Sevetri Wilson, one of the founders featured as part of the #WealthInColor campaign, provides an overview of the role of nonprofit organizations in addressing racial disparities and shares a reflection on the findings from the Radical Collaboration for Black Wealth Creation report.

Black Americans have always faced unique obstacles on the road to the American dream, from buying homes to saving money. These obstacles have compounded over time and left a glaring legacy of inequality, particularly with regard to wealth creation and retention. After the events of this summer (especially the George Floyd killing and nationwide protests over racial disparities in the United States), Americans are engaged in a renewed discussion about how to address these systemic issues in a robust and sustainable way.

The nonprofit sector is indispensable to this effort. Not only are nonprofits increasingly responsible for the provision of essential services – many of which have a disproportionate impact on marginalized communities of color – but they also account for a significant proportion of economic activity in the United States, which means the sector has to take a hard look at whether it’s promoting racial equity within its own ranks. Governments, businesses, and other grantors should also make racial equity a top priority, which means giving equal consideration to organizations founded and led by people of color.

Nonprofits will be in a stronger position to address the racial wealth disparity in the United States if they focus on collaboration – a rapidly emerging trend in the sector. This is particularly important for organizations run by people of color, as many existing networks remain exclusive and inaccessible to Black entrepreneurs and nonprofit leaders alike. Over the next several years, these barriers to investment and action need to come down, but this process will require disruption and collaboration on an unprecedented scale.

Legacies of oppression and inequality

The net worth of the average white family in the United States is around $171,000 – almost ten times greater than the average for Black families ($17,150). This vast disparity is a direct result of centuries of discrimination against Black Americans, from slavery to severe limitations on economic opportunity imposed during the Jim Crow era to policies of redlining across the country that made it extremely difficult for Black applicants to obtain home loans.

The average white family’s net worth is almost ten times greater than the average Black family.

There are countless effects of these racially-rooted legacies that we witness every day, from persistent educational disparities and hiring discrimination to higher levels of infant mortality and the disproportionate impact of COVID-19 and other health crises. There are many ways nonprofits can address these disparities, from job training to improving healthcare access to easing the unique burdens Black families face.

For example, Black caregivers provide more hours of care to family members, friends, and neighbors per week than members of other groups. As the National Council of Nonprofits explains, organizations that “provide care for children or elderly parents allow family members who would otherwise shoulder the burden of providing care to instead work outside the home.” This is just one of the ways in which nonprofits can provide economic opportunity for Black Americans, and it’s a reminder that closing the wealth gap will require a cohesive approach that acknowledges all the inequities Black communities face.

Nonprofits can facilitate Black wealth creation

Take a moment to consider how large and intractable the racial wealth gap has proven to be in the United States. Not only have white families accumulated almost ten times as much wealth as Black families, but also more than one-fifth of Black Americans have zero or negative net worth. It’s clear that any real solution to these vast disparities has to address fundamental issues of access to capital, networks, and other resources that have eluded Black founders and workers for too long.

According to the Living Cities report Radical Collaboration for Black Wealth Creation, published in 2019, nonprofits have a unique opportunity to disrupt the systems that perpetuate the racial wealth gap by forging relationships with stakeholders in other sectors. For example, the report points out that by “leveraging relationships with the Black investment and entrepreneurial community, philanthropies can collaborate with other social impact ventures.” The report also notes that relationships between Black-led nonprofits and white grantors, investors, etc. should be framed as economic opportunities instead of just moral imperatives. When Black founders and leaders have a seat at the table, communities and economic conditions will improve for all Americans – and this is especially critical as the United States experiences dramatic demographic changes.

Living Cities explains that collaboration with Black-led organizations will “uncover new earned revenue opportunities, arrive at innovation more quickly, and exponentially leverage relationships with private sector corporate partners and philanthropic partners in a mutually beneficial way.” The racial wealth gap in the United States isn’t a problem confined to a single demographic group – it’s a problem that hampers the innovation, productivity, and economic growth of the entire country, and we should treat it as such.

Collaboration is the key to closing the wealth gap
Living Cities isn’t the only organization that recognizes the vital role BIPOC-led nonprofits will play in closing the wealth divide. Prosperity Now’s Racial Wealth Divide Initiative emphasizes the idea that “nonprofits of color … are well positioned to serve communities of color.” However, despite the fact that a significant proportion of nonprofit leaders believe diversity should be a top priority within their organizations, there’s a large disconnect between this belief and reality. One reason for this discrepancy is the fact that nonprofits founded and led by people of color often receive less investment (both initially and over time) than their peers.

A recent McKinsey report found that the racial wealth gap will cost the U.S. economy between $1 trillion and $1.5 trillion between 2019 and 2028 in reduced consumption and investment. This is one of many reminders that systemic racial inequality in the United States is harmful to everyone. When the perspectives and expertise of Black Americans are kept on the margins, this doesn’t just maintain the cycle of disadvantage for communities of color – it has a stultifying effect on creativity and development across the country.

$1 – $1.5 TRILLION
The cost of racial inequity to the US economy, in reduced consumption and investment.

One of the most pronounced trends in the nonprofit sector is the move toward greater collaboration between organizations, but what’s necessary today is collaboration that extends to the private sector as well. For example, in the aftermath of the George Floyd killing, nonprofits and businesses across the country are coming together to address the systemic causes of racial inequality. Living Cities lists some of the ways nonprofits, grantors, and community stakeholders can continue to collaborate in pursuit of eliminating the racial wealth divide: strategic convening, joint research and program development, resource sharing, and networking.

At a time when nonprofits – including those founded and run by people of color – are receiving a significant influx in donations as the United States has its most far-reaching public conversation about racial inequality in decades (a clear departure from the status quo), it’s all the more important to ensure that these funds are being used as effectively as possible. This means developing an interdependent ecosystem of support, which draws upon the private sector, key community stakeholders, and other organizations to scale programs, invest in marginalized communities, and put us on a path toward eliminating the racial wealth gap once and for all.

As part of the City Accelerator, the City of Pittsburgh has prioritized equity in their procurement systems, implementing changes to better meet the needs of local businesses owned by women and people of color.

On a typical fall afternoon, the streets of downtown Pittsburgh are filled with crowds of people coming from their favorite lunch spots, cars and buses headed in every direction, and bicyclists enjoying the weather. This year is different though. With the constantly changing landscape we are currently living in due to the pandemic, business owners and companies are met with even more day to day uncertainties.

When Pittsburgh was selected for the City Accelerator cohort on Inclusive Procurement, our goal was to find ways to help disadvantaged businesses—particularly those owned by people of color and women—to do more business with the City of Pittsburgh. To be a disadvantaged business is to be owned by a member of an economically and socially disadvantaged group. Put another way, it’s a business owner who is trying to build, grow, and sustain a business while operating against the additional, federally recognized, statistical challenges of being a person of color or a woman.

Equity is a priority for the City of Pittsburgh, and inclusive procurement is an opportunity for our city to recognize and understand the needs of our businesses owned by women and people of color and identify what tools they need to be successful.

When our disadvantaged businesses succeed and are awarded city contracts, our money is invested into our communities and our entire local economy is stronger.

Through our close partnership with the City of Pittsburgh Office of Equity, Office of Business Diversity, and the Equal Opportunity Review Commission—all of whom work directly with the disadvantaged businesses—we were able to garner feedback from female business owners and business owners of color about their experiences and pain points navigating our procurement process. By using feedback about local experiences and national recommendations, we looked at our internal processes and identified two areas where we could immediately help our local businesses: publicly displaying our forecast of future solicitations and shortening the time between when a contract is awarded and executed. Time and preparation are of the essence for our small businesses, so we implemented these tools to help them compete more effectively for City contracts.

Government solicitations can often be confusing and complex. If you are a vendor who is looking at these for the first time, it can often be overwhelming, especially without ample time to plan or prepare a proposal. We saw the great work that the cities of Chicago and Charlotte did by providing their local businesses with a City “Buying Plan” through the City Accelerator. These buying plans include upcoming solicitations, when they estimate the solicitation will be released, the estimated dollar value of the contract, and other pertinent information. These examples were our template for the City of Pittsburgh’s first buying plan.

Time and preparation are of the essence for our small businesses, so we implemented these tools to help them compete more effectively for City contracts.

Our Office of Management and Budget worked with the 19 City departments to develop a 12-month outlook of upcoming contracting needs. These were then merged with our list of recurring procurement contracts to develop the City’s 2020 forecast.

After that was completed, we saw there was an opportunity to make the forecast even more useful to local businesses by having other government agencies’ information appear on the forecast. Due to the City’s collaborative nature with its authorities, we enlisted their help to turn the forecast into a collective Buying Plan that identifies contract opportunities for the next calendar year and is updated quarterly. This means that instead of businesses searching through 6 different websites to find out about upcoming opportunities, they can click and view upcoming contracts and bidding information in one spot.

Along with all of the important solicitation specific information (name, value, time frame), we also decided that it was necessary to include the URL’s to the participating government entities and contact information in the Buying Plan document. We hope to expand this eventually to include additional helpful bidding information.

When looking at our other internal processes, we identified another area where we could immediately help our local businesses: shortening the time between when a contract is awarded and executed. When this time is prolonged or a maximum timeframe is not identified, it can put an unnecessary burden on businesses. Small businesses count on the income from the contract, and they may not be certain when they will need equipment, supplies, labor, inventory, or anything else to complete the scope of work.

We noticed that there were three major opportunities that were contributing to the inconsistent or delayed speed of our process:

  • An awarded vendor is required to print off two copies of everything, physically bring them to our office, and sign contracts. If any of the required forms are incorrect or missing information, they would need to start the process all over again.
  • Multiple individuals in separate departments need to review and sign the documents, leaving lots of room for delays along the way.
  • A notary is required for an affidavit.
  • When our disadvantaged businesses succeed and are awarded city contracts, our money is invested into our communities and our entire local economy is stronger.

    When we recognized the process was more onerous than necessary, we centered the experience of the vendor and we all worked together to identify some administrative solutions. We worked with our Law Department to change an affidavit to a certificate. We collected information online during the solicitation process. We embraced DocuSign/electronic signature process to eliminate delays.

    We fortunately piloted the electronic signature process before COVID, so when we closed City Hall, we were prepared to keep executing contracts to avoid administrative business interruption. We are exploring other virtual means of supporting our business community. We launched “Contract Connections: Bids for PGH,” an remote training series to help local, diverse small businesses learn how to participate in the City and other agencies’ procurement processes.

    While the pandemic may have changed the busy nature of our Downtown business district, we are grateful to the Living Cities and Citi Foundation’s City Accelerator for helping us change the way we do business to make it more accessible and inclusive. The past few months have been full of uncertainty, and going forward, we remain committed to examining our procurement processes to respond to the needs of the business community.

    The City of Pittsburgh can lessen the burdens it places on business owners through the procurement process to diversify our vendors and provide a more equitable opportunity for disadvantaged businesses. During the pandemic and afterward, we will strive to make procurement more inclusive for all of our businesses and ensure that Pittsburgh is a city that is livable and workable for all.

    Photo from Flickr user Katina Rogers

    Published: November 12, 2020
    Category: Blog Pittsburgh