This Week in ESG and Impact Investing

Reflect on this breathtaking figure: Over $11 trillion has been erased from the nation’s stock market since mid-January of this year. That massive rubout supposedly came just three days before President Donald Trump started his term and has not recovered as much since. More recently, U.S. stocks had their largest two-day loss, $6.6 trillion jointly on April 3 and April 4. The damage has left stockholders, including Black investors, in a precarious position: What should they do as the market moves to bearish territory? Stocks surged on April 8 after Trump approved a 90-day pause on tariffs impacting most countries, per The Wall Street Journal. However, stocks crashed again on April 10 after the White House disclosed the tariff on China is now 145%. There is uncertainty about how stocks will perform subsequently. The unrest is being fueled by fears of a potential global trade war, a possible U.S. recession, and other headwinds. Rising Number of Blacks Investing in Stocks BLACK ENTERPRISE...

  Policymakers should prioritize refining and enhancing these programs. See: https://www.blackenterprise.com/making-the-case-for-dei-reform/

Trump’s New Economic Policies Could Have A Detrimental Impact On Black Businesses, Yet Some Opportunities May Exist. The article presents a critical analysis of the potential impact of Donald Trump’s proposed economic policies on Black-owned businesses. While acknowledging limited opportunities, the overall assessment suggests that the negative consequences will outweigh the positives. The analysis underscores that while some isolated opportunities may arise from Trump’s policies, the overall damage to Black businesses could surpass the setbacks experienced during his first term. The compounding effects of higher operational costs, reduced social safety nets, and macroeconomic uncertainty could stifle growth, increase business failures, and deepen racial economic disparities. While there are narrow windows of opportunity, Trump's proposed economic policies pose a significant threat to the stability and growth of Black-owned businesses, necessitating proactive strategies for mitigat...

New data show that venture funding for Black-founded startups remains dreary. For the first time since 2016, backing for those companies in 2023 fell below $1 billion to $705 million, according to a new report from tech research firm Crunchbase. The eye-popping 71% decline for Black startups was much larger than the 37% drop in combined venture capital (VC) dollars invested in 2023 as the market retreated. The latest numbers also reflect Black founders last year getting over $300 million less in those dollars than seven years before that. During the peak funding year of 2021, Crunchbase shared that $4.9 billion was invested in Black founders. The 2023 figure represents an 86% drop from 2021 for those entrepreneurs. The drop in VC funding to Black start-ups is significant as those firms need the capital to launch businesses, expand, and gain working capital to help them survive. Further, Black-owned women’s small businesses continue to struggle to land VC funding even though they’re amo...

  Black Businesses Projected To See $1B In Loans  From The Small Business Administration - https://www.blackenterprise.com/analysis-sba-projected-to-supply-black-businesses-1-billion-in-loans-this-year/  

We've seen a lot of changes in the Black banking sector of late. With the announcement that a Black-led investor group plans to acquire Holladay Bank & Trust in Holladay, Utah, the proposed creation of a credit union by  Alpha Kappa Alpha ,  the nation's oldest Black sorority , the public debut of a Black-owned bank (Adelphi Bank) in Columbus, Ohio, and the unconfirmed identification of two new Black banks (Tioga-Franklin Savings Bank in Philadelphia, PA, and Grand Bank for Savings, FSB, in Hattiesburg, Mississippi), activity in the Black banking sector has increased dramatically. This recent growth may be the result of increased funding for Black banks following the $71 billion  corporations pledged for Black Lives Matter following the George Floyd incident. Longer term, even if we confirm the African American ownership of Tioga-Franklin and of Grand Bank for Savings, there are still only 21 Black banks, representing 4 tenths of one percent of 4,706 total comm...

Data: Nearly 80 of Black Entrepreneurs Believe They Run Thriving Businesses, Yet Gaining Access to Capital Still a Hurdle - https://www.blackenterprise.com/data-nearly-80-of-black-entrepreneurs-believe-they-run-thriving-businesses-yet-gaining-access-to-capital-still-a-hurdle/  The article highlights the fact that, despite the resilience of black entrepreneurs in dealing with record inflation, a pandemic and overall economic uncertainty, the issue of access to capital remains a significant hurdle. Almost 50% of black business owners report they have issues accessing finance.  Be that as it may, the provision of information about sources of finance is a step in the right direction. The article notes that Bank of America and Seneca Women compiled a database on sources of capital specifically for black entrepreneurs (Ed note: also see the Minority and Women-owned Company Small Business Financing Guide and Workbook ).  Knowing what lenders are looking for is helpful, regardle...

In a major setback, venture capital funding for Black businesses dropped significantly last year. (NOTE: Overall, funding has increased from 2013 to 2022. See chart below.) That financial backing fell 45% for those businesses, based on data from analytics firm Crunchbase, per CNBC. The news outlet disclosed that it is the largest year-over-year decline for Black entrepreneurs. And the decrease was much greater than the 36% drop in VC funding altogether. The descent came after venture capital funding for Black founders reached record levels for Black founders in recent years. In the first half of 2021, Black founders raised almost $1.8 billion, more than four times the capital raised during same time the prior year. The fresh numbers offer a glimpse how challenging VC funding can be for Black entrepreneurs. Black founders saw an uptick in VC funding following the murder of George Floyd  and subsequent national racial injustice protests. Many of the nation’s largest corporations vowe...

  According to an article in Black Enterprise Magazine, "Columbus, Ohio’s largest city and capital, could become home to a Black-owned bank if leaders can make it happen. Adelphi Bank founder Jordan Miller said it is talking with 'high net-worth individuals and institutions in Central Ohio as it seeks to raise the initial $20 million, ' according to Columbus Business First. The Federal Deposit Insurance Corporation (FDIC) granted approval subject to conditions in May for the startup." See:  https://www.blackenterprise.com/proposed-black-bank-aims-to-raise-20-million-to-open-an-effort-that-could-reverse-trend-of-such-banks-closing/

While multiple reports have shown rising interest in financing Black-owned small businesses, a new study shows an underlying problem still remains. According to the “State of Minority Business, March 2022” report by Creative Investment Research , there has been less understanding of the core issues small Black-owned firms face in gaining funding to start or grow enterprises. The analysis pinpoints why Black-owned firms continue to experience under-performance in accessing capital across the nation’s financial services-industry. William Michael Cunningham, an economist and owner of Creative Investment Research in Washington, D.C., says those factors include elevated discouragement when applying for financing, low-profit margin industries, and a reported undercount by the U.S. Census Bureau of the number of black owned businesses. He says potential discrepancy can lead to less funding from federal, state, and local agencies to support to those ventures. Cunningham swears the lack of fin...

Pursuing some accountability, a Black economist  has  filed a petition with the Securities and Exchange Commission (SEC) to require companies to report on Black Lives Matter (BLM) pledges. The request by William Michael Cunningham, who runs Washington, D.C.-based Creative Investment Research, says data from his firm shows 251 U.S. companies promised to battle systemic racism within their own organizations. All told, Cunningham claims those companies pledged $65 billion to boost their diversity and equity initiatives from May 2020 to May 2021. Yet, to date, Cunningham maintains that $500 million has been allocated toward such efforts. Compared to $500 million, Cunningham  estimates  the commitments by now should be $15 billion to $20 billion based largely on damages Black companies have suffered from the COVID-19 pandemic. He says his projections are tied to the companies having combined profits of $750 billion as of 2019. https://www.blackenterprise.com/black-economi...

Black American Business Owners Sound Off in New Survey of PPP  by Jeffrey McKinney, Black Enterprise Magazine April 24, 2020 Financing from the Paycheck Protection Program (PPP) is getting a cool reception from black business owners. A new national survey of 50 small businesses conducted Thursday by Washington, D.C.-based Creative Investment Research on the Paycheck Protection Program and the Economic Injury Disaster Loan Emergency Advance (EIDL) Program was intended to get a true pulse of how effective the lending programs have been. The survey came out the same day the House rati􀁽ed a bill by the Senate to pump roughly $310 billion more in loans to the Paycheck Protection Program, The Wall Street Journal reports. The PPP exhausted its initial $350 billion funding last week after being rolled out on April 3. The program for 􀁽rms with up to 500 workers became law in late March as part of the $2 trillion coronavirus economic stimulus package. It was geared to h...

Black businesses with socially-driven concepts can now possibly attain some new capital from Citi. See:  https://www.blackenterprise.com/citi-launches-150-million-fund-to-support-minority-businesses-including-black-firms/

Article by Jeff McKinney in Black Enterprise describes HR 41, "the Rescue Act for Black and Community Banks . The bill–initiated in January 2019–aims to, along with other measures, bring regulatory relief for black banks from Congress, boost wealth-building for black consumers and businesses, and help save black banks from failing." See: https://www.blackenterprise.com/new-bill-black-banks-black-investors/

Please see: http://www.blackenterprise.com/business/business-news/2008/12/23/executives-working-to-create-black-owned-holding-company/