Building Wealth in Underserved Communities
By Max Wagner, Investment Associate
The word ‘wealth’ means different things to different people. For some, it’s a dream to work toward; for others, it’s a lifestyle to maintain. Wealth has the power to lift people up out of tough circumstances or stand in the way of greater opportunities. For working-class communities of color in Eastern Massachusetts, wealth is a metric that demonstrates the structural inequality that exists in the local economy.
Community members and stakeholders gather at the Second Church in Dorchester to celebrate the Interfaith Solar Project. Through the project, Boston Impact Initiative supported solar installations on the rooftops of three Boston churches in majority non-white neighborhoods.
According to a 2015 Federal Reserve Bank of Boston report, black households in Boston have a median net worth of just $8, compared to $247,500 for white households. While close to 80% of white residents own a home, only one-third of Black and less than one-fifth of Dominican and Puerto Rican residents are Boston homeowners. It can be easy to look at statistics about the racial wealth gap and feel dismayed by the sheer scope of the problem. Boston Impact Initiative (BII), a Sunwealth investor and partner, sees an opportunity to close the racial wealth gap and build business ownership among entrepreneurs of color.
Founded in 2013, BII has a mission of creating opportunity for low-income communities and communities of color in Eastern Massachusetts. They do this by directing capital to entrepreneurs who live or work in those communities. BII makes intentional investments that promote economic justice and community resiliency.
“There’s capital out there. There are entrepreneurs out there in communities of color. It’s about finding the right match and we’ve found that there isn’t enough patient and integrated capital in the ecosystem,” said Aliana Pineiro, Director of Impact at BII.
Pineiro and the rest of the BII team offer entrepreneurs the patient capital that is critical to getting a small business off the ground. The fund offers integrated capital, often providing any combination of debt, equity, and/or grant capital over time as the business goes through different phases and faces challenges. Their hands-on approach to investing sets them apart from traditional capital sources.
“The relationship with our entrepreneurs is at the center of everything we do. That’s something special. We’re super involved, providing connections and making sure they have what they need to succeed,” said Pineiro.
Success is not just measured in the financial return on their investments, it’s measured by the impact they have. This looks different for every company they invest in. From CERO, a worker-owned cooperative that collects waste from local businesses, to Fresh Food Generation, a food service business that turns local ingredients into Latin American and Caribbean cuisine, BII works with a diverse portfolio of companies that share their values.
Sunwealth joined the BII portfolio in 2017 after receiving a loan to help finance Interfaith Solar, an initiative to bring clean energy to houses of worship in the Boston area. BII has been a valuable partner ever since, making an additional equity investment in 2019 to support Sunwealth’s growth.
“We try to strike a balance in our portfolio, investing in both early stage startups and more mature companies. We see Sunwealth as a steady, less risky investment. From the perspective of impact, Sunwealth is helping spread and keep wealth in communities of color through its solar projects,” said Pineiro.
As of September 2019, BII has 28 companies in its growing portfolio of impact investments. With a goal of eliminating the racial wealth gap in Eastern Massachusetts, complete success can seem abstract. But for the entrepreneurs who benefit from BII’s personal approach to investing, success is not abstract at all. It can be measured in the opportunities created, jobs added, and wealth built in underserved communities across Boston.
Max Wagner is an Investment Associate at Sunwealth and a senior at Northeastern University. He is a renewable energy advocate and believes that harnessing solar energy is key to combatting climate change and building an inclusive energy future.