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Facilitating Investment into Underserved Communities: Minneapolis and The GroundBreak Coalition

Nathan Kelly CrossBoundary

In the wake of George Floyd’s murder in May 2020, the 50 largest US public companies pledged nearly US$50 billion to address racial inequality, more than 90% of which was allocated as loans or investments into Black institutions and communities. However, in the nearly four years since their pledges have been made, 37 companies have confirmed disbursing only US$1.7B of the total pledged, and most of those dollars have been disbursed in the form of grants.

We do not think this is an anomaly. Since the introduction of empowerment zones in the 1990s, a litany of government and private programs have sought to promote investment in US underserved markets. Yet most of these programs have achieved middling results, with (by our count) none having reached the lofty goals set out for them.

Despite the political will, availability of public/philanthropic funding, and best intentions of these programs, there is no inevitability to the flow of capital to the best opportunities in underserved markets. It requires hard work from dedicated investment professionals to facilitate investment – acting as a trusted intermediary to overcome years of structural barriers that keep capital on the sidelines.

In Minneapolis, the McKnight Foundation took the initiative to put such a team together, and over the past two years have funded that team to unlock $1B of capital so far, with the potential to unlock $5.3 billion of private and philanthropic capital to the region in the next ten years.

In our session Nathan Kelly, Managing Director of US Underserved Markets at CrossBoundary, will interview Tonya Allen, President of the McKnight Foundation; Ellen Ward, Senior Strategist at Activest and Independent Consultant to the GroundBreak Coalition; and Dondi Edwards, Project Director at the GroundBreak Coalition, about the incredible results they have achieved to date and the unique approach they took to unlocking capital flows for Minnesota’s Black Communities.

We will discuss:

1) The challenges of moving a corporation or financial institution from commitment to capital deployment and why flows into many underserved markets remain limited even after a pledge has been made.

2) How philanthropic capital can play a unique role in building trust and bridging information asymmetries between historically underserved communities and commercial capital providers through investment facilitation.

3) The costs associated with putting together new facilities and transactions that are designed to overcome the barriers to capital flows in underserved communities.

4) The unique role that an experienced transaction professional can play in calling out unnecessary and reasonable practices and policies by capital providers.

Track

Capital Flows for Impact: Dialogues Around the State of Impact Investment

Format

Panel (3 speakers)

Speakers

  • NameTonya Allen
  • TitlePresident
  • OrganizationMcKnight Foundation
  • NameEllen Ward
  • TitleSenior Strategist
  • OrganizationActivest
  • NameDondi Edwards
  • TitleProject Director
  • OrganizationGroundBreak Coalition

Description

In the wake of George Floyd’s murder in May 2020, the 50 largest US public companies pledged nearly US$50 billion to address racial inequality, more than 90% of which was allocated as loans or investments into Black institutions and communities. However, in the nearly four years since their pledges have been made, 37 companies have confirmed disbursing only US$1.7B of the total pledged, and most of those dollars have been disbursed in the form of grants.

We do not think this is an anomaly. Since the introduction of empowerment zones in the 1990s, a litany of government and private programs have sought to promote investment in US underserved markets. Yet most of these programs have achieved middling results, with (by our count) none having reached the lofty goals set out for them.

Despite the political will, availability of public/philanthropic funding, and best intentions of these programs, there is no inevitability to the flow of capital to the best opportunities in underserved markets. It requires hard work from dedicated investment professionals to facilitate investment – acting as a trusted intermediary to overcome years of structural barriers that keep capital on the sidelines.

In Minneapolis, the McKnight Foundation took the initiative to put such a team together, and over the past two years have funded that team to unlock $1B of capital so far, with the potential to unlock $5.3 billion of private and philanthropic capital to the region in the next ten years.

In our session Nathan Kelly, Managing Director of US Underserved Markets at CrossBoundary, will interview Tonya Allen, President of the McKnight Foundation; Ellen Ward, Senior Strategist at Activest and Independent Consultant to the GroundBreak Coalition; and Dondi Edwards, Project Director at the GroundBreak Coalition, about the incredible results they have achieved to date and the unique approach they took to unlocking capital flows for Minnesota’s Black Communities.

We will discuss:

1) The challenges of moving a corporation or financial institution from commitment to capital deployment and why flows into many underserved markets remain limited even after a pledge has been made.

2) How philanthropic capital can play a unique role in building trust and bridging information asymmetries between historically underserved communities and commercial capital providers through investment facilitation.

3) The costs associated with putting together new facilities and transactions that are designed to overcome the barriers to capital flows in underserved communities.

4) The unique role that an experienced transaction professional can play in calling out unnecessary and reasonable practices and policies by capital providers.

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