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The position of a graduate student worker at an Ivy League or similarly elite private university is unusual. On the one hand, the student worker works in one of the wealthiest institutions in the country. On the other, the benefits of that luxury and wealth fail to reach teaching and research assistants who provide essential labor that allows those elite institutions to function.

The COVID economy has only made this contradiction more vivid. In fact, since the start of the COVID-19 pandemic, Brown, Penn, Yale, Harvard, and Princeton all raked in record returns, raising their endowments by unprecedented rates while refusing raises and downsizing departments. Actions that universities might take to alleviate suffering from the worst effects of pandemic-era inequality—perhaps by raising wages, lowering tuition and fees, or increasing enrollment to more widely distribute their riches—are conspicuous by their absence.

Take Columbia University in New York. Fueled by record stock market gains, Columbia’s endowment soared 32.3 percent between July 2020 and July 2021, with its endowment reportedly $14.35 billion as of June 30, 2021. That’s more than a $3 billion increase in a single year made purely from investments. Meanwhile, until the new collective bargaining agreement—tentatively agreed upon on January 7^th—is ratified by the majority of the members and takes effect, many graduate student workers earn a meager $29,000 salary in one of the nation’s most expensive cities. Under the new contract, a press release from the graduate union explains, some workers will receive up to a 30 percent raise.

Columbia and the Student Workers of Columbia (SWC) union have reached a tentative agreement. But the chain of events is telling. Columbia announced its record endowment gain on October 21^st.  Did it offer to share in this massive fortune, made in a period of extreme social crisis? Not exactly. Instead, the graduate union went on strike on November 3rd—and stayed on strike for over two months—to settle a contract while facing threats of replacement and no backpay.

Columbia students are not alone. Last year, over 7,000 workers at private universities in the Northeast went on strike. In addition to the 3,000-plus workers of Student Workers of Columbia, both the Harvard Graduate Student Union and the Graduate Student Organizing Committee at NYU (New York University) walked off the job. Goals included full union recognition, higher wages, better healthcare, third-party arbitration for discrimination and harassment, parental leave, and protections from government agencies. All three unions are affiliated with the United Auto Workers (UAW), which has long represented graduate student workers at public universities.

The length of the work stoppages has ranged from three days to almost three months, requiring mass participation and mobilizing widespread support from undergraduates, faculty, and other unions across the country. When it ended earlier this month, the SWC-UAW strike at Columbia was the largest strike in the entire country.

Graduate Worker Unions, Then and Now

Graduate employees’ struggle for democratic decision-making at the university did not begin overnight. Unions at public universities date back many decades: student workers at the University of Wisconsin, for example, achieved their first union contract in 1970.  But the unionization of student workers in the private sector would take longer, due in large part to legal resistance by their employers.

In 2000, the National Labor Relations Board granted graduate teaching and research assistants at private universities the right to unionize, reversing rules from the mid-1970s that excluded these workers from labor protections. The very next year, graduate student workers from NYU made history by forming a union and negotiating a contract. But by the time graduate students at Brown attempted to do the same in 2004, the Bush administration’s NLRB reversed field and stripped graduate student workers of their collective bargaining rights, and private universities refused to voluntarily recognize unions even where they did form. This remained the case until the 2016 Columbia decision, when the board once again affirmed that graduate student workers at private sector universities had the right to unionize. Since then, graduate students at Brown, Harvard, Georgetown, and elsewhere have successfully won contracts that afford them higher wages, better healthcare, and work protections.

Working Within the Neoliberal University

Universities, as we know, are businesses. Last summer, writing for NPQ, Ira Harkavy and Rita Hodges of the University of Pennsylvania observed that, “Higher education is at least as responsible as any sector for the continued (even if fraying) dominance of a neoliberal economic system.” Even more recently, Davarian Baldwin of Trinity College noted that, “Across America, universities have become today’s companies.”

Graduate student workers, like workers in other sectors, have responded accordingly. Their recent strikes and victories point to this newfound political momentum. Increasingly, graduate students have found themselves facing a decimated job market that universities themselves have helped engineer by refusing to grant tenure lines and further casualizing academic labor, with more and more teaching done by adjunct professors who are often paid just a few thousand dollars per course.

Today, almost 75 percent of the academic workforce is untenured, and over half a million jobs have disappeared since the spring of 2020. Prospects of employment have thus only worsened since the start of the pandemic, as many universities—Ivy League-Brown among the first—announced hiring freezes and admissions pauses. This austere landscape has all but destroyed the idea that academia is exempt from the same forces of privatization that plague every other industry in the country, where CEOs and owners collect bonuses while workers stay vulnerable and impoverished. Even at the height of this sectoral crisis, boards of trustees and financial managers at universities have prioritized saving rather than spending, citing long-term sustainability while imposing financial cutbacks.

But there is a cost to this. When institutions don’t take care of their own—when they respond to social chaos and mass death with hiring freezes and budget cuts—workers tend to question why they are risking their lives to continue to do their jobs. Academic workers are no different: growing political consciousness amongst teaching and research assistants is sparked and stoked by the raging inequality, precarity, and artificial scarcity. Facing a lifetime of underemployment in a future mostly devoid of tenure-track jobs, graduate workers are questioning and resisting the longstanding imperative to “pay their dues” or struggle through an advanced degree and amass debt in hopes of security to come. Every time that university administrators refuse workers’ living wage demands, they seed the ground for further dissent.

A Vision for Social Justice

Wages are important, but it’s not all about the money. Although wealthy schools will occasionally make concessions by raising wages and granting benefits, graduate worker unions also address larger issues that impact the communities in which they live and work—a strategy often called “social justice unionism.” This approach to labor organizing attempts to tie fights for better working conditions to larger social concerns, using union resources and political leverage to create change.

For example, NYU GSOC’s contract mandates sanctuary protections from ICE (Immigration and Customs Enforcement) for undocumented students, while Columbia’s tentative agreement secures neutral, third-party arbitration in cases of discrimination and harassment. The members of the Graduate Labor Organization union at Brown University (GLO-AFT), where I serve as the President, just voted to urge the Brown Corporation to divest all funds from companies complicit in human rights abuses in the occupied territories of Palestine and establish a means of oversight over the university’s investments.

Such demands, and others like them, attempt to undo anti-democratic decisions by university administrators and trustees to contract with local police forces, restrict external investigations of abuse, and invest money in companies profiting from political oppression or environmental destruction. Like most large, wealthy corporations, universities fight these efforts towards regulation at every turn. But as the academic labor movement grows, gaining members and contracts, as well as political power, it becomes harder to justify why demands for shared governance or institutional transparency are denied.

Collective action can serve as a check on power abuse and become a vehicle for institutional transformation. But graduate worker unions are only as strong as the rest of the labor movement, which struggles against resistance to regulation and accountability from wealthy businesses across industries. An Economic Policy Institute report recently found that corporations in the United States spend $340 million a year on union-busting lawyers and consultants to resist granting workers collective bargaining rights or to limit the scope of union power.

Private universities follow this corporate playbook. Harvard University’s administration, for example, insists on undermining union security by keeping the university “open shop”— that is, on keeping graduate union membership optional, making it harder for the union to sustain itself.

Although the members of Harvard’s graduate union went on a three day strike this year, hoping in part to rid themselves of this arrangement, they were not able to secure this in their contract. Even though every other employee union at Harvard enjoys this provision, the administration seems intent on keeping HGSU separate. Harvard’s efforts don’t exist in a vacuum: right-to-work laws currently similarly restrict unions in 27 states. When they take on these issues at their own universities, graduate student workers are engaging in wider struggle against the national repression of organized labor.

Despite such obstacles, graduate student workers at private universities have made many strides, organizing against top-down governance and towards financial transparency. Private higher education faces multiple pressures—including rising debt, soaring tuition, increased sectoral unemployment, and often a bloated administration. And for the time being, private universities cannot function without graduate student labor. In this turbulent world, graduate student workers may be uniquely situated to beat back the descent into corporatization—perhaps even to push private universities to reclaim their mission as democratic institutions for public good.

This article originally appeared in the Nonprofit Quarterly. See the original article here.

These days, the presence of cooperatives across the United States is nearly universal. The largest sector is financial cooperatives, better known as credit unions. As of September 30, 2021, the National Credit Union Administration reports that 128.6 million Americans are member-owners of federally insured credit unions, which works out to about 38.6 percent of the nation’s population.

But the extent of cooperative business activity varies widely across regions and business sectors. Why have cooperatives been more successful in some areas than others? What are the most important ingredients for creating new co-ops? And how does the newest generation of co-ops differ from previous ones?

These were some of the questions that my colleagues at the University of Wisconsin Center for Cooperatives and I sought to address in a recent report titled Collective Action in Rural Communities. In that report, we identified 945 cooperatives that were formed between 2011 and 2019, including 195 in rural communities and 750 in urban areas.

The findings are intriguing, including rapid growth of worker cooperatives and the emergence of sector-specific development strategies. There has been considerable innovation in the field of food co-op development. Additionally, the use of cooperative land ownership has provided increased economic security for tens of thousands of families living in manufactured housing (mobile home) communities. The demographics of who creates co-ops has also shifted. Increasingly, co-ops are being used by people in communities of color—especially Black, Indigenous, and Latinx communities—as tools for community wealth building and economic development.

Putting the Findings in Historical Context

Before delving further into what is new, it is helpful to understand some of the waves of co-op development that have preceded our own. One of these waves involved the development of rural electric cooperatives, which today provide power to over 40 million Americans. Back in the 1930s, however, only one out of every ten rural households enjoyed the benefits of electricity, even as electric power was already nearly universally available in cities. Children did their schoolwork by the light of kerosene lamps at kitchen tables, household chores were accomplished by hand or horse, and food had to be preserved to last the entire year. In 1935, President Franklin Delano Roosevelt established the Rural Electrification Administration (REA), which provided loans and assistance to groups of farmers who wanted to build and own their own electrical distribution systems. The Rural Electrification Act of 1936 established a lending agency to finance this effort. Farmers, familiar with the cooperative model, quickly established rural electric cooperatives to take advantage of the program. The REA provided ongoing organizational support to these cooperatives, which contributed to the overall success of the program. By 1953, more than 90 percent of rural homes had access to electricity, which brought profound changes to rural life and agricultural practices.

The story of rural electrification exemplifies the power of cooperative action—what is possible when a group of people work collectively to meet a shared need. Many of the country’s largest and most prominent cooperative sectors have equally impressive origin stories rooted in a combination of social upheaval, government intervention, coordinated support, and personal gumption. Credit unions are another example of a successful systematic public and private intervention to create new opportunities for consumers to access credit. The concept of cooperative credit gained popularity during the 1920s, and a national association was formed to organize credit unions, promote state-level authorizing legislation, and eventually win passage of the Federal Credit Union Act in 1934 (Moody & Fite 1971). Today, as noted above, the nation’s 5,000-plus credit unions collectively have 128.6 million members.

Large numbers of farmer-owned grain and dairy cooperatives were organized and sustained with the support of social movement organizations like the Grange, in response to critical market failures. Beginning in the 1840s, farmers formed dairy cooperatives to process cheese and butter, and to market fluid milk in urban areas. By 1909, there were more than 2,700 dairy cooperatives. During the same period, farmers organized cooperatives to build thousands of elevators to store and market grain (Schneiberg et al. 2008). Today, dairy cooperatives handle approximately 85 percent of the total milk marketed in the United States, and in 2020, agricultural cooperatives as a whole employed over 185,000 workers, with revenues exceeding $200 billion.

Co-op Development Today: The Growing Prominence of Worker Cooperatives

Consumer cooperatives—such as credit unions, rural utilities, and mutual insurers (e.g., Nationwide)—are by far the largest segment of cooperatives, with over 90 percent of US cooperatives identifying as consumer owned. Consumer co-ops remain a common form for cooperatives started between 2011 and 2019, but their share is declining, while the share of worker co-ops is rising. This can be seen over the course of the decade since we conducted two surveys. In the first survey, which covered the period from 2011-2016, 40 percent of newly incorporated cooperatives were consumer owned, which was more than any other single category. By contrast, in the second survey period of 2016-2019, worker co-ops were the single most common type of cooperative, constituting 47 percent of the new co-ops. That is an extraordinary figure, given that only one percent of US co-ops formed before 2010 are worker co-ops.

This trend, nonetheless, is not surprising, as it fits well with the historical pattern of development highlighted above. Cooperatives typically emerge when people’s needs are not being met by the market—and it would be hard to argue that late-stage capitalism is meeting the needs of most workers in America. From wage stagnation and the emergence of the gig economy to retiring business owners, employee ownership has been identified as a solution to many of our socioeconomic ills.

It is also important to note that the overall growth of worker cooperatives is not at all unrelated to the growing popularity of co-ops in Black communities, Indigenous communities, and communities of color. According to the 2015 State of the Sector report by the US Federation of Worker Cooperatives and the Democracy at Work Institute (DAWI), “Two-thirds of worker cooperatives in 2015 were less than 15 years old and 39 percent were less than five years old. Almost 70 percent of all employees are female, about 60 percent are non-white and [Latinxs] are the largest plurality of any race (43 percent).” And that trend has continued—according to the 2019 State of the Sector report, “The racial demographics of worker owners continue to show a majority of people of color, with a concentration of Latinx workers.” Of the 450-plus worker cooperatives in the US, approximately 38 percent of the membership is Latinx. And according to UWCC’s 2020 study Latinx Co-op Power, approximately three-quarters of the Latinx cooperatives incorporated between 2014 and 2019 are worker-owned.

The jump in worker co-ops as a percentage of total cooperatives incorporated between our two survey periods was particularly notable in Colorado, a state better known for rural electric and farmer-owned cooperatives. While there are regions with much higher concentrations of worker cooperatives and more developed cooperative development ecosystems, the timing of Colorado’s growth in worker ownership is interesting in that it coincides with the state’s shift to an ecosystem approach to increasing employee ownership.

In 2012, the Rocky Mountain Employee Ownership Center (RMEOC) launched with the mission to build a more just and sustainable economy through employee ownership. RMEOC has taken a holistic, ecosystem approach to their cooperative development work. In addition to supporting cooperatives directly, they engage with policymakers, service providers, state leadership, and other stakeholders to strengthen the region’s employee ownership ecosystem. The approach has paid off. There has been a recent flourishing of state level policy supporting cooperatives in Colorado including the creation of the Colorado Employee Ownership Commission and a Colorado Employee Ownership Office within the Colorado Office of Economic Development and International Trade. The Commission was charged with educating the public on the benefits of employee ownership, establishing a network of technical support for employee ownership conversions, and generating a list of recommendations for removing barriers to the development of employee-owned businesses. The Office supports these initiatives and channels grants, loan guarantees, and technical assistance to worker cooperatives.

Around the same time, Colorado’s legal environment became friendlier to cooperatives as the state strove to become known as the “Delaware of Cooperatives.” In 2011, the state adopted a new cooperative statute that allows outside investor-members within certain parameters and is flexible enough to be used by cooperatives in many sectors. And in 2014, a new law firm launched that serves and actively promotes cooperatives and other social enterprise models.

Colorado is one small example of what is possible through an ecosystem approach to cooperative development—it is also exemplifies a broader national trend. The ecosystem of support for worker cooperatives exploded in the last decade. Two prominent national employee ownership organizations, DAWI and Project Equity, launched in 2013 and 2014, respectively; and in 2012 The Working World, which provides non-extractive financing and technical support to worker cooperatives, added a US-focused loan fund. Additionally, several longstanding cooperative development centers and community economic development organizations added or enhanced programming on worker ownership during this time. Private foundations and municipalities such as New York City; Madison, Wisconsin; Oakland, California; and Minneapolis, Minnesota, began investing in employee ownership to create good jobs and build community wealth. And investment capital is now starting to flow—a 2020 study by the Democracy Collaborative identified a dozen new or emerging investment funds focused on supporting employee ownership transitions.

Sector specific strategies

Another notable finding was the effectiveness of sector-specific strategies to scale specific segments of the cooperative economy. In the early 2000s, two national organizations emerged with sector-specific approaches in retail grocery and housing. These organizations served as national leaders that worked closely with local cooperative developers to spread their model, practices, and expertise on the local level. We’re now seeing the fruit of their labor.

Food Co-op Initiative (FCI) started in 2005 as Food Cooperative 500, a pilot project launched by leaders from the grocery cooperative community who wanted to “test the theory that new food retail cooperatives could open more quickly and successfully if they had appropriate guidance.” FCI connects food co-op organizers across the country with a suite of industry-specific resources including organizing tools and best practices, training and technical advice, peer learning opportunities, and seed capital. Since its founding, 157 new retail food cooperatives have opened in the US and nearly 100 additional communities are currently working to open new stores.

ROC USA—the “ROC” stands for resident-owned communities—is another example of an organization that has successfully developed cooperatives in a specific sector: manufactured (“mobile”) home communities. Launched in 2008, ROC USA works in partnership with a formal network of nonprofit affiliates and has a national technical assistance team. It also provides financing through ROC USA Capital, a community development financial institution (CDFI). The technical assistance and financing—along with third-party legal counsel and engineers—facilitate the conversion of manufactured home communities to cooperative ownership. ROC USA is headquartered in New Hampshire where the model was pioneered and market-tested for more than two decades before expanding nationally. In New Hampshire and Vermont alone, approximately 39 new housing cooperatives were formed in the past decade. Today, the network represents nearly 300 co-ops and 20,000 member-owners in 21 states; in the past three years, the network has developed 20 new co-ops a year.

The Next Wave of Cooperative Development

Cooperatives are not a panacea, but they are a time-tested strategy for improving social and economic wellbeing. Cooperatives have the potential to build community wealth, empower workers, and help small businesses thrive in an increasingly competitive world. While cooperative businesses can be challenging to launch, they are a solid long-term investment. Studies from the across the globe have shown that once established, cooperatives last longer than other forms of business and are more resilient during times of crisis. Many of the cooperatives established during earlier waves of cooperative development are still serving their members decades later—as of 2020, 76.5 percent of all agricultural cooperative were more than 50 years old, and 17.5 percent were more than 100 years of age.

As Andrew Crosson explained in a recent NPQ article on Appalachia, an ecosystem approach is required to overcome barriers to shared prosperity and to create an economy that works for all. The same argument applies to the development of strong, networked cooperatives that meet the needs of individuals and communities. Historical examples, as well as the cooperative development success stories of today, demonstrate the power of taking an ecosystem approach to building a resilient cooperative economy. Co-op development trends reflect social and economic trends; they also reflect trends in philanthropy and public investment. This begs two questions: What collective needs must we most urgently address? And what investments can we make today that will usher in the next wave of cooperative development?

This article originally appeared in the Nonprofit Quarterly. See the original article here.

This article is part of our weekly series—The Promise of Targeted Universalism: Community Leaders Respond—that NPQ is publishing in partnership with the national racial and economic justice nonprofit Prosperity Now. In this series, writers examine how targeted universalism—a narrative framework that advocates the use of targeted approaches to achieve universal goals—can inform efforts to close the racial wealth gap, community by community.

The persistent and stubborn racial wealth gap in the United States is well documented. This gap is rooted in the enslavement of Black Americans and structurally reinforced through policy and practices that persist today in the nation’s banking, taxation, housing, transportation, and education systems, to name but a few.

While there is widespread agreement on this condition, there is less agreement on what should be done—and if something is done, there is debate about which group(s) should be the focus. I will not engage these issues directly; some of them will be addressed in other articles in this series. Instead, I propose an alternative way to understand this problem and a way to address it and talk about it.

There is an understandable call for equity when facing the racial wealth gap. And in making this call, the implicit or explicit focus is often to address the gap between white wealth and Black wealth. This makes intuitive sense—but there are some serious limitations in such a singular focus. And these limitations also are present when focusing on eliminating or narrowing racial disparities in other important social markers. A targeted universalism (TU) approach, I believe, addresses many of these limitations. Here I discuss the advantages of TU in the context of the racial wealth gap. Before doing so, it is important to be explicit about the limitation of equity.

The concept and practice of equity has gained momentum in recent decades. Before the turn to engaging with equity in the 1990s, the discussion of racial justice and fairness was primarily envisioned as a call for equality. Equality means that people are treated equally, which is not as simple as it sounds. For instance, for years people debated whether equality meant equal outcomes or equal opportunity. From these debates, the concept of equity was developed to recognize that treating people with unequal starting conditions equally does little to reduce inequality.

Indeed, as an engagement with equity became more pronounced, the shortcomings of simply treating people who faced vastly different circumstances equally became ever more obvious. For example, in the housing system, it was pointed out that fair housing could not be achieved if Black Americans were treated the same as white Americans. This position was buttressed by the disability rights movement.

Limitations of the Equity Approach

Compared to the frame of equality, equity represented an advance in that it recognized the need to respond to situatedness. For example, to address inequality in key areas of the economy like housing or employment requires recognizing that different groups have different relationships with those systems and structures.

A shortfall of the equity approach, however, is that it encourages advocates to focus on what they want to end (disparities), rather than what they want to achieve (universal thriving). When advocates focus on closing disparities, that requires identifying—and defining—a group that is doing better, and very often this group is composed of white people. This measure of this group’s status is then the measurement that other groups are compared to and the outcome set as the aspiration. In the identification of a gap, there is a better performing group—a more favored group—and a single less favored or marginal group. In the context of the racial wealth gap, the less-favored marginalized group is often African Americans. In discussions of the wage gap, the favored group might be men and the less favored group women. In the context of education, often white boys are more favored than Black boys.

While discussions may acknowledge additional disparities—recognizing the gaps between additional groups and the most favored groups—the approach directs our gaze to a binary. The details of how groups are situated recedes and the disparity itself is foregrounded. There is much more I could add, but this may be enough to point out some of the weaknesses to this approach. The favored group becomes the benchmark and desired outcome for all groups. There is not a deep inquiry of how this group is situated or what exactly it is that it possesses, nor is there a deep inquiry into the ways different people within that group are situated. The goal for the less favored group is entirely defined by what the favored group has.

What if the favored group—or different subgroups within it—are seriously lacking what is needed to flourish? Orienting a strategy to “close the gap” renders the power of defining universal targets to members of the favored group. This is problematic because the group at the top of the disparity may lack important resources. This can render invisible any attention to the needs within the apparently favored group. This also limits the aspirations for the scale of change that we seek. Transformational structural change is required, and the ambition should expand beyond tying success to what current outcomes look like.

Finally—and connected to these problems—is that focusing attention and resources on less favored groups may create or deepen a perception of competition between groups. This is likely to increase polarization and breaking—and reduce the needed power to promote transformational reform.

The Targeted Universalism Approach

Let’s turn to the ways that targeted universalism addresses these issues. First, TU is anchored by naming a universal goal. In the context of wealth, the goal may be articulated by considering what an individual and community needs to be secure and thrive. This is how the goal is a universal one—it is a goal statement in which many groups see improved futures. It is worth noting that this is a significant distinction from a disparities-based framework, because it is so often assumed that the favored group is secure and thriving. This is not assumed within a TU framework. It might be that some group is close to the universal goal. But in many instances, all will fall short.

Second, TU centers its attention on the situatedness of groups—the gap from the universal goal will vary from group to group. Some groups are more distant from that goal, have different paths to the goal, and have experiences in trying to navigate there. The situatedness of groups are centered in TU by its requirement of articulating different paths groups might pursue to achieve that universal goal; the structural analysis it encourages helps identify these.

Third, dependent upon a thorough analysis, strategies need to be designed that target structural changes that support groups’ reach and paths to the universal goal. These strategies must be targeted to address the situatedness of each group—to navigate around or remove structural barriers, but more importantly to squarely focus on creating new structures that leave in place durable paths to goals.

It is in this way that TU is strictly concerned with outcomes and is proactive. It directs focus to the systemic and structural roots of what are unfair outcomes for different individuals. This approach also turns away from an individual accounting of unfair outcomes. This is in part because those structural processes are incorporated into the change strategies and programs that are developed.

TU is an operational approach that creates new narratives and requires different language to discuss the systemic and structural changes it seeks. Its universal component calls attention to the need to improve circumstances for most, if not all, groups. Its targeted component—the structural analysis of the situatedness of different groups trying to reach the goal—forces analytical attention to be paid to the unique positions and experiences of different groups trying to reach the goal.

Consider TU as applied to the racial wealth gap. First, what is the universal goal? The process of identifying the universal must be iterative and co-created. Different groups participate in helping to identify the universal. One might imagine that the goal is not simply for Black Americans and others to have the same wealth as whites but to also make sure that all people and all groups have what is necessarily to be secure and flourish. Another related goal might be to limit the concentration of wealth so that it does not distort our democracy or our individual and collective belonging.  This means inspecting the status of white elites hoarding wealth within the more favored white groups—and this affirms that race and class in the US must be considered in combination with each other and cannot be thought of as binary categories.

Indeed, we know that throughout history, in the US, race and class have been entangled and are inextricably linked to each other. Failure to combine and enrich this structural analysis could mean that we have addressed or are working to address one problem and ignore another—or even worsen the problem.

Often, discussion of the racial wealth gap centers on the median wealth of racial groups. Even if this measure of the racial wealth gap is closed—if median wealth for all groups equaled what white households have—the mean wealth gap would persist. Data from the Survey of Consumer Finances (SCF) of the Federal Reserve, offered below, show us why:

The driver of racial wealth gaps is primarily the wealth held by the wealthiest 10 percent within white and other racial groups. This can easily be seen in figures 1 and 2 above. For example, it is clear from Figure 2 that the top 10 percent of Black American households have more wealth than the bottom 90 percent of white households. Figure 1 shows that even if you added $181,440 (white median wealth) to every Black or Latinx family, that would not eliminate the wealth gap with white elites.

Saying that a goal should be to close a racial wealth gap does not imply an engagement with the persistent hoarding of wealth by elites. Focus on the dominant measurements of the racial wealth gap inadvertently places low wealth white households on the same side of a disparity as their elite counterparts. When a set of policies and strategies are said to close a gap, the implication is that only non-white groups benefit. This focus on closing the gap is likely to create more fracture between groups. This is despite the shared gains they would all have from some policies that could build the wealth necessary for household and community stability and health. These needs—ultimately for a sense of health of communities and individuals—is what centers TU.

TU helps reconcile what otherwise may seem to be contradictory tenets, as it combines a focus on collectively held universal needs and aspirations, alongside a deep appreciation of the vast range of needs within a group. The framework and path of analysis and communication it lays out for us is powerful. It can help realize human flourishing and planetary health—the traces of what belonging would look like. It accomplishes this ambitious and collective project by attending to the needs of non-elites—a diverse group, including some people within the favored wealth group, but who are also alienated by the structural dynamics of elite wealth.

Using TU’s laser focus on structural historic analysis and the modern structural features of wealth accumulation and uneven distribution can improve everyone’s prospects. Only by addressing the structural and systemic facts of life inherited by and through extreme racialized violence can we usher in a world in which everyone truly belongs.

This article originally appeared in the Nonprofit Quarterly. See the original article here.

 

Dear NPQ Reader,

The winter 2021 edition of the Nonprofit Quarterly magazine is available now!

Our winter issue takes a first look at the emerging field of health justice.

We partnered with Dr. Angel Acosta—a healing-centered educator who works to bridge the fields of leadership, social justice, and mindfulness—to invite an extraordinary group of leading-edge thinkers and practitioners working at the intersection of health and justice to write for NPQ’s first-ever edition focused on the topic.

Here are a few winter 2021 issue highlights…

Psychedelic and Plant Medicines: A Portal to Transformative Realms of Possibility  

by Kasey Crown

The Power of Self-Care: A Bridge to Communal Care 

by Shelly Tygielski

Dimensions of Thriving: Learning from Black LGBTQ+/SGL Moments, Spaces, and Practices

by Kia Darling-Hammond 

Healing-Centered Leadership: A Path to Transformation

by Shawn A. Ginwright 

Person First, Disability Second: The Road to Full Inclusion  

by Nicole Zerillo 

And many more…

Subscribe to the Nonprofit Quarterly magazine today.

This article originally appeared in the Nonprofit Quarterly. See the original article here.

“Impact investing will not save us. It is not enough. Philanthropy will not save us. Social enterprise will not save us. We have to connect the dots and use all the social and financial capital tools we got.”

Deb Nelson, Executive Director, Just Economy Institute

As a term, impact investing turns 15 this year. What the term means, however, remains subject to interpretation. On the one hand, the concept is simply an expression of common sense. If a foundation, company, nonprofit, or individual allocates funds to an investment vehicle—be it a stock, bond, or private placement—it will have an impact of some kind, whether for good or ill.

On the other hand, the idea is to consciously leverage financial capital to advance social justice and build power in community. That’s a much taller order and 15 years in, despite the trillions nominally invested for impact—the jury is still out on effectiveness. Clearly, some investments advance transformative goals, but many do not.

Elaine Rasmussen, who participated over the past two years in Boston Impact Initiative’s national Fund Building Cohort, named some of these tensions in an interview with NPQ last year. “One of the ways I talk about this,” she said, “is there are the master’s tools, which is the current finance sector. I am of the belief that we can use the master’s tools to do what we’re trying to do within limits.”

Another complication is that impact investors have divergent goals. To explore how different actors are thinking about impact investing, I spoke with three people in the field: Otis Rolley, senior vice president of the US Equity and Economic Opportunity Initiative at the Rockefeller Foundation, the foundation that organized the 2007 convening where impact investing was coined; Miguel Santana, CEO of the Weingart Foundation in Southern California; and Deb Nelson from the Just Economy Institute.

Impact Investing at Rockefeller: Moving Money to BIPOC-Led Funds

Rolley, as noted above, heads the Rockefeller Foundation’s equity and economic opportunity work. One interesting thing to consider is that 15 years in, Rockefeller is still only at very early stages of developing a strategy to leverage the corpus of its endowment, which Rolley estimated at $6.4 billion; the foundation announced its intention to begin to do so in April 2021. Rolley adds that the foundation’s chief investment officer, its president, and its investment committee from the board of trustees “are looking into how to do more mission-related investments. We have divested from the fossil fuels. We are trying to be smart in terms of where and how…. We did some analysis that has to be done on where and how we invest and turn that ship.”

What Rockefeller has done, however, is make grants and program-related investments (low-interest loans) to expand access to capital in BIPOC communities. For example, the foundation disbursed a $500,000 grant to the REAL People’s Fund in Oakland, California—a fund that was featured last year in Transform Finance’s report on leading power-building “grassroots community engaged” impact investing funds nationally and which makes loans of $50,000 to $250,000 to BIPOC-owned firms. The acronym “REAL” stands for “Revolutionizing Our Economy for All Local People.” About the investment, Rolley said, “We found it very attractive and invested in it. We know if we are going to do something different, we have to do something different.”

Nor is REAL a one-off. Rockefeller also has backed CLLCTIVLY in Baltimore, which Rolley describes as a “BIPOC-led firm that is really looking at small and microloans both to BIPOC businesses as well as BIPOC-led nonprofits.” It has supported Founders First Capital Partners, which aims to lend to 400 BIPOC-owned firms and employs revenue-based financing; firms only pay if they have the available cash to do. This is also sometimes called “non-extractive financing.”

As Rolley explains, the way this works is that the firm pays a “fixed percentage of the revenue up to a predetermined cap so it doesn’t hurt their bottom line when they are paying it back.” In other words, loan payments remain limited if cash is short; if business performance exceeds expectations, the loan fund payments are higher than standard, up to the cap or maximum amount. This structure helps ensure that the interests of the loan fund and its business borrowers are aligned. Rolley adds that early data have shown “great numbers” that suggest the approach is working.

The foundation has also invested in employee ownership, serving as a lead backer of Apis & Heritage Capital Partners, which Rockefeller describes as a $30 million fund to “turn businesses with workforces of color into employee-owned firms.” The foundation, explains Rolley, sees “employee ownership is a crucial part of racial wealth gap in the long haul. That’s what attracted to us to it. It’s meeting a challenge of today. You can’t have a serious view of making real changes of BIPOC wealth creation without having serious conversation about innovative mechanisms to build up business ownership.”

These investments, Rolley adds, are part of a two-tier strategy that also involves supporting policy coalitions and research to promote public policy change—both federally and at the state and local level, particularly in the tax code—so that the wealthy pay more taxes and working people less.

What is the end goal? While some Rockefeller grantees may disagree, the foundation believes that “an inclusive capitalism” remains “a viable option for the US.” Rolley claims inclusive capitalism works elsewhere, based on an arguably rosy view of European social democracy. Impact investing, in this vision, is a tool designed to nudge the existing economic system towards greater equity and inclusion.

Using the Foundation Corpus to Shape Markets in Los Angeles 

While Rockefeller is just starting to think about how to use its corpus for impact investing, the Weingart Foundation in Los Angeles is much further along. As Miguel Santana, once the city of Los Angeles’ chief administrative officer and the foundation’s CEO since 2020, details, “For the nearly billion-dollar corpus that we have as a corpus at the foundation, we are looking very seriously in our investments to not only ask the question are they counter to our mission, but how these investments are advancing our mission. The work of the foundation is broader than our grants.” Although Santana arrived at Weingart recently, the foundation’s investment policy shift predates him by four years. Today, half of its corpus is invested in mission-aligned ways—and the foundation is moving toward having 100 percent of its investments aligned with mission.

The first step in shifting investment, Santana notes, is to conduct what he calls a “do no harm” look—in other words, divest from industries that are harming the community. This is followed by conducting due diligence to determine whether the groups that are managing foundation assets “represent our values.” Given Weingart’s racial justice frame, this means asking if the investment professionals are diverse and if that diversity is “represented at different layers of an institution from its board to its executive team to people who are managing the assets? Those questions inform our decisions of who we actually partner with.”

One example Santana highlighted involved a $5 million investment in a for-profit builder of modular homes, which Santana contends is a much more cost-effective means of increasing the region’s low-cost housing supply and reducing its affordable housing shortage than traditional grant-funded housing. Santana is enthusiastic about the foundation’s approach. Whether the foundation’s bet is right remains to be seen. What is clear, however, is that this example speaks to one of the central challenges of impact investing—namely, to be an impact investor requires having capital to invest. In other words, if philanthropic decisions regarding impact investment are made, as they often are, without substantial community review, impact investment can become—even with the best of intentions—a tool that reinforces philanthropic power.

Impact Investment for Liberation? The Just Economy Initiative

The Just Economy Initiative began as a project of RSF Social Finance and became a standalone nonprofit in 2021. It is led by Deb Nelson, the daughter of a conservative entrepreneurial father and a social activist mother. In her career, Nelson has tried to combine both aspects, she explains. Nelson’s work seeks to understand and activate money “in wise ways to get to an economy that is just and works for all people and the planet.”

Nelson explains that the idea of the Just Economy Initiative, which had its first cohort in 2017, was to look broadly at different promising models and strategies and connect different people and organizations “using an integrated holistic approach.”

Central to the group’s objective is to “shift the flow of power. There is such an incredible concentration of wealth and power in this country and in this world. Unless we also shift the flow of power, we’re not going to get to systemic change.” Each fellowship cohort brings together movement leaders, community organizations, financial advisors, wealth holders, and nonprofit leaders together as a community of practice to build knowledge about effective interventions.

What does systemic change require? Nelson is clear on the problems. “Our current form of capitalism is extractive capitalism. That is not working for people or the planet. That is crystal clear,” she says. The goal, she adds, “is an economy that supports the well-being of the people. That is a regenerative, restorative economy.”

The methodology remains a work in progress, but Nelson is certain that developing a restorative economy requires a shift in who makes impact investing decisions—and that better due diligence by itself is not sufficient. As Nelson puts it: “The wealth holders are not saying, ‘This is how and when and how much capital will flow.’ It is the movement leaders who are making those decisions. That is part of our theory of change.” Over time, Nelson notes, there has been a shift in both the fellowship she directs and the field, which she describes as “anchoring on racial and economic justice while not losing our focus on environmental justice.”

Can impact investing truly be liberatory? Nelson is hopeful that “we are beginning the long and hard and joyful work of creating new systems that get us to a just and sustainable economy. We of course are not there yet. But we are in a place where people are awake and seeing that different systems are possible. They are seeing things work in their local communities.” Nelson cites the growing impact of the Movement for Black Lives, as well as the rise of radical philanthropic groups and foundations such as Kataly, Solidaire, and Resource Generation. “What I am seeing as the movements are coming together, as the leaders are coming together … [is that] this is our time.” She also observes that the stakes are very high. “This is our time because we have to get it right. If we don’t work on these issues and affect systems change in this decade, the repercussions are catastrophic.”

This article originally appeared in the Nonprofit Quarterly. See the original article here.