A new $10 million fund run by community leaders from local nonprofits will soon inject desperately-needed financial resources into dozens of East Bay businesses.
The REAL People’s Fund, a collaborative of six nonprofits fighting for racial and climate justice, has been quietly fundraising for over a year and is set to start distributing its first $3 million in loans this spring to Alameda and Contra Costa County entrepreneurs of color, formerly incarcerated business owners, and others who might have faced historical barriers to accessing capital. The Fund, which received a half-a-million dollar commitment this week from the Rockefeller Foundation, will also provide financial advice to local business owners trying to survive the pandemic recession.
“We need to support our struggling businesses, especially during COVID,” said Tash Nguyen, coordinator and board chair of the People’s Fund. “So many Black businesses have shuttered, so that’s a big focus for us.”
The pandemic, Tash said, has exacerbated an already-existing wealth gap between Black and White families: In 2016, the median wealth for a White family nationally was 10 times that of a Black family, according to the California Budget and Policy Center.
“We’re thinking over the long term: How can we move the needle in terms of racial wealth gap?” said Otis Rolley, senior vice president of the Rockefeller Foundation’s U.S.-based Equity and Economic Opportunity branch.
Business ownership is one way. But not all aspiring entrepreneurs have equal access to capital: A 2016 Stanford study found that Black-owned businesses received on average about one third of the initial investments that White-owned businesses benefitted from.
The REAL People’s Fund, with funding from the Restorative Economies Fund and the San Francisco Foundation, plans to disburse 18 “Friends and family” loans of up to $50,000 to help entrepreneurs without much of that social capital start their business. The Fund also plans to award six larger loans of up to $350,000 with interest rates capped at 4 percent, Tash said, to help established East Bay businesses survive the pandemic recession. The loans will be managed by Community Vision and the Runway Project, two local nonprofits. Over five years, the Fund hopes to disburse $10 million.
Organizers are finalizing the application process after which members of the six participating nonprofits — Restore Oakland, the Asian Pacific Environmental Network, the Restaurant Opportunities Center, Oakland Rising, Communities for a Better Environment, and the Alliance of Californians for Community Empowerment — will decide who will receive funds.
There is no requirement that applicants be people of color, but the board will be looking for equitable businesses “interested in the concept of democratic governance and in strengthening the local supply chain,” said Nguyen, who represents Restore Oakland. Applicants also need to agree to certain equity-focused requirements, including not to conduct credit or background checks on employees.
“We’re putting the power of capital in the hands of those who are most affected by disinvestment,” Rolley said.
This article is part of the California Divide, a collaboration among newsrooms examining income inequality and economic survival in California.