considered impact investments in the field. At a high-level, from grants, to debt, to equity investments, how can impact investors use the tools at their disposal to begin to heal the legacy of slavery? 

A few thoughts on getting started:

Transfer power. Relinquish power to your investees. Trust that communities of color know what’s best for communities of color. Make investments designed with and by partners and eliminate unnecessary restrictions and requirements. 

Open up. Invite people of color into your impact investing group: your angel circle, your investment club, your giving circle, your professional association (and not just one new member at a time please—who wants to be that person!?). In an intentional way, reach out, start dialogue, build relationships and inclusive practices. 

Admit it. White people who have wealth can acknowledge that they have benefited from slavery, oppression, and white supremacy—whether their ancestors were slaveholders or not. You own the stuff, now own the history. 

Speak up. (This is what I’m attempting to do right now, please be patient with me.) It’s very easy for white people to avoid talking about race for so many reasons:  they are afraid of saying the wrong thing (you will at some point, it’s ok though), they don’t want to make waves, they have the luxury of NOT talking about race if they don’t want to, they are waiting for someone else to say something, they are waiting for people of color to say something. People with the power and resources have the responsibility to speak up when topics of race and oppression are being ignored. You’ve likely used your influence to address other issues, and now you can use it to begin talking about race.

Rep-ar-a-tions. It’s an old idea that has become relevant again. Perhaps due to Ta-Nahesi Coates' article "The Case for Reparations” in The Atlantic five years ago, or because of new interest from politicians and their constituents, reparations has become a debated policy once again. Obviously reparations would be a large-scale government program, but could reparations have a place in our impact investing solutions? Could impact investments be structured in a way that African Americans can reclaim wealth that was stolen from them? Can impact investing be a conduit by which wealth is redistributed to communities of color? It’s tricky for an individual philanthropists to pay reparations, but impact investing could provide the structure needed for individuals to come together outside of (or in addition to) government to repay people of color.

Just think about it. It is hard to think about oppression, white supremacy, racism, slavery, and all of the terrible ways white people have been able to accrue wealth. But just think about it, making your impact investing harder, or making your meetings more uncomfortable, or making yourself feel vulnerable—how do these minimal discomforts compare to 246 years of American slavery and its ramifications?

Get creative. American ingenuity. Entrepreneurship. Social enterprise. Impact investing. Surely we can use some of our favorite tools to help remedy some societal ills. (Please remember, you don’t have to be "the decider.” See #1 and #2 above and remember that you want to be a white ally, not a “white savior.”) Start by adding an equity lens to your investing and your philanthropy and see where it takes you.

Keep learning. The field of impact investing is constantly growing and evolving — that’s why we love it so. Extend your passion for learning about finance for social impact to learning about white supremacy or white fragility. Relearn our history and understand how slavery implicated even government housing policies that affect home ownership and the wealth gap today.  

White people have been hoarding wealth in America for 400 years. It’s time to think about how investing capital for impact can not only make a difference and a return, but also how it can be a small step toward righting some of the wrongs along the way. 

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