Equity Program

Introduction

We believe that many existing diversity programs focus very little on meaningful results and outcomes related to the Black community, and instead, emphasizing tokenism and symbols of progress over significant, material progress.  It's easy to say "Black Lives Matter."  It costs nothing.  It takes a bit more effort and real resources to actualize concern about Black lives and scale solutions to actually help the Black community and improve Black lives.  This goes beyond internal hiring and creating a sense of belonging for Black employees, although still important, to incorporating external facing initiatives and metrics to diversity, equity, and inclusion programs targeted specifically at the Black community.

We believe that many problems in the Black community stem from a lack of economic self-determination and institutional capacity, hindering our ability to formulate and implement our own solutions to our own problems without creating permanent dependency on philanthropy, government, or even DEI programs outside of our control.

A true equity program should eventually negate the need for an equity program as the solutions we present become self-implementing and self-sustaining.  The key to racial equity is financial equity (aka shareholder equity).

 

The Strategy

We are not attempting to replace or replicate existing diversity programs, but rather offer a complimentary, cross-disciplinary enhancement that uses principles from investment management and economic development to improve economic outcomes.  DEI programs are typically focused on internal HR metrics like organizational unit demographics, recruitment candidates by ethnicity, promotion rates by gender, compa-ratios by race, hiring bias indexes, etc., to identify gaps and opportunities to improve diversity, equity, and inclusion within a particular organization. 

Our Equity Program leverages these efforts to extend to a larger set of stakeholders beyond employees, such as shareholders, suppliers/vendors, board members, community leaders, educational institutions, grassroots organizations, and government officials, in order to achieve sustainable economic outcomes using economic metrics, such as:

  • Unemployment rate, unemployment duration, and labor force participation rate
  • Home ownership
  • Land ownership; particularly farm land
  • Industrial and agricultural capacity
  • Median income
  • Income inequality WITHIN the Black community
  • Wage share
  • Median net worth
  • Business formation and success rates
  • Total revenue generated by Black owned businesses
  • Total capitalization of Black-owned businesses
  • Total number of Black people employed by majority Black-owned businesses
  • Manufacturers' new orders
  • Vendor performance
  • Funding for independent Black-educational institutions
  • Shareholder and board participation in Fortune 2000 companies

We achieve this by using investment management and economic development principles to look at the "Black economy" as a distinct economic jurisdiction and developing solutions to improve it.

Investment management principles

  • Set short, medium, and long term investment objectives (capital growth, passive income, principal protection, etc.)
  • Budget
  • Portfolio management (diversification and regular re-balancing)
  • Manage downside
  • Manage liquidity
  • Adapt to changing market fundamentals
  • Measure performance

Economic development principles

  • Set goals
  • Develop vision that integrates all stakeholders (government, business, education, justice/law enforcement, community organizers/leaders)
  • Poverty reduction
  • Exploit and strengthen existing capacity/capabilities before spending resources attracting new talent and assets.
  • Reduce imports where possible and increase exports
  • Resilience, sustainability, and environmental responsibility
  • Invest in people and skills
  • Maximize utility of existing spaces before clearing land to develop new spaces
  • Regional collaboration to fill in local capacity gaps
  • Create livable communities and community spaces
  • Encourage cultural activities and traditions
  • Encourage community and employee ownership programs and coordinate with traditional sources of finance/capital

The Program

The focus of our equity program is on improving economic outcomes for the African American community through initiatives that give African American individuals and organizations agency and contribute to self-determination rather than a dependency on quotas/affirmative action, donations, and government programs.  In short, an equity program would strengthen African American institutional and productive capacity.  

This is not to say that you shouldn't hire African Americans, but that you should not hire them solely because of their race, and employment alone is not the best way non-Black-owned corporations can help combat the system of white supremacy or the African American community as a whole.  So, how do we do this?

Whenever evaluating potential solutions targeted at African Americans, it helps to begin with the basic question, "Will this increase or decrease African American dependency on non-African American dominated systems, organizations, and/or institutions?”  And since corporations are economic organizations, we should look at economic and financial outcomes to measure success.  Capacity building is key.

A major corporation that is dominated by non-Black people hiring a Black person creates a state of dependency for that individual.  Her livelihood now depends on her acceptability to the non-Black people below, around, and above her in the corporate hierarchy; therefore she cannot contribute to her full potential or take risks that other employees may be able to take due to the pervasiveness of conscious and sub-conscious anti-Blackness, as clearly evidenced in The Black Tax by Shawn D. Rochester.

On the other hand, investing in, donating to, or buying from a Black for-profit enterprise increases their chances or success and ability to scale, and hire other Black people as Black-owned businesses are 85% more likely to hire Black employees.

Our proposal is for equity programs that prioritize independent African American participation in:

  1. Cap tables
  2. Board rooms
  3. Supplier/vendor lists
  4. Capacity building philanthropy
  5. Think tanks

These all can be used promote economic agency rather than complete dependency, although dependency can be perpetuated even with these measures if not managed correctly.  

The fundamental problem in the African American community is that the resources needed to repair itself have been systemically looted over centuries.  First through slavery (which includes sharecropping as a form of slavery), then the inability to participate in state and federal land grant and loan programs, redlining, predatory loans, mass incarceration, etc.  A diversity program that does not directly provide a positive economic outcome by helping build and maintain wealth within the African American community is like treating symptoms without addressing the underlying disease.

Our Equity program involves a three-stage process:

  1. Equity audit and diversity analytics - we look at the existing ownership and management structure within the company to identify key African American decision-makers and stakeholders (including major shareholders and board directors), vendor contracts with Black-owned businesses, philanthropic initiatives that directly impact the African American community, and venture capital initiatives (if any) that have funded responsible Black-owned businesses.  We will also look at your internal DEI data to identify gaps in hiring, promotion, and retention at all levels.  Where data is lacking, we can help implement collection systems to start gathering it going forward.  
  2. Equity Strategy - we look across the entire business to identify partnership and development opportunities that could involve African American businesses, community organizations, investors, government officials, and individuals.
  3. Management - for this to truly work, the Equity Program should be independently managed by a third party with full budget authority, a long-term contract, and minimal oversight outside of meeting quantitative and qualitative goals and staying within legal and ethical boundaries until internal capabilities and controls can be reliably established.  Equity Program Managers will implement the strategy developed in phase 2 above and report annual progress to the sponsor company/organization with quantitative and qualitative measures.

    Finally, the specific details and beneficiaries of an equity program should not be made available to the public, or even to most employees within the organization that aren't directly involved, and instead, treated more like a skunkworks project that reports directly to the CEO and/or COO in order to minimize internal resistance.  PR announcements, if any, should only be made once measurable success is achieved and not simply to announce programs and partnerships that have yet to produce any meaningful results.

    Currently, we are looking for 2-3 organizations to run a pilot program and use as case studies over a 12-24 month period.  The results of the study will be anonymized and participation will be kept private if the organization so chooses.