FRIENDS FUND
Why?
If you're wondering why now is the time to redirect not only some of your philanthropic capital towards BIPOC (Black, Indigenous, People of Color) Founders of Nonprofits and for profit businesses but also why it's time to redirect decision making power over those funds, we'll lay it out here:
94%
94% of businesses that end up hiring talent have relied on some kind of financial assistance.
Top 3
The top three sources of capital used by businesses for start-up or initial acquisition capital are: personal/family savings of the entrepreneur (64.4%), business loans from banks or other financial institutions (16.5%), and personal credit cards (9.1
Top 3
The top three sources of capital used by businesses for start-up or initial acquisition capital are: personal/family savings of the entrepreneur (64.4%), business loans from banks or other financial institutions (16.5%), and personal credit cards (9.1
Net Worth
In a 2016 survey the median net worth for white families was $171,000. The median net worth for Black families was $17,600 and the median net worth for Latino families was $20,700.
65%
65% of all founders rely on personal and family savings for startup capital.
3X
Additionally, Black entrepreneurs' loan requests are 3X less likely to be approved than those of white entrepreneurs.
Equity
Owner Equity for Black owners is more than half of total financial capital vs. white owners putting up less than one-third.
3X
One study compared sources of finance and found that new Black-owned businesses start with almost 3X less in terms of overall capital than new white-owned businesses (gap does not close as firms mature).
Why?
94% of new businesses that end up hiring someone need some kind of financial assistance.
The majority of this financial assistance either comes from family and personal savings (~65%) or bank loans (~17%).
In a 2016 survey the median net worth for white families was $171,000. The median net worth for Black families was $17,600 and the median net worth for Latino families was $20,700. This is not because of a difference in work ethic or ingenuity, but because of historically racist policies and redlining...not to mention the 400+ year head start.
So if you don't have personal savings or family savings, you go to a financial institution, right?
Well, Black entrepreneurs are 3X more likely to be denied for a loan with the same application than white entrepreneurs. And more likely to be asked for irrelevant personal information.
So what ends up happening? Because Black business owners put up more than half the total financial capital for most of their ventures (compared with white owners putting up less than 1/3), they start their firms with nearly 3X less in terms of overall capital than new white owned businesses. This gap does not improve as the firms mature.
This is our why. All stats can be found in here.