The Economic Imperative for Dismantling Systemic Racial Exclusion

by | Mar 6, 2019

By Kathy Ames Carr, Crain Content Studio-Cleveland

 

As founding president and CEO of Birthing Beautiful Communities, Christin Farmer is committed to reducing the infant mortality rate among African-American babies in Cleveland, a reality she says is directly linked to systemic racial exclusion — or long-standing, institutional practices that have excluded community members based on race. In 2015, Cuyahoga County’s infant mortality rate was almost double the national rate, with African-American babies in the region dying at three times the rate of white babies. Birthing Beautiful Communities is working to eliminate this problem and build equity, primarily by supporting families and advocating for systemic change.

 

“We have mass incarcerations, an achievement gap in education, insufficient resources within African-American communities, higher rates of unemployment, housing instability and significant gaps in generational wealth building,” Farmer said.

 

This adds up. With too many fathers in despair and mothers suffering chronic stress, health outcomes suffer.

 

“These social determinants are the fault of society failing to create an equitable environment,” Farmer said.

 

Indeed, we are all woven into the fabric of a society that does not afford equal opportunity to all its residents. Across systems, including criminal justice, education and health care, outcomes for black Northeast Ohioans are significantly worse than outcomes for white Northeast Ohioans. Disparities in economic outcomes are equally stark. Black Northeast Ohioans earn $1,500 less per month, on average, than white Northeast Ohioans and are 8.2 percentage points more likely to be unemployed.

 

The challenges transcend person- and company-specific attitudes and actions; our fundamental systems are racially exclusive. Each of us has a stake in our region’s path forward, which prompts greater questions. What systems are we a part of that include or exclude our neighbors, and what greater role can each of us play in influencing equitable outcomes?

 

As part of its strategy, the Fund for Our Economic Future is calling for the region to recognize that racial inclusion has to be imprinted within all aspects of our culture and business activities, and not just some tangential ambition. “There is a strong correlation between economies that are inclusive and economies that are performing well,” said president Brad Whitehead.

 

The Fund’s systemic racial inclusion agenda specifically targets closing the disparities in economic indicators.

 

Regional stakeholders such as the Fund and others are deliberating the actions we can take as individuals, as institutions, and collectively as a region to address inequitable systems.

 

RECIPROCAL INVESTMENT

 

Khrys Shefton, director of real estate at Famicos Foundation, points to Birthing Beautiful Communities’ model as an example of the type of intentional, economically inclusive investment the region needs in health care. Famicos is seeking similar systemic change in housing.

 

While well-intentioned, certain community reinvestment projects miss the mark if they don’t directly engage and empower residents themselves, whether in the decision-making or economic prosperity, she said.

 

“Dollars are agnostic to how they are invested. What matters is their return,” she said. “How is infrastructure, education, workforce and economic development impacting the residents? What jobs are reinvestment providing to residents that pay meaningful wages?”

 

Birthing Beautiful Communities, for example, recruits and trains employees who live in areas impacted by high infant mortality, with specialist hourly wages beginning at $20 an hour.

 

Similarly, the Famicos Foundation helps neighborhoods recover from disinvestment by developing affordable housing and providing social services, primarily for Cleveland’s Glenville and Hough neighborhoods.

 

Last year, the organization received a low-income housing tax credit from the Ohio Housing Finance Agency to develop 30 single-family lease-purchase homes in Glenville’s Circle North neighborhood, which is adjacent to University Circle, a cultural epicenter and home to one of the fastest-growing job hubs in Northeast Ohio. The project aims to bring new homes to Glenville that will support residents in achieving homeownership. The project is part of Famicos Foundation’s broader goal of community engagement and residential wealth-building.

 

“Real estate development alone is not a solution to solve the problems in our communities,” Shefton said.

 

Community wealth-building and business growth is another area requiring systemic change, and Growth Opportunity Partners is among those committed to this arena. A history of exclusion from traditional bank financing has disenfranchised minority- and low-income populations from accessing capital to start a business, even when their lending profiles meet the criteria for a loan, said president and CEO Michael Jeans. Growth Opportunity Partners invests in growth-oriented businesses that have not been able to access bank loans.

 

“In lieu of being approved, we’ve often seen business owners using their credit cards, with much higher interest rates than a traditional loan, or they have to take from their retirement plans,” he said. “The difference eats away at their profits and prohibits growth.”

 

The organization only lends money to businesses that create meaningful-wage jobs. Clients must meet certain criteria, such as providing living wages, paid time off, health care coverage or company-sponsored retirement plans.

 

“Middle- to low-income earners begin to build wealth when their wages provide a path toward homeownership, and a company-sponsored retirement plan enables them to save for their future,” Jeans said.

 

He sees additional potential in financially supporting more businesses that are located in Opportunity Zones, or federally designated census tracts that are considered economically distressed.

 

But the wealth-building conversation must involve community participation. That’s part of the equation that seems to fall off in terms of reinvestment into communities, Jeans said. The disproportionate relationship between economic revitalization and community engagement reinforces exclusion and stifles shared wealth.

 

“When we talk about wealth-building in communities of color and low-income communities, we have to be very careful not to treat them with the same diagnosis and prescription,” he said.

 

DISMANTLING EXCLUSION IN THE ECONOMY

 

Addressing systemic racial exclusion must stretch beyond those delivering front-line services to those guiding the resources behind them. For instance, the Fund recently approved a $10 million strategy for 2019-2021 as a direct response to The Two Tomorrows report. It outlines key priorities over the next three years, including embedding racial inclusion within its own processes and strategies.

 

“We are proud of our work over the past 15 years and can point to many optimistic aspects of the economy. Yet at the same time, our economy is leaving people behind, and a disproportionate number of them are people of color,” Whitehead said. “This reality compelled us to put the issue squarely in front of us, instead of wrapping it inside careful language.”

 

The examination prompted recognition of internal disparities, which stymie the mission of economic competitiveness that the Fund, a collaborative of more than 40 funders, is trying to build.

 

As part of its response, the Fund is reassessing its overall governance structure, acknowledging that philanthropy as a sector has struggled with racial inclusion.

 

“We recognize the distorted power dynamic and want to make sure we have people at the table who can bring different and more robust perspectives from the communities where we are working,” Whitehead said.

 

The Fund’s most recent three-year grant agreement with The George Gund Foundation, its largest funder, explicitly spells out the imperative for a comprehensive racial inclusion agenda, said Gund Foundation executive director David Abbott.

 

“Racial inclusion is a moral issue, a social issue and an economic issue,” Abbott said. “Northeast Ohio’s economy is in competition with the rest of the world. We cannot compete economically if members of our community are sitting on the sidelines and even suffering.”

 

Efforts to eradicate racial exclusion have prompted the Fund to dig deeply into its programmatic work, which has led to challenging conversations.

 

“It caused us to reshape how we release funding,” Whitehead said. “We tie our funding to racial inclusion intentions and outcomes. Many actions are deep into implementation already, including our work with ConxusNEO and Workforce Connect on job preparation, job hubs and a significant mobility innovations challenge we’ll be launching with Greater Cleveland Partnership and others.”

 

As a Fund executive committee member, Suzanne Rivera said she appreciates the Fund’s commitment to tackling the insidious problem of systemic racial exclusion and recognizing those efforts involve a hard look in the mirror.

 

“I share the profound concerns of the Fund that there are really two Clevelands: one that enjoys the city’s many wonderful attributes and one that is excluded systematically from access to safe and affordable housing, world-class health care, neighborhood safety, excellent education and economic opportunity,” said Rivera, vice president for research and technology management and an associate professor in the bioethics department at Case Western Reserve University. “Those who are leading those efforts need to set the example,” Rivera said.

 

 

 

In partnership with Crain Content Studio-Cleveland, the Fund for Our Economic Future will illustrate through a series of custom monthly reports published between November 2018 and April 2019 the positive momentum, benchmarks and work yet to be done as it relates to The Two Tomorrows report. All of the content will be available at www.CrainsCleveland.com/TwoTomorrows.