Markets evolve. Innovations that initially seem like rocket science become replicable templates. For those repairing local economies, making them fair places where people in every neighborhood can thrive, such templates can speed progress and unlock capital.
For a decade, we at Neighborhood Economics have been gathering the practitioners creating the financial innovations that bring economic power to neighborhoods where people have traditionally been dealt the short straw of the economic development game. In Chicago later this month, we are once again gathering to share these replicable models.
When our team started Neighborhood Economics, more than a decade after launching SOCAP, the field of local investing for transformation was characterized by uncoordinated innovation, partial solutions and isolated islands of impact. Community development financial institutions, designed to reach marginalized communities, had loan funds that were often out of reach for people in the communities without assets.
This year, a phase change has occured. There is now a workbook on how to buy back the block, created by entrepreneur and scholar Lyneir Richardson and The Brookings Institute, to keep commercial real estate in low asset neighborhoods from being displaced by predatory hedge funds. The model is being implemented in half a dozen cities around the country, from Chicago to Baltimore, St. Louis and more.
At ImpactAlpha, contributing editor Napoleon Wallace and founder David Bank are cataloging a collection of economic justice-focused financial innovations: a “Playbook for shared prosperity” (add your strategy to the playbook with this form).
Along with Wilson Lester and Talib Graves-Manns, Wallace also is a co-founder of Partners in Equity, which provides financing to enable under-represented business owners to buy the building that their business operates in, allowing entrepreneurs to run a thriving business while owning an appreciating real estate asset.
And this year we are excited to announce the launch of the Community Finance Academy, a new initiative aimed at spreading innovative and locally tailored financial solutions to economically disadvantaged communities.
Neighborhood scale
Replication, usually at neighborhood scale, is how community wealth and community health is created.
In the broader impact investing world, the focus is on scale: What solutions can grow big at a low cost to investors. While the world of venture-backed and tech-enabled impact can produce market-rate returns that have a positive impact, we can’t overcome systemic injustice at market rate. There is a cost for real and deep change that requires catalytic capital that is patient, flexible, and willing to take on risk.
When we led SOCAP, we looked for startups that could promise double-digit returns, often from venture capital trying to invest in making a better world, solving a social or environmental problem.
At Neighborhood Economics, we’ve discovered that deeper change is local, and involves the whole local ecosystem, including catalytic philanthropic investing, from foundations, donor advised funds and crowdfunding, as well as sweat equity from local community members and faith communities, alongside grants and public sector funding once the model is proven.
Neighborhood Economics has long looked to elevate locally-attuned and community-connected solutions. This year with the workbook for buying back the block, ImpactAlpha’s Playbook for Shared Prosperity and the Community Finance Academy, we turn to the broader work of replicating economic justice solutions across the country.
Kevin Jones is a co-founder of Neighborhood Economics. ImpactAlpha is a media partner for the conference; use the code IA495 for $200 off, expires Sept. 22.
