The Black developers Crain’s interviewed all agree the federal and state governments can provide greater incentives for institutional investors to provide Black businesses with necessary capital. But the greater, more substantive changes must come from the institutional investors themselves, in how they hire and what they aim to do with their money.
One guiding light can be found at Goldman Sachs’ Urban Investment Group. Led by Margaret Anadu, one of the few Black American women in finance, the fund manages a $4 billion portfolio and invests $1.5 billion each year.
Marshall first tapped Anadu’s Urban Investment Group for $20 million in 2007. Since then his firm has been able to source $1 billion from her team.
“We raised $10 million from a family office, but I don’t think we’d have the trajectory we’ve experienced without Margaret Anadu’s Urban Investment Group,” Marshall said. “It would’ve been quite difficult, quite frankly.”
Anadu’s group has been empowered by her firm to invest capital where it sees fit. But not enough major firms create targeted social-impact funds that seek to deploy capital in underserved communities. And not enough firms have Black women in charge of billions in capital.
Pension funds are another part of the equation. Peebles, Livingston and others stress that the funds, which are financed in part by the contributions of minority workers, need to hire asset managers who reflect their constituency.
Last month Blueprint Capital Advisors, an investment firm founded by African Americans, sued New Jersey, alleging racial bias. The firm accused the state’s pension office of stealing its investment ideas and hiring mega-firm BlackRock to implement them instead.
The lawsuit alleges that board members supervising the pension’s investment said they were not likely to approve a minority-owned asset-management firm.
Livingston called for a paradigm shift in how the heads of pension funds and their asset managers make decisions.
“Until those they invest in look like those who contribute their money, we’re not going to get there,” he said.
More than anything, Peebles stressed, it comes down to the white institutional investors choosing to do business with Americans of different backgrounds, and then choosing investment projects reflective of the demographics of the markets where their capital is going to operate.
“Wouldn’t that be what a fair democracy is?” Peebles asked.