36,000 Funds or Bust! 💥
V.2, N.39
The United States has about 36,000 cities, towns, and villages, each with a budget to administer basic services. Any level-headed local policymaker trying to deliver these services would agree that the community could do more if it had more money. The immediate instinct is to turn to taxes. But most municipalities have very limited taxing powers (which usually must be authorized by the State legislature), most residents feel overtaxed already, and most local elected officials loathe raising taxes. Another option is charity. U.S. giving from all sources is about half a trillion dollars annually. That sounds like a lot of money, but it represents less than one-third of one percent of the financial assets of U.S. households and nonprofits combined (which totaled $108 trillion as of the end of 2022).
So, where else can communities turn? The mother load of funds for fixing communities, from small towns to big cities, is private investment. Only by steering more of that money away from Wall Street and into our communities can we solve fundamental problems. One way to facilitate local investment is to create at least one investment fund in every community—one entity designed and built to invest in critical local priorities. We’re far from this dream, but innovations are happening everywhere.
Our lead story in this issue highlights a Racial Justice Fund in Richmond, Virginia. It is not really a fund—yet—but a small pool of capital established by a foundation to help first-time homeowners of color muster the necessary downpayment to put down roots and form the nucleus of equity from which capital grows and businesses can prosper. It’s a great idea, but still tiny. If it works, every resident of Richmond should be invited to add capital—and maybe even given tax breaks to incentivize more giving. The new mindset of philanthropy needs to be: Start great programs, prove that they work, and then invite local investors to take them to scale.
Money, of course, is not enough to fix the racial wealth gap. Undoing more than a century of redlining and credit discrimination requires proactive intervention by the government and the institutions that played—and are still playing—a role. Our second article underscores how supposedly neutral credit evaluation standards perpetuate inequality and explains how twenty major financial institutions in the country are trying to correct them.
Our third article highlights another approach to addressing racial inequality called “predistribution,” a strategy advocated by Yale political scientist Jacob Hacker. The idea is to distribute more ownership shares of business, property, or anything else, preferably at birth, to those at the lowest levels of wealth in our society. Wealth could then accrue to those denied the opportunity to amass it due to past discrimination.
We also have two articles on climate finance. The first one, on trends, notes that in 2023, the world installed enough renewable electricity capacity to power Spain and Germany combined. The second article makes the case that big climate meetings like COP28 should add another “O” to their names and focus on co-ops as key vehicles for delivering carbon-reduction strategies.
Finally, a reminder that, as we announced last month, paying subscribers will start receiving the MSJ Extra! on January 25. We moved our listing of current local investment opportunities there and added other features like interviews. Please consider subscribing through the link below.
NEWS
Black Homeownership Program Launched, Next City (January 11)
Changing Underwriting Rules for Racial Justice, Nonprofit Quarterly (December 14)
Predistribution of Ownership Over Redistribution of Wealth, ImpactAlpha (December 18)
Four Trends Shaping Sustainable Finance's Future, Corporate Knights (January 3)
Sustainable Growth Must Involve Cooperatives, International Cooperative Alliance (December 14)
PARTNER VOICES
Pioneering Regulation Crowdfunding Rating System for Private Companies, Crowdfund Capital Advisors (January 4)
Three Major Types of Community-Controlled Housing, Shelterforce (January 4)
Five Ways Impact Crowdfunding Addresses Poverty and Homelessness, Superpowers for Good (January 3)
Pushing the Cooperative Movement’s Boundaries: Exit to Community, Co-op News (December 29)
Celebrate Choose Black-Owned Month: Boost Ownership, American Independent Business Alliance (December 25)
NOTABLE NEW RESOURCES
Cooperative and Community-Led Solutions to the Housing Crisis, Confederation of Co-operative Housing (January 8)
Local Currencies with Alice Maggio, Community Wealth Canada (December 20)
The People’s Money: The Case for Public Banking in the United States,
Adrian Kuzminski (December 15)
Exploring Community Land Ownership, Center for Community Investment (December 8)
EVENTS
Local Investment 101 Workshop with Michael Shuman - Virtual and In-Person Event. January 27 - February 24. Register here.
Closing the Racial Wealth Gap by Shifting Ownership - Virtual Event. January 31, at 1 pm ET. Register here.
Crowdfunding & SBA Lending: A Conversation - Virtual Event. February 6, at 2 pm ET. Register here.
Neighborhood Economics - In-Person Event. February 26-28. Register here.
SuperCrowdBaltimore - In-Person Event. March 21. Register here.
ICYMI
Why Reward-Based Crowdfunding Works, Crowdsourcing Week
JOBS BOARD
Institute for the Cooperative Digital Economy is recruiting for its 2024/2025 fellows cohort.
American Independent Business Alliance, Cambridge Local First, and Sustainable Business Network of MA are recruiting Resilient Local Economies Interns.
Mission Driven Finance is hiring a Real Estate Asset Management Senior Director and a Fund Operations Manager.
FREE SHORT VIDEOS ON LOCAL INVESTMENT
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The Main Street Journal aims to catalyze the movement of $50 trillion from Wall Street to Main Street to facilitate economic development and economic justice. It’s sponsored by the National Coalition for Community Capital, with grants from the Heron Foundation, Wallace Global Foundation, and the Bondi Foundation. We welcome feedback about everything, from our design to content. Also, we welcome suggestions of other groups to involve as partners and additional information to include. Please send ideas to Jen Risley at jen@main-street-journal.com.
PARTNERS
Abrams+Angell | American Independent Business Alliance | Candide Group | Community-Vision Solutions, Benefit LLC | Council Fire | Crowdfund Better | Crowdfund Capital Advisors | Cutting Edge Capital | Democracy Collaborative | Exit to Community Collective | Fair Food Network | Impact Finance Center | ImpactPHL | Initiative for Local Capital | The Kassan Group | Mission Driven Finance | National Coalition for Community Capital | Natural Investments | Neighborhood Associates | Neighborhood Economics | New Majority Capital |. Next Egg | Nonprofit Quarterly | Ownership America | Ownership Matters | Project Equity | Project for Public Spaces | Prospera Partners | Raise Green | Revalue | Schumacher Center for a New Economics | Shelterforce | Slow Money | SOCAP | Sun Valley Institute for Resilience | The Super Crowd Inc. | Transform Finance | Uwharrie Bank | Village Well | Zebras Unite
We welcome any nonprofit or for-profit committed to local investment as a partner. If your organization is interested, please contact Jen Risley at jen@main-street-journal.com.