July 16, 2020 | By Saumya Shruti and Shaily Acharya

Small businesses are critical to the U.S. economy: Pre-COVID, they represented 99% of all U.S. firms, generated over 40% of our economic output, and accounted for some of the highest rates of job creation. However, small businesses are facing two critical challenges: recovering from our current, global pandemic, and tackling the longstanding barriers of access to capital related to systemic discrimination that works against entrepreneurs and businesses from historically overlooked and undeserved communities. 

Arguing that “now is the time to re-imagine how we invest into small businesses” and drawing from their previous work together catalyzing investments for underserved communities outside of the U.S., Agnes Dasewicz and Dale Mathias launched a call for creating a new government-funded institution (a U.S. Development Corporation) that would focus on strengthening local economies and small businesses critical to our recovery. 

The Beeck Center kicked-off our new Ideas that Transform series by hosting Agnes and Dale to explore this idea further along with Melissa Bradley, an expert in small and medium business growth, particularly for ‘new majority’ entrepreneurs.

How Would the U.S. Development Corporation Work?     

Tackling the challenges of the current disparate ecosystem, a U.S. Development Corporation (USDC) would drive more private capital to the small businesses and communities here at home that need it the most, focusing on three critical pipelines: 

  1. Community Development Financial Institutions (CDFIs): The CDFI network plays a critical role directing capital to local communities; they need funds to strengthen their systems and operations, and create additional capacity for lending and investments.
  2. Local investment funds (like Bradley’s 1863 Fund): these funds support businesses and entrepreneurs but are often only known in smaller, local circles; the USDC would look to scale these practices to better provide capital to the domestic entrepreneurial ecosystem.
  3. Financial technology (FinTech) firms: known for delivering capital more quickly and using data and AI tools to improve credit risk assessments, the USDC would explore ways to partner with these types of companies to scale up rapid and equitable access to capital while enforcing the necessary guardrails to ensure that the financing is offered on an equitable basis to all communities.

As Dale noted, the current ecosystem of U.S. government programs supporting small businesses is highly fragmented and uncoordinated, like “having a lot of ornaments, but no Christmas tree.” The USDC would connect larger investors to CDFIs, local funds, small businesses, and entrepreneurs, playing a unique role in driving more investment capital to and through trusted intermediaries, creating a more supportive small business ecosystem.

Tackling Systemic Barriers

The recent, high profile financial commitments to support entrepreneurs and small businesses led by Black and Brown leaders,  such as Netflix’s recent $100 million pledge to Black-owned banks, are encouraging, but as Melissa Bradley noted, “you cannot erase 401 years of systemic barriers with the writing of a single check.” To truly remove these barriers, there must be a commitment to difficult conversations between all types of actors in the financial field. 

Even with these barriers, new majority entrepreneurs have been the most dynamic and efficient job creators in the U.S. Minority entrepreneurs created 4.7 million jobs in the last decade. Almost 2,000 women-owned businesses were launched every day in 2018 and women of color founded 64% of all new businesses. In light of the loss of jobs and economic growth caused by the COVID-19 crisis, the recovery of these businesses is critical to the revival of our economy.

The USDC can play an important role as an investor, catalyst and connector directly supporting, and providing incentives for private investors to support “new majority” businesses and those who invest in them.  With a priority focus on developing and supporting ecosystems that focus on underserved entrepreneurs, USDC can drive towards systemic change in racial and gender equity in the financial space. A USDC acknowledges that local communities do have the knowledge and ability to create their own solutions that take into account their unique contexts and economic activity. Thus the USDC will work within local contexts and networks rather than advocating one-size-fits-all solutions, which has been a philosophical barrier in the past.  

A Call to Action

As the ideas for a USDC continue to develop, our panelists expressed their commitment to “continue the drumbeat” on the importance of small businesses to our communities and our country, and encouraged each of us to get involved in a number of ways:

  • Contact your congressional representative and senator to emphasize the importance of investing in small businesses, especially those led by women and people of color, and communicate the urgent need for systemic solutions for small business support – and not just relief packages – to help revive our economy. 
  • Reach out to Agnes to share any people or organizations interested in or doing similar work on small businesses with whom they might collaborate; Agnes and Dale are both committed to expanding their outreach and pushing this idea forward.
  • Collect + share data on businesses led by women and people of color, and the value of their businesses to the U.S. economy (Melissa Bradley is committed to doing this work). Data needs to drive decisions and the research on these businesses is scarce yet necessary.
  • Change the narrative about the potential of businesses led by women and people of color. These firms are creating millions of jobs and are critical to the health of our country and rebuilding our economy. Publishing and speaking about the importance of these entrepreneurs is key to changing the narrative (and continue to support your local businesses as consumers and investors).

This is just the beginning of the conversation and there are many more great ideas out there. Join us August 18 at noon ET, for our next Ideas That Transform event where we’ll discuss Shifting Power From Investors To Communities. And be sure to check #BeeckIdeas on Twitter every Tuesday at noon where we’ll share a thought prompt to foster conversation.

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November 18, 2019 | By Jen Collins

Undaunted. Optimistic. Courage. Excitement.

When we asked the members of the Beeck Center Opportunity Zones Investor Council to share the first words that came to mind when talking about the OZ landscape, their responses were illuminating on both the promise and challenges OZs face. An influential group of first-mover fund managers, investors and developers who have moved over $200 billion in capital during their careers, the Council met in late October at the Williamsburg Hotel in Brooklyn, NY to discuss their impactful work, share ideas, and catalyze more action towards delivering positive social outcomes for communities and investors in Opportunity Zones.

Most of the public narrative around OZs has focused on the tax benefits for investors, but the diverse Council (which includes 14 people of color and 7 women) is looking at the much bigger picture and taking into account the 35 million people living in the 8,766 designated zones. According to the Economic Innovation Group, for the majority of OZs, the economic picture is tragic:

Opportunity Zones have an average poverty rate of nearly 30 percent, and an average median family income that is 37% lower than the American average. Black Americans are significantly over-represented in zones, representing twice as large of the zone population as they do the national population.

Source: Economic Innovation Group

The work of the Beeck Center is to support the original intention of the legislation, to drive positive social outcomes in these neighborhoods, improving the lives of the people who live and work in those communities today. By bringing together a diverse group of stakeholders, we create a grasstops approach between fast-moving grassroots ideas and slower-changing institutions, increasing the probability of generating impact at scale.

graphic of Beeck Center grasstops approach

Unlocking the Promise and Potential in OZs

Beeck Center Investor Council members David Gross and former NFL player Derrick Morgan kicked off the Council meeting by sharing how they are driving impact in communities. Both influencers are deepening their efforts in impact investing through OZs. Both have powerful, personal motivation to make a real difference in underserved neighborhoods. 

Three people in chairs on a panel discussion
David Gross (L) and Derrick Morgan (R) speak with the Beeck Center’s Jen Collins about their work investing in Opportunity Zones during the OZ Investor Council meeting. Photo: Ori Hoffer

The meeting was grounded in three pillars: inspiration, impact, and influence. The Beeck Center acts as a field builder in driving impact across the country and invited organizations that are developing impact tools to connect projects to investors across the nation. The Center is also informing the creation of a process tool to help operationalize the OZ Impact Reporting Framework. Given the national narrative and flurry of legislative activity, these points stood out among the many topics of discussion:

1. Some OZs are problematic and need tweaks.

The Opportunity Zone designation process was a quick, unfunded mandate to the state governors – many who have changed over since zone designation. The Beeck Center was so concerned about the zone designation process, Fair Finance Lead Lisa Hall actually penned guiding principles to aid the governors in thinking through their zone designation strategy. 

The Council recognizes that there are outliers and will be supportive of a thoughtful, forward-looking process to sunset high-income OZs. The national narrative is loud about the existence of wrongfully-designated zones, but we should not let that taint the reality that when OZ legislation is operationalized thoughtfully and with impact intentionality, it can lead us towards a more equitable society. This is the work OZIC members do every day, unlocking the promise and potential that lives in these neighborhoods. 

2. This is not a gentrification program.

Recent news and local narratives – especially on the coasts – suggest that investment in OZs accelerates gentrification. When people use the word gentrification, they most often mean forced migration and/or displacement. The research shows that less than 4% of OZs are at risk of gentrification. Regardless of the data, Council members believe that any behavior that causes displacement is bad and should be avoided at all costs.

OZ legislation is a capital gains tax incentive. Currently there are no impact, data or transparency requirements. This reality has made the work of the Beeck Center in driving positive impact important. It’s why we co-authored the OZ Impact Reporting Framework with the U.S. Impact Investing Alliance and the Federal Reserve Bank of New York earlier this year. The Impact Framework calls for five guiding principles: community engagement, transparency, equity, outcomes and measurement.

3. Impact is happening. Patience is needed.

Opportunity Zone legislation was designed to spur capital investment and economic development in underinvested neighborhoods. To that end, the legislation requires “substantial improvement” in order to qualify for the tax benefit. This requirement means that the investor needs to double its basis in the Opportunity Zone, a provision that made real estate development first movers in the market. At this time, we know of more than 400 initiatives committed to the OZ Impact Reporting Framework, and Council members have over 30 OZ projects underway nationwide.

The thing is, development takes time – and a lot of it, especially in certain locations. David Bramble, Managing Partner of MCB Real Estate and Beeck Center Investor Council member, said it’s taken over four years just to get permits for some of his projects. The Washington State Department of Commerce Opportunity Zones Working Group recently observed, “Success will require attention, patience, resources and public/private partnerships to support local efforts,” sentiments the Council agrees with wholeheartedly.

Nearly two years have passed since the OZ legislation was enacted and the regulations are still not finished. The regulatory clarity needed for real OZ business investment was set only a few months ago. We are seeing inspiring activity in these neighborhoods, but we need time to see new capital flow in meaningful ways.

Renewed Commitment to Action

people sit at a long conference table
Council members engage in robust discussion during their meeting in Brooklyn, NY. Photo: Ori Hoffer

With new reporting and self-assessment tools in the works, and a host of new ideas in their pockets, the Council wrapped up two days of conversations with a renewed commitment to action.

“There is a lot of work going on in the area. The work should have been happening anyway, but OZ legislation was the catalyst toward this.”

“We will take a more intentional role in gathering the cultural influence, adding the cultural component to the grasstops model.”

“We are learning how to do deals that bring in as many stakeholders as possible, and collaborative behavior is really important.”

The Opportunity Zones legislation is a new tool for investors to spark development and growth in communities across the country. While OZs are new, people have been working and investing in these types of communities for decades. What’s different now is how the discussion of OZs has sparked interest from new players in the space. This group represents institutional powerhouses (Goldman Sachs), non-profits (LISC), established developers (MCB Real Estate), and non-traditional investors like Derrick Morgan, bringing added energy and asking new questions to deliver results. 

To the Beeck Center, one of the most valuable things about OZ legislation is the conversation swell around it. It is bringing many new players to the world of impact. The Beeck Center sets tables so that those with deep impact knowledge can teach and collaborate with new players. OZ legislation is not the answer to every problem that exists within community development, but it provides space for smart people to converse who wouldn’t interact otherwise. Innovation comes from conversations like these, and the economic reality in OZs is illustrative of a need for major change. It’s going to require collaborative behavior. And time.

Read Part 1: The Problem We’re Trying to Solve

Our Approach to Solving the Problem

The Beeck Center creates space and opportunity for uncomfortable conversations, while seeking and creating bold solutions. The Fair Finance Initiative is an ambitious program that aims to right the rules, both written and unwritten, currently in place for investment of capital in low-income, disenfranchised, and underserved communities. 

Over the next two to three years, the Fair Finance Initiative is focusing on the following programs:  

Reimagining Community Investing for the 21st Century

We are focused on a future for community and sustainable investing that is rooted in the lessons of the past, but which results in systems change driven by policies that do not simply tinker around the edges. The Beeck Center is soliciting, examining and designing policy solutions on a federal and local level to deliver positive social outcomes in communities that have been historically overlooked and underestimated by traditional investors. Potential policy recommendations include the creation and capitalization of a new form of tax-exempt community institutions, deconstruction of the U.S. Department of Housing and Urban Development, and the consolidation of programs focused on community development under a new agency. The initial stages of this work are being generously supported by Incite whose mission is to build movements by transforming big ideas into big deals.

Project Lead: Lisa Hall Funding Partner: Incite

To uncover bold new ideas we must first understand the past. This timeline, created by the Beeck Center, charts key programs and significant developments in “A History of Community Investing in the United States.” Created by Student Analyst Kriti Sapra through the Knight Lab. 

Driving Impact in Opportunity Zones

The bipartisan passage of Opportunity Zones legislation has led to multi-stakeholder conversations around community investing. The Beeck Center is supporting the original intent of the legislation by driving positive social outcomes in Opportunity Zones. Since February 2018, the Beeck Center has led national efforts to incorporate impact objectives into investment strategies for Opportunity Funds. We are using the conversation swell around OZs to collaborate with investors and test new models of community investment. 

Opportunity Zones are an ideal conduit for exploration of creative ideas for location-based community investing in the United States. Earlier this year, In partnership with U.S. Impact Investing Alliance, we produced the Guiding Principles and Impact Reporting Framework for Opportunity Zones in addition to creating an Opportunity Zone Investor Council. We are grateful for the generous support of the 15 Council Members, a powerful group of investors, developers and fund managers that are setting a new standard for impact. 

Project Lead: Jen Collins

Colorful grafitti saying "Real equality isn't possible if we don't celebrate our differences
Photo by Matteo Paganelli on Unsplash

Financing Immigrant and Refugee Integration

The U.S. population is rapidly diversifying. As has been the case since the founding of the country, much of this diversity comes from immigrants and refugees—currently over 44 million people, nearly half of whom are of working age. It benefits everyone to integrate these new arrivals into society and tap their expertise, energy and earning potential.

Yet, we currently have a systemic problem. Many individuals are unemployed or under-employed, At the same time, the U.S. anticipates a shortfall of 1.9 million workers by 2024 (Bureau of Labor Statistics). Bringing immigrants and refugees into the workforce will enable them to use their skills, support their families, and contribute to the U.S. economy. This integration would represent significant impact at scale.

The Mariam Assefa Fund, a new initiative of World Education Services (WES), seeks to reduce the barriers that prevent immigrants and refugees from finding meaningful employment in the U.S. Thanks to a generous grant from WES, the Beeck Center is exploring ways to finance training and workforce development for these workers. We are reviewing the current landscape of workforce development financing, and will consider the history and applicability of other innovative financing programs that target outcomes with a social element (e.g., Pay for Performance contracting, or Loan Guarantees). We’ll engage a diverse group of stakeholders and experts including investors (both traditional and impact), policymakers, corporations, community leaders, academics (from both national universities and community colleges), and representatives from the immigrant and refugee communities, to identify the most promising (and most scalable) approaches to financing economic integration. Throughout, we will involve our students and seek collaboration with other centers and individuals at Georgetown.

Project Lead: Betsy Zeidman Funding Partner: WES – World Education Services

Promoting Inclusive Entrepreneurship

Creating prosperity for all, means including all communities in the nation’s economic growth. With the vast majority of net new jobs coming from new business startups, the people, policies and finance governing the field of entrepreneurship matters. Today, 92% of the decision makers behind the venture capital that drives most high-growth startups are men and less than 3% are investors of color. These investors provide 2.2% of that capital to female founders and only 1% to entrepreneurs of color. How we tell these stories is as important as the numbers themselves.

The world’s business news media was created more than 150 years ago. Today, even leading publications still view the world through this mindset, focusing on institutions, hierarchies and narrow, extractive views of what’s valuable. Many stories and important trends are left out when this world view is applied to journalism.

Times of Entrepreneurship is a new business publication that upends the old model. Times of Entrepreneurship highlights communities and individuals, regardless of race, place, class and gender. Its innovative reporting structure puts journalists in secondary U.S. markets, but gives them global beats in Money, Food, Climate, Security and Health, with two-cross-cutting channels, Women-Owned and Migrant-Owned Businesses. It covers innovation and trends in entrepreneurship and among leading investors. Our journalistic lens seeks different and new ways to measure value and to document the dynamic, entrepreneurial systems that shape institutions as they evolve — hopefully toward a more equitable and sustainable future.

Project Lead: Elizabeth MacBride Funding Partner: The Ewing Marion Kauffman Foundation

man reading business newspaper

Photo by Adeolu Eletu on Unsplash

Creating Equitable Capital Markets

The concept of capitalism presumes perfect information and equal opportunity. The reality of capital markets is that information and opportunities are distributed unevenly. ”Free market” absolutism has left behind millions of Americans over the past 10 years and created prosperity for a small number of Americans. At the Beeck Center we create opportunities that help shrink the racial and gender wealth gaps.

Initiatives like the Racial Equity Assets Lab (REAL), and the recent study sponsored by Knight Foundation are sparking discussions around the disparity in capital allocation to fund managers of color and women-led fund managers in spite of financial performance that matches the performance of white men. We collaborate with others to identify practical solutions to addressing barriers for these fund managers, through further research in conjunction with existing ecosystem players. Potential program activities include the creation and dissemination of video content to highlight market inequities and promote solutions, like the global directory of women in venture capital. We are also conducting a landscape survey of initiatives underway to bolster the ecosystem for fund managers of color and women-led fund managers. We are grateful for the generous support of Surdna Foundation, the seed funder of this work. 

Project Lead: Lisa Hall Funding Partner: Surdna Foundation

Through these projects, the Beeck Center contributes to the momentum of an existing flywheel for change in capital markets. We are connecting the dots between many disparate efforts around finance as a tool for prosperity including impact investing, community development finance, corporate social responsibility, and conscious capitalism. In our vision, prosperity is shared among many rather than hoarded by a few. Please join us in pushing the wealthiest nation in the world to provide equal access and a fair shot at sound economic and financial opportunity for all. 


Finance is a dominant driver of innovation and economic growth in the United States and abroad. However, debate remains whether finance and capitalism can be a force for good. Recent news around Opportunity Zones highlights the skepticism which insists that financial investment in marginalized communities cannot achieve positive results for both investors and the community.

At the Beeck Center, we believe that finance can deliver social and environmental outcomes in service to the common good, that it is a fundamental tool for solving intractable social problems like poverty and wealth inequality, and we are committed to using financial tools to create impact at scale.

Impact at scale means redesigning current systems, and the courage to think, behave and collaborate differently. Investing for outcomes also means shifting incentives and addressing systemic inequities to achieve lasting change. As we seek to shift systems so that they work for all stakeholders, we are embarking upon a new initiative known as Fair Finance, which aims to right the rules of the game for shared prosperity. For us, attacking these systems isn’t just a job, it’s a personal commitment driven by our life experiences.

How We Got Here

The Problem We’re Trying to Solve

All too often the policies that shape the flow of capital enable an elite group of those who are already extremely comfortable to be more comfortable. This new Beeck Center initiative envisions a world where the tools of finance are intentionally directed towards improving all of society and equalizing access to opportunity. We’ll examine and deconstruct the financial systems that perpetuate inequity and a profit-only mindset, while promoting programs and tools that harness the power of capitalism to create positive social impact. 

At the Beeck Center we confront the powerful constituencies that promote and preserve the myth of opportunity or the “American Dream,” which ignores systemic and persistent barriers to financial and economic success like racism and sexism. We draw upon global examples to identify scalable solutions for the United States that address these challenges. We’ll also directly address obstacles to opportunity and market access that hinder economic growth in many U.S. communities. Over the past 35 years, prosperity has been limited to a small percentage of the U.S. population. Access and opportunity have not been evenly distributed, despite rational thinking that talent and potential are evenly distributed in rural and urban areas; among whites, African-American, Latinx, and Asian communities; between tribal lands; and across religious groups and ethnicities. 

One example of growing inequity is the dramatic change in CEO compensation as compared to other employees throughout recent decades as illustrated by the above chart produced by Economic Policy Institute.

The Opportunity at Hand

Technology, social innovation, and impact investing are driving exponential change around the world, and increasingly business leaders are recognizing that long term financial sustainability is inextricably linked to social and environmental sustainability. Ideas that once seemed impossible are now within reach, enabled by the digital age and the ability to communicate and transact rapidly. Dynamic leaders like Rodney Foxworth of BALLE (Business Alliance for Local Living Economies, Stacy Abrams and others from across the private, public and non-profit sectors are making bold, audacious recommendations for change while tackling challenging economic, political and environmental realities. Increasingly, individuals are examining their lifestyles and demanding social impact in every area of their lives, including purchases, investments, and other choices.

The failure of investors to tap the capacity of communities of color prevents the country from maximizing its full potential. A recent study by the National Community Reinvestment Coalition shows the barricades that minority entrepreneurs face when looking to expand their business. As reported by the Washington Post,

“The organization sent teams of white, black and Hispanic “mystery shoppers” who acted as prospective borrowers to evaluate customer service interactions with the banks’ small business lending representative at 60 Los Angeles area banks. The testers had nearly identical business profiles and strong credit histories, with black and Hispanic testers possessing slightly better incomes, assets and credit scores than their white counterparts.

In almost every measure, white testers received superior customer service, the study found. Bank representatives asked white prospective borrowers fewer questions about eligibility and provided them more information about loan products.”

Bar graph showing information provided to loan applicants

When minorities talk to loan officers, they don’t always get the full picture of what’s involved, which can discourage their application. Credit NCRC

These experiences highlight the need for more capital in communities that are often underestimated and overlooked but are critical to the future economic growth of the United States.

Part 2: Our Approach to Solving the Problem