Wealth inequality, and in particular, the racial wealth gap grows with staggering numbers. A report released by Founders of Color (FOC) says that it will take a Black family 228 years to equal the wealth of whites. For Latinos, it is 211 years.
Earning potential has not solved the issue, as Blacks, especially men, tend to die earlier at almost double the rate of the population, along with their disproportionate incarceration numbers.
Even, educational attainment does not fix it says William R. Emmons and Lowell R. Ricketts in a study showing that education fails to address racial or ethnic wealth gaps. As well, their research pointed out that “meaningful or lasting results for wealth outcomes within a single generation, let alone across generations,” is unproven.
FOC, a member-based organization of 3,700 heads of start ups, says that inheritance and entrepreneurship will create multi-generational wealth to close the disparities. Their focus is business.
According to their research, studies show that if minority businesses were given the support to thrive and “were to grow and hire at the rate of white firms, it would add 9 million more jobs to the economy and boost the national income by $3 billion.”
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“We see the potential of minority entrepreneurship every single day,” says Kelly Burton, founder of FOC who expressed excitement on a Linkedin post about the increasing reception of the FOC report titled, “Disrupt This.”
Burton continues. “We see the opportunity, but what we understand is that if we do not create the ecosystems that they need to survive and grow, it’s not going to happen. It’s just not . . . the current ecosystem is underperforming.”
From their report, the entrepreneurial ecosystem is much like the environment—it is dying off. The report cited major issues such as major corporations, really investing in diversifying their vendor pools. While less than 10 percent have five or more on their staff to ensure a regular flow and relationship with a diverse supplier pool, only 32 percent of companies say they have a successful model that brokers business relationships with minority suppliers. At the same time, 54 percent are severe under-resourced with only one or fewer full-time staff
Another key issue FOC cite for minority entrepreneurs are the lack of bank and family investments, as compared to whites. In 2017, a Venture Capital poll showed that all-women teams received just $1.9 billion of the $85 billion total, and Black women acquired about 0.005 percent of that money.
While whites are overwhelmingly more than likely to get a loan, when they cannot, they often lean on family members and inheritances—something that is unlikely or slim for Black and Latino entrepreneurs. Like the college experience, Black entrepreneurs are first generation or generations removed from running a business. In turn, resources and knowledge to navigate the waters of commerce are scarce.
In theory, local chambers of commerce catering to racial and ethnic groups are designed to support; however, the 300 or so that exist are often self-sustaining units without an infrastructure or model that can provide collaborative works and efforts that effectively help its members. As a result, they operate in silos and are anemic at best.
“There are things that we can do to fix it pretty rapidly,” exclaims Burton. “There’s a lot of low hanging fruit and we go over much of it in the report.”
FOC lists several key steps to address immediate needs:
- Update and disseminate widely, an ecosystem map designed by FOH that identifies actors operating at the intersection of entrepreneurship and diversity and inclusion
- Asses and provide how minority entrepreneurs fair in the marketplace and what distinguishes those who are successful from those who struggle
- Give comprehensive data on how the plethora of programs for minority entrepreneurs can access and understand program availability, as well as know its quality.
- Create a space for service providers to come together, share best practices, identify synergies in their work, co-strategize, and plan, we’ll be able to extend our reach and achieve true collective impact.
- Advance the conversation on minority entrepreneurship in ways that go beyond the surface to explore and unpack the dynamic and multifaceted nature of an issue that will continue to surge in relevance as the nation becomes increasingly diverse.
Admittedly, Burton says, “We don’t have all of the answers, but we are willing to hold the space to have them conversation.”
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