Business Equity Starts with Capital

By Orlando Watkins, Vice President for Programs

Read or download the report

As we head toward what we hope is an exit from the COVID-19 pandemic, the economic toll has fallen, as is almost always the case, disproportionately on businesses owned by people of color and their workers - especially small businesses. The pandemic has again exacerbated gaps in capital, access, and networks that have been created by decades of systemic efforts that shut out business owners of color from the opportunities afforded their white peers.

But even before the pandemic, the Boston Foundation’s Economic Inclusion initiatives sought to rewrite that narrative. In 2018, we launched the Business Equity Fund (BEF) to help businesses of color employ more people, build more wealth and thrive. The primary mission of the Fund is simple: Provide growth capital.

Given the disturbing data on access to capital for people of color, we see this work as essential to closing the racial wealth gap and creating equity of opportunity. The Fund is designed to provide flexible financing and patient capital to businesses that are doing well and are positioned for growth. Since our launch, through a competitive application process overseen by a remarkable and talented BEF investment committee, seven businesses have received a combined total of $2.3 million in low-cost loans.

But what makes the work special isn’t just the funds. It’s the ecosystem that surrounds those funds today. A significant grant from the Eastern Bank Foundation helped to catalyze our work and two additional elements of the ecosystem: The Business Equity Initiative (BEI) and the Greater Boston Chamber of Commerce’s Pacesetters Initiative. These programs tackle barriers around technical assistance and networks. Specifically, the BEI provides high-quality consulting and mentoring to Black and Latinx businesses, and the Pacesetters Initiative encourages member companies to spend more of their procurement dollars with businesses owned by people of color. The portfolio of companies supported by the Fund are cultivated from our BEI partnership, ensuring that the selected businesses are getting both the dollars and the support to maximize their opportunity for growth. 

There’s more in the pipeline. Initial investors in the Business Equity Fund have contributed nearly $6 million in gifts and commitments, and through networking and referrals, the Fund has also unlocked an additional $2.8 million. Together, these will allow us to support another eight to 12 businesses, bringing total leveraged dollars by the Fund to $8.8 million.

These elements together: Capital, mentorship, and access to markets, can unleash remarkable entrepreneurs - some of whom we recognized in our most recent BEF Investment Report. In education, manufacturing, business services, and more, these leaders are using our patient capital to create jobs and community impact. The COVID-19 pandemic put them to the test, but overall, The BEF companies weathered the storm relatively well, with the wrap-around support of the ecosystem. If anything, COVID-19 has made apparent that this work is more important than ever.

I hope you’ll take the time to look through the report and consider joining the growing list of fund supporters. And while you’re at it, add these stable, thriving businesses to your lists of vendors and suppliers. For our Black and Latinx businesses - capital is a start. Opportunity is what will unlock their future success.