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Changing Capital: Building Interconnection and Assets in the Black Belt

By Sarah Trent

This is the first in a three-part series featuring Local Economy Fellow Jessica Norwood. Below, read about Jessica’s journey to Localism and her passion for changing how capital works to support communities. The second installment features a mini case study of her Emerging Changemakers Network, the leadership, capital, and policy organization she founded after Hurricane Katrina. The third looks at four strategies ECN is implementing to change how capital works for under resourced communities in the Black Belt, along with examples of how their work is influencing food financing in that region. April 16 at noon (PT), meet Jessica along with Senior Fellow Angie Hawk Maiden and BALLE Board Chair Sandy Wiggins in our webinar, Building an Ecosystem for Place-Based Investing.

Taking a brief glance at the current work of the organization she founded nine years ago, you might assume Jessica Norwood is especially passionate about supporting farmers and food systems. After all, Emerging ChangeMakers Network runs an accelerator for community- and socially minded farmers and food businesses and is doing research and policy work to bring healthy and affordable food options to Alabama food deserts.

Or you might assume that, in line with many of her peers in the BALLE Fellowship, she’s primarily driven to support social enterprises and entrepreneurs in the Black Belt who are creating impact, building more sustainable communities, and bringing prosperity to more people.

Both of these groups are important to her. And her organization is doing all of that work. But these are just happy byproducts: “I’m mostly interested in how the money behaves,” she says: learning what kinds of tools and infrastructure make investment possible, understanding the processes, mechanisms, and legalities related to how you can move money, and figuring out how her organization and others can take a whole community, aggregate their dollars, and push them out into enterprises that will make a return for both investors and their businesses and through all that improve their community.

“So entrepreneurs for us aren’t really our bread and butter,” she says. “Our bread and butter is creating infrastructure that will allow for community capital to happen, including putting partners in place, testing ideas, and building more systems.”

From Burnout to Purpose

Jessica’s journey into Localism and community capital did not start in finance. The “family business” was politics: among other family politicians, her father was the mayor of her hometown, and she kept up that tradition working on elections and campaigns before moving into low-dollar development work, aggregating small donations to support new and emerging candidates for election. Burnt out on the campaign side of politics, she transitioned into voter education, working to get young people engaged in the electoral process. But that caught up with her too. “Anybody who works on campaigns and elections knows that it has got to be one of the most grueling kinds of work,” she says. “I got a little tired and quite honestly a little jaded with campaigns, elections, politicians, politics, and didn’t know if that was the way I wanted to pursue making change in communities.”

After years in New York, Chicago, and Washington, D.C., she packed up and headed home to Mobile, Alabama, to focus on starting a bottled water company and figure out what was next for her.

Two weeks after the move, the “what’s next” hit hard: Hurricane Katrina decimated the Gulf Coast.

“I thought I was leaving behind all of those connections and relationships but somehow all those things became really germane in my little Gulf Coast town. I had organizations, colleagues, and friends who wanted to help rebuild the Gulf and were looking for people on the ground who could help them understand the lay of the land and be culturally sensitive and thoughtful with what they were putting on the ground.”

Through this work, she found her purpose:

“I had known there was a connection between systems and institutions that kept people from really progressing, so theoretically I understood why housing mattered to transportation and why transportation mattered to workforce development and why jobs mattered to early childhood care. But it wasn’t until those systems were completely washed away by the storm that I really understood the intersection of those things and how if one institution wasn’t working as well as the others, how it could systematically leave behind whole populations of people.”

Approaching the problem as a handful of separate issues, addressing each independently, she says, “was never going to get to the real solutions. “It wasn’t a holistic enough approach or understanding about how economies really work.”

“Economies are really about how you take care of homes, how you address the household, and what you really need to live,” she says. “I needed to drop that framework of economies into something that mattered to everyday, mainstream people. Building local economies and creating wealth that stays in the community – in people’s hands – became something that I felt very strongly about. And I understood that money was the mechanism or glue that permeated every particular instruction I was talking about. So if I could use that framework and start talking more about organizing capital and how that resource was either helping or harming – and whether money could behave differently – then what could be possible for those communities?”

The Value of Assets

The way money behaves now for African Americans is deeply troubling to Jessica – it demonstrates to her how far we have not come in the 50 years since the Civil Rights Movement, and how not inclusive America continues to be.

“The Pew Research numbers show that it’s not inclusive: the data is there,” she says.

The average assets of an African American, she explains, are around $13,000. That includes home equity, investments, and savings a person could pull from at any given time. The average assets of a white American are $140,000. So when two business owners, one black and one white, go to start an identical business with identical customers, markets, and products, the white business owner with more assets looks better for a loan. And even if neither can get a loan, the bootstrapping white business owner can pull more capital from his or her most likely white friends and family (remember: $140k in assets each) than the bootstrapping black business owner can from his or her most likely black friends and family with their $13k each. The difference between what each of these nearly identical businesses can raise in capital is an order of magnitude – $10,000 vs $100,000.

Jessica has her own story of being denied a business loan for lack of collateral, despite having large contracts she thought should compensate – and not being able to borrow money from her parents, with their two mortgages from paying for home repairs and college. “And we were like everybody,” she said.

“There are hundreds of folks I could point to and say ‘this is what modern day challenges around the lack of access to capital really mean when you don’t have these assets,’ and it’s not because folks aren’t getting up and going to work, that’s not our problem. It’s not because people are poor planners. It’s the fact that your work and your labor alone isn’t going to get you there.” Assets matter – ownership matters, she says. And with only 50 years – not even one generation – of limited access to capital, black businesses simply don’t start at the same place as their white peers.

What’s more: despite the system working against them in so many ways, African Americans are still more likely than their white counterparts to try to start a business: they’re trying to close the gap between the $13k they have and the assets they need to feel successful, Jessica says. “Why do they think that a business is the way to do that? Because that’s the American dream: go out there, become an entrepreneur, and you’ll be able to close that gap. They don’t know that that’s a little bit rigged and set up against them.”

SOUL’utions

So Jessica has a solution. Or rather, SOUL’utions – the name of the local investment club she created five years ago at Emerging ChangeMakers Network.

“I want to give African American business owners the opportunity to get more friends and more family,” she said. “Because we’re not necessarily going to change the fact that you have $13,000 right now. So I need to give you a couple of things that may help you out: first, your network of friends and family has to be bigger.”

The Emerging ChangeMakers Network members she had worked with in the early days of her organization – it was initially created in 2006 as a leadership development organization “scouting” leaders before they became mayors, firm partners, and CEOs and developing their social justice lens and understanding of structural inequity – were now older, shorter on time to volunteer, but had more disposable income. Income that Jessica knew could make a real difference in their communities.

Secondly, Jessica says. “I have to then make sure that that entrepreneur has really great credit” and is in the best possible position to receive a loan from her network and make the best of it. So she started an accelerator program to work with these business owners.

“And then we take it another step further: all those people who put in their $1,000 or $500 who don’t know this business owner from anybody else but they like the idea and they trust us as an intermediary – we have to make sure that their money is safe and that they get a return. I need to grow those people who have $13,000 and move them up the ladder to where they’re at $15,000 in assets. Or $20,000. I need to increase their assets, so we don’t keep having this as an issue. That’s the path of community capital that I’m interested in.”

Because what’s made possible when that path is taken is tremendous:

“We’ll shift the culture from just consumption to production and have people who see one another as connected to them, that their fate rises with them and their civic participation rises because of it. People will see the power of small amounts of money moving in concert with one another to make big ripples in the world, and leverage big institutions to change their ways, too. Just like policy can do it, people moving their money can do it. People will get a sense that they’re not just going to work every day to make a check – that that’s not the only way money is going to come into their household, because they have money working in their own neighborhoods and they can actually see the benefit of what it is they go to work for now. That would be progress.”

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