You may know him as an American founding father. You may not know that Benjamin Franklin was also an OG impact investor.
The simple way Franklin invested in a young country’s future provides a powerful example for everyone in America’s 250th year working to help the country live up to its founding ideals.
Franklin was the youngest son in a large Boston family. He spent his early years laboring in his older brother’s print shop before striking out on his own. He knew firsthand the difference between working for someone and working for yourself, and he knew that the gap between the two was rarely just about talent or effort.
It was also about capital. A skilled worker without access to a loan would spend his life selling his labor and barely getting by. Give him enough to buy tools or a stake in a business, and you change the financial trajectory of his family for generations. A slaveholder earlier in his life, Franklin later became an ardent abolitionist. He credited a loan from two friends that allowed him to start his own business in Philadelphia as the foundation of his fortune.
So near the end of his life, Franklin added a provision to his will that set up revolving loan funds in Boston and Philadelphia to help young tradespeople become business owners. The fund made loans of up to $20,000 (in today’s money) charging 5% annual interest over 10 years. Each repaid loan funded a new loan to the next worker.
By 1990, when the funds expired as planned after 200 years, thousands of workers had become owners, and the two cities had accumulated millions of dollars for public use.
Expanding access
Franklin showed clearly how extending fair financing to working people is crucial to expand opportunity. He didn’t have a name for what he was doing. I call it Investing in America.
Investing in America is not a financial product or a policy program. Nor is it only about investing in specific places or in “Made in America” supply chains. It is the broader idea that extending loans and investments to the people and places that have been shut out of mainstream capital markets on terms that advance rather than trap them is crucial to make the promise of America as the land of opportunity real for more people.
Expanding access to finance alone will not solve our challenges. We cannot solve them unless we do.
Nearly half of Americans cannot cover a $400 emergency without resorting to credit cards or predatory loans. They certainly can’t pay upfront for a home, an education, or the car they need to get to work. Unless you were born wealthy, you almost certainly cannot pay upfront for a home, a business, or an education.
The same gap shapes the health clinic that gets paid only after it delivers care, the entrepreneur whose idea dies waiting for a bank to return a call, the local government that could improve services tomorrow if it could borrow today.
Capital, like water, follows the path of least resistance toward large companies, familiar borrowers, established markets. That leaves vast stretches of the economy on parched ground, where talent and hard work aren’t enough because the financing never arrives.
There is a growing consensus that America needs to build more: more homes, more energy infrastructure, more opportunity. That’s right. But building more only helps if the people who need it most can access and afford what gets built. Deregulation can unclog supply. It cannot, on its own, fix who gets financed. And if expanding supply is not coupled with expanding access to financing, the people who already have money or are well-served by investors will convert their existing advantage into even greater wealth. Everyone else gets to watch. A level playing field requires not just more to invest in, but a fair chance to invest. That’s where Investing in America comes in.
Across the country, in places that don’t fit any easy political category, a remarkable group of investors and entrepreneurs are doing what Benjamin Franklin did: finding creative ways to extend fair financing to people and places the mainstream market overlooks.
- In El Paso, workers at a landscaping company used a loan from the private credit firm Apis & Heritage to buy their retiring boss’s business. They now own what they used to work for, and their retirement accounts are growing.
- In North Carolina, a local entrepreneur received financing from the nonprofit fund Connect Humanity to build a broadband provider serving rural households the big telecoms ignore, at lower cost than what residents were paying for dial-up.
- In Utah, an energy company is using fracking technology to build the world’s largest geothermal power plant, backed by investors like Capricorn Technology Impact Fund that are willing to finance a new energy source most capital markets still won’t touch.
- In Detroit, a new fund is helping first-time buyers purchase homes at lower down payments through a financing model built in partnership with local government, donors, and Homium, a company backed by Sorenson Impact Group.
Building together
My forthcoming book, Investing in America, profiles these and more than 80 other examples across 42 states. The people behind these ventures and initiatives share a few traits. They are bridge builders able to work across the lines that divide most of us. They are driven by moral clarity, not paralyzed by ideological purity. And they are patient, willing to take first steps that don’t immediately look like wins.
They know when to work with government rather than around it. The 30-year fixed-rate mortgage that has propelled more than 60% of Americans into home ownership, for example, resulted from government invention almost 100 years ago. Many of today’s most effective investors are building on similarly smart public-private structures, using federal credit programs, loan guarantees, and tax incentives to unlock private capital for challenges the market won’t solve on its own.
What strikes me most is how the people behind these examples do not fit easily into the narratives we usually tell about economic change. They are an Army veteran and an AME minister, tribal leaders and Goldman Sachs alumni, the leaders of a conservation nonprofit working with investment bankers and the CFO of a community foundation in an old timber mill town. They don’t always share political views. They share a pragmatism, a willingness to work with whoever they need to work with to solve the problem in front of them.
At a moment when Americans seem unable to agree on almost anything, these investors and entrepreneurs are demonstrating that you don’t have to agree on everything to build something together.
As an immigrant, I have always been inspired by the American idea that hard work should lead to opportunity for anyone. These people and many more are working every day to help our country live up to this founding ideal through the often-unglamorous work of structuring deals, building institutions, and finding capital for people and places that everyone else has passed over.
Investing in America need not be a spectator sport. Anyone with a savings account or $1 and an internet connection can invest in America. Switching to a community bank or credit union is a start. So is asking your financial advisor why your portfolio isn’t working harder to expand opportunity. The barrier isn’t wealth. It’s awareness.
Government can invest in America too. I am one of the few people I know who actually enjoys spending time on Capitol Hill, because the bipartisan appetite for this work is real. Elected officials and their staff from both parties are genuinely excited about ways to bring more private investment to solve the challenges their constituents face.
Historically, when private capital has failed to flow where the country needed it most, policymakers have stepped in: with creations such as the 30-year mortgage, the Farm Credit System, the Small Business Administration, and the Low-Income Housing Tax Credit. These weren’t bailouts. They were market-shaping interventions that made it rational for private investors to go where they otherwise wouldn’t.
That same toolkit — loan guarantees, tax incentives, concessional capital programs, public pension investment — is available today. Harnessing private investment to expand worker ownership, finance new energy sources, make homeownership accessible again: these are not left or right ideas. They are American ones.
The United States has built the most dynamic economy in the history of the world. We have the capital markets, the institutions, the talent, and the track record to harness finance to solve hard problems at scale. We know how to build wealth. The real question isn’t whether we have the tools to invest in America. We do.
Benjamin Franklin showed how to Invest in America 200 years ago with a modest bequest and a simple bet that a worker with a loan could build financial security for their family and economic growth for their new country.
The question now is whether enough of us as investors, voters, and citizens will demand that those tools be used at the scale this moment requires. An economy that finances opportunity too well for too few, and not well enough for the rest, is a choice. So is changing it.
ImpactAlpha contributing editor Antony Bugg-Levine is the author of Investing in America: Expanding Access to Finance to Solve Our Shared Challenges, due out in June.