To Go Fast, Go Alone; To Go Far, Go Together
Individual behavior is often seen as the cause of the racialized wage and wealth divides. However, compelling evidence shows that racial economic inequality is primarily the result of long-term investment in some communities and a lack of investment in others. Fairly consistent racial economic inequality, particularly for the African American community, is found throughout the entire country, and the racial wealth divide is found at all income and educational levels. Prosperity Now and the Northwest Area Foundation, which supports economic opportunity in under-resourced communities, understand that only through ongoing investments in communities and organizations of color are we going to heal our nation’s centuries-old racial divide.
Currently, African American families have a median net worth approximately 98% less than Whites ($3,400 and $140,500, respectively). Black Americans are overrepresented among the poor, with 22% of Blacks and 8.8% of Whites living below the poverty line, respectively. African American workers are over two times more likely to be unemployed compared to Whites. Finally, the racial wealth divide is exacerbated by the fact that employed African Americans earn approximately $24,500 less per year than the $63,155 earned by the median White household.
Our government recognizes the need to seed and develop wealth. In 2016, it spent $677 billion through the tax code to subsidize homeownership, higher education, savings and investments. The problem that most of this spending goes to the wealthiest Americans instead of those who need wealth development the most. In 2016, the average millionaire received $160,190 from these types of subsidies while families making $50,000 or less only received $226.
This stark data should be a wake-up call to our country and a prompt for fresh thinking and new investment. Government, through policy, should target wealth investments more squarely to those who are asset poor. Foundations and non-profit organizations must also focus our energies and investments more directly at communities that are most economically disenfranchised and organizations that arise from those communities.
It is in this spirit that Prosperity Now and the Northwest Area Foundation continue our partnership through the African American Financial Capability Initiative (AAFCI). AAFCI brings together six distinct local African American communities of practice (CoPs)(which comprise of nonprofits) in six cities (Minneapolis, St. Paul, Portland, Seattle, Tacoma and Des Moines) to work together in developing and implementing innovative community-centered financial capability pilot projects.
“African American-led organizations have the answers for how to offer services and develop policies that help communities break the cycle of living paycheck to paycheck and build assets for the long-term,” said Kevin Walker, President and CEO of the Northwest Area Foundation. “This initiative provides funding they can use to scale up their work and grow the economic security of African Americans, and it’s just the kind of effort we want to fund through our Financial Inclusion portfolio.” Andrea Levere, President of Prosperity Now, stated, “We believe the AAFCI has the potential to help address the significant financial insecurity facing African American families and communities by strengthening the capacity, access to resources, and pilot implementation of African American-led, and serving organizations. In addition, we believe these unique pilot projects will spark innovation for the benefit of the entire financial capability field.”
Though we are in the early stages of implementation, a promising practice is certainly emerging: dedicated, long-term funding paired with content expertise and the ability to innovate from the perspective of clients is essential for infrastructure development, trust-building and collaboration, and organizational change. By directly funding organizations as they build capacity and implement holistic asset-building infrastructure, the AAFCI not only has the potential to incubate transformational strategies to tackle the wealth divide for African Americans, it also promises to educate funders and the field about what tools and supports are needed to strengthen individual, family and community economic security.
On this auspicious anniversary, 50 years since the assassinations of Dr. King and Robert Kennedy—as well as the “Poor People’s Campaign” of the civil rights movement both died advocating for—the Northwest Area Foundation and Prosperity Now are proud to continue investing in African American nonprofits to more holistically address the racial wealth divide that has kept this country separated. By following the leadership of and fully including those who have been historically disenfranchised, the AAFCI reflects the spirit and work necessary to turn King’s dream into a reality.
Through the Initiative, we believe that bringing together local nonprofits of color to develop and share promising practices supported by the resources of regional and national organizations moves our nation forward on a path to social and economic equality.