The nationwide protests against police brutality and systemic racism have highlighted the inequalities in the United States like never before. An important part of that dialogue addresses the economic disparity between Black and white Americans. According to the Brookings Institution, in 2016, the average net worth of a white family ($171,000) was nearly 10 times greater than that of a Black family ($17,150). The median wealth (which is meant to represent the “typical” household) of white families was 6.7 times that of Black families.
As defined in by Brookings, wealth is the “sum of resources available to a household at a point in time,” which includes “accumulated wealth from past income or inheritances” and both tangible and intangible assets. Considering the centuries of institutionalized racism and discrimination Black Americans have faced, that means they are essentially born at a disadvantage when it comes to building wealth. However, businesses can help rectify the situation by working with and uplifting Black Americans in both their own workforce and in the businesses and organizations they partner with.
As a business, the key to supporting racial justice and equality means first understanding what the biggest issues are that Black entrepreneurs and professionals face, where the blind spots are in your business, and then implementing policies to tackle them. Here are what Black leaders say are the most pressing challenges and how we can support them.BREX
One of the biggest challenges facing Black entrepreneurs is access to resources—in particular, capital. Not only is it difficult to find capital, but it’s also hard to find financing that isn’t predatory, says Byron Allen, founder and CEO of Allen Media Group and Entertainment Studios, in a recent webinar with other experts.
“I didn't have access to capital; people wouldn't invest, and banks wouldn’t lend,” he shares about when he first started his business. “And for the first almost 15-plus years of my business, I had to use factors (debt financiers that buy a business’s accounts receivables) who were charging me 27% interest on receivables from folks like PepsiCo and Johnson & Johnson and McDonald's. That's something that you can't survive.”
Access to resources isn’t just limited to capital—it also applies to networking connections, says George Swain, founder and CEO of GeorgeSwain Investments. It’s considerably more difficult for Black entrepreneurs and professionals to succeed and build wealth when they don’t have the same connections as their white counterparts. Swain shares that when he was young, he joined a brokerage firm and had a partner who started the same day as he did, had the same level of experience and performed the same tasks of canvassing and cold-calling, but who happened to be white. After months of doing the same work, Swain’s partner ended up receiving a $60,000 check compared to Swain’s own $750.
“That was a big wakeup call for me because that to me says, ‘well, how did he do that?’” says Swain. “Well, [his] dad introduced [him] to some people, his friends. Right away, that’s to me access to resources, access to capital, that we just don’t have.”
The commitment to support Black entrepreneurs and professionals in the workforce needs to come from the C-suite, and it needs to have concrete, actionable steps. For example, companies like Sephora and Yelp have joined the “15 Percent Pledge,” an initiative started by Black entrepreneur Aurora James to get major retailers to dedicate a minimum of 15% of shelf space to Black-owned brands to equitably represent America’s racial demographics. (Black Americans make up more than 13 percent of the nation’s population, according to the U.S. Census Bureau.)
“Make sure that they have the training and all the resources and the tools that they need to be successful and do the job that you hired them to do. Mentor them, and position them for long-term success.”
“The top has to say we're including you, and whether it's contracts or bank loans or capital loans, you will be a part of our portfolio to the tune of 15%,” says Allen. “This is a systemic problem at the top, and…you have to change the program. It won't stop until you become a true leader, lean in, and make sure you're doing business with numerous African American communities, not just that [one] Black person.”
Robert Lewis, president and board chair of the Black Cooperative Investment Fund (BCIF), a nonprofit organization that provides microloans to the Black community, says that the best way to bridge that wealth gap is to work with organizations that specifically provide African American communities access to capital.
“Oftentimes in philanthropy, you'll see high-net-worth individuals or corporations have no qualms with putting tens of thousands, hundreds of thousands of dollars, in grants in what I call the ‘warm and fuzzy feel-good’ efforts…like free meals and tutoring programs,’” says Lewis. “They're certainly important…but none of those things actually help people grow money. If they're looking to put capital into communities and businesses, they [need to] help people produce products and services, help them create jobs, help them stimulate the economy, help them move up the socioeconomic ladder, so that they can be in a position to have more employees—those are the kinds of things that will change the fabric of our community.”
Even then, companies need to do their due diligence and make sure they are directly supporting entrepreneurs and business owners themselves. “One of the issues we were talking about was investment or lending in the human community that the bank is in,” explains Swain. “What was happening was that the bank was lending to the real estate people or developers who are building in the community, as opposed to the community itself.”
There are a number of organizations like BCIF that businesses can partner with to support Black and minority entrepreneurs. There are Community Development Financial Institutions such as Lendistry and Grameen Bank that specifically work with underserved communities. Lewis adds that businesses should also consider organizations that provide alternate forms of capital, such as crowdfunding platforms and giving circles.
Every company and every person suffers from racial bias to some extent, so it’s important to be intentional in your diversity hiring. However, that doesn’t mean there is a “one-size-fits-all approach” to diversity hiring, says Derrick Coleman, managing director at Creative Financial Staffing.
The first step, he recommends, is to implement an implicit bias testing and training program so you can recognize and acknowledge where your biases lie. “You could be making bad hiring decisions and not recognizing there’s bias in the judgment of that,” Coleman explains. “So, to acknowledge your own biases, which may affect the judgment and the end result, you have to standardize aspects of a recruitment process so that you can minimize the effects of bias on the final hiring decision.”
In order to keep people accountable and ensure that diversity and inclusion remain at the forefront of a company’s mission, businesses should tie those goals into performance reviews for those in leadership positions.
“You can even tie diversity and inclusion standards to job performance,” says Dommond Lonnie, a member at the law firm Dykema. “At the end of the year, have a question on a self-evaluation form: What have you done to promote diversity inclusion within the last year? [It holds] people accountable, but it has to happen with a clear statement that's written for everyone to understand and to follow and follow up, in terms of annual reviews when people can actually address that issue and focus on it year after year.”
It’s just as crucial to ensure that you retain diverse talent, which is where the real challenge lies. “Minority professionals are heavily, heavily recruited, but if they don’t feel welcome or see people who look like them, they are more likely to go elsewhere,” states Coleman. “In my opinion, the inclusion part is still lacking, and we have to embrace it.”
Embracing inclusion can mean a variety of things depending on the size of your business, from prominently featuring images of minorities on your website, to forming a diversity and inclusion committee, to purposefully hiring and promoting Black professionals. Most importantly, you need to provide them with the tools to succeed at the job, says Karen Slade, vice president and general manager at KJLH Radio FM.
“Make sure that they have the training and all the resources and the tools that they need to be successful and do the job that you hired them to do,” emphasizes Slade. “Mentor them, and position them for long-term success.”