The wealth disparity between Black and White Americans is widely documented—Black households across the country average about one tenth the median net worth of White households. In Washington, D.C., that gap is more like a chasm: White households have a net worth 81 times greater than the District’s Black households.
The reasons for the national wealth gap are many and interrelated. Black Americans are less likely to inherit wealth, and they’ve historically faced barriers and outright discrimination to accessing credit, resulting in less opportunity for home ownership, high quality education, work opportunities, and a way out of the cycle.
One way out is business ownership, says Harold Pettigrew, executive director of the Washington Area Community Investment Fund (Wacif) in the nation’s capital.
He’s backed by research from the Association for Enterprise Opportunity (AEO), which just released a report on the landscape of Black business ownership in America.
“The gap in average wealth between Black and White adults decreases from a multiplier of 13 all the way down to three when you compare the wealth of business owners by race,” says AEO President and CEO Connie Evans. And it’s not because Black business owners began with greater wealth, she says. “Business ownership is the great equalizer in American wealth disparity.”
A Community Development Financial Institution (CDFI), Wacif has been lending to community organizations and underserved entrepreneurs since 1987. It has provided a vital lifeline of capital to businesses including Nspiregreen, pictured above, and Po Boy Jim, a New Orleans-themed restaurant.
This April, they’re launching Ascend Capital Accelerator, a hands-on development and technical assistance program that will equip 25 local entrepreneurs at a time with the skills they need to maximize their ability to get and use capital.
Accelerators are best known in the tech sector, where venture capital is expected to create fast and exponential returns on innovation, products, and ideas. With Ascend, Harold says, “our focus is to invest in people, so they can build assets and create wealth.” These are entrepreneurs running yoga studios and restaurants—businesses that will build modest wealth for the owner but that also have ripple effects in their communities through local hiring, local purchasing, and more.
By focusing on technical assistance and tailoring support to a cohort of moderately-established entrepreneurs (they must have been in business for at least one year and have revenue of at least $25,000) Ascend will set these businesses up for success, equipping them with knowledge and skills from price-setting to marketing, management to business model optimization. Then they’ll meet local business investors and lenders. They’ll also be part of a cohort of peers—which will eventually grow into a community of alumni—that can provide ongoing support and opportunity for each other.
“We’re not just giving capital to entrepreneurs and believing that’s all they need,” says Harold. “If we make investments in their social and knowledge capital, then financial capital will be far more catalytic.”
Ascend Capital Accelerator’s first cohort will launch in late April with funding support from the District of Columbia Department of Housing and Community Development (DHCD) and Capital One. The accelerator is accepting applications through March 31, 2017. The program prioritizes underserved entrepreneurs including women and people of color.
The AEO report estimates that if Black-owned businesses were able to boost employment to levels equivalent to the broader base of privately held U.S. firms, nearly 600,000 new jobs would be created and $55 billion would be added to the economy. The benefits would also be felt in local communities—and could help to chip away at that wealth gap.
Sarah Trent is an Oakland-based writer who tells the stories of social innovation, leadership, and community-based entrepreneurship.