Giving Compass' Take:
- Phuong Pham and Katie Janowiak highlight the gap between the success of startups and businesses led by women of color and the amount of venture funding that reaches them.
- How can you help to address funding disparities along racial and gender lines in your investment and giving strategies?
- Read about private investment redlining and the racial wealth gap.
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This year, the women’s suffrage movement’s centennial celebrations were extended to commemorate the historic victory guaranteeing women’s institutional right to vote. As we honor Black, Native American, Asian American, and Latinx women suffragists in history, their stories painfully remind us that the 19th Amendment excluded women of color. A century later, women of color still face enormous barriers to achieve true equality.
Black and Latinx women are two of the fastest-growing groups of business owners in the United States. In 2019, women of color represented 39% of the total female population in the U.S. but accounted for 89% of the net new women-owned businesses per day. And yet, according to Goldman Sachs, less than 1% of all venture funding goes to Black and Latinx-led women-founded companies.
Gender lens investing promotes gender equity and addresses gender issues — such as women’s leadership and products, services, and practices that improve women and girls’ lives. “Gender lens and racial justice investing are no longer a case that needs to be made, but an approach that is sought after and becoming a fundamentally necessary approach for any impact investing strategy,” said Heather Marie Burke of Mission Driven Finance (MDF), an impact investing firm dedicated to building a financial system that ensures good businesses have sufficient affordable access to capital. MDF constantly looks for ways to say yes to tenacious small businesses and nonprofits. Yes to their vision for impact, yes to their plans for growth, and yes to their understanding of what kind of capital they need and when to realize those plans.
“This may seem like a simple equation, but it’s a kind of radical act in the field of finance where most lenders ask borrowers to fit in a specific box,” Burke said. “The act of listening to women and BIPOC communities is in and of itself a transformative act.”
Read the full article about gender lens investing by Phuong Pham and Katie Janowiak at Southern California Grantmakers.