When Impact Investing and Racial Equity Meet in Philanthropic Practices
A piece on the Stanford Social Innovation Review addresses how organizations are examining their work to commit to racial equity within their institutions and impact investing practices.
The article by Matt Onek, president and CEO of Mission Investors Exchange (MIE), which is part of a series How Foundations Are Using Impact Investing to Advance Racial Equity presented by MIE and the Stanford Social Innovation Review, brings concrete examples of foundations leading the way in this meeting point between impact investing and racial equity:
Many foundations are increasingly investing in broader funds that target entrepreneurs of color. The Detroit Entrepreneurs of Color Fund, created by Kellogg Foundation, JPMorgan Chase, and the Detroit Development Fund, for example, more than tripled in size in 2018. Invest4All, an initiative of Prudential Financial, the Annie E. Casey Foundation, and Kresge Foundation, is focused on low-income communities of color in the South and invests in entrepreneurs of color among a variety of financial inclusion strategies. And Impact America Fund, supported by Prudential, Surdna Foundation, and Kellogg Foundation, directs capital to overlooked and underserved markets, with an emphasis on supporting leaders who have first-hand experience with the problems they seek to solve.
Onek also raises the point of who impact investments end up serving:
Impact investing capital, of course, ultimately supports programs, products, or services that directly address the needs of specific individuals and communities. Given the historic, systemic barriers for individuals and communities of color—including a lack of access to high-quality education, health services, affordable housing, and banking—it matters greatly who impact investments ultimately serve, and where service or product gaps disproportionately affect people of color.
"Philanthropy is ideally positioned to lead the charge for racial equity," Onek says. "Free to challenge status quo systems and free to use the power of their endowments to tackle societal challenges, foundations can ensure that racial equity becomes central to the growing impact investing movement."
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