BATTLE CREEK — A $10 million commitment to help support Battle Creek entrepreneurs serves as one recent example of a project focused on ensuring racial equity in the business community.
The Battle Creek-based W.K. Kellogg Foundation, which along with Ann Arbor-based Altarum authored a new study on the business case for racial equity, announced last week that it was providing an immediate $1 million investment to the Battle Creek Small Business Fund and will match local investments 2:1, up to $10 million. The locally-designed and locallysupported fund will increase access to capital for Battle Creek entrepreneurs and new businesses in the city.
Major contributions from the Kellogg Company, Battle Creek Unlimited (BCU) and The Miller Foundation already total $1.8 million. With the 2:1 match for local contributions and the $1 million commitment, the Battle Creek Small Business Loan Fund has secured $6.4 million to date.
The nonprofit BCU is committing $1.2 million to the fund, said Joe Sobieralski, BCU’s president and CEO. He said a lot of foundations have economic development missions.
“To invest large dollar amounts is especially rare in a community of our size,” Sobieralski said. “Everybody is coming together to tackle the issues and some of those issues include the need for lending and having a business plan consultant to assist with the development of small businesses.”
The Battle Creek fund is similar to the “Entrepreneurs of Color Fund” that was created in 2015 by JP Morgan Chase, the Kellogg Foundation and the Detroit Development Fund, said Howard Walters, program and evaluation officer at WKKF. The goal of the Detroit-based fund is to provide minority-owned small businesses in the city with access to capital and technical assistance. JPMorgan Chase originally invested $3.5 million and the Kellogg Foundation committed $3.5 million. For the Kellogg Foundation, the contribution came as part of its roughly $25 million annual investment in the city and commitment to promoting equity.
In 2017, leaders of the Detroit fund said they were attracting new investors and nearly tripled the fund’s size from $6.5 million to more than $18 million because of strong demand for capital and a continued effort to help all Detroiters benefit from the city’s comeback.
Walters said the economic renaissance in Detroit that included the construction of sports arenas and other amenities highlighted the need to create opportunities for entrepreneurs of color.
“That fund created an entree for those entrepreneurs to be a part of that renaissance and created greater access to other funds,” Walters said. “It allows for a more equitable benefit from that renaissance. We can look at that as a success because of how the fund created equity in the broader community.
“In philanthropy, as we look at an understanding of the impact of our work and reforming strategies, we need to keep racial equity front and center in our thinking. If we’re not closing the gap for everyone, we can’t say we’re being successful.”
The Kellogg Foundation/Altarum study makes the case for addressing those needs. By 2050, Michigan stands to realize a $92 billion gain in economic output by closing that gap, said Ani Turner, co-director of sustainable health spending strategies with Altarum.
Turner said the biggest story is that the state’s population isn’t growing and is getting older while also becoming more diverse. She said a couple of decades ago, the non-Hispanic white population accounted for between 85 and 90 percent of the population.
“We are shifting to a higher percentage of people of color,” Turner said. “By 2050, 40 percent of Michigan’s working-age population will be people of color and 45 percent of children will be children of color. The birthrates for Hispanic and black residents are higher than those of the white population.”
However, the trend is not unique to Michigan.
“This is something that’s really happening around the country,” Turner said. “The younger population is more people of color. Some of it has to do with fertility rates, which builds over time.”
This gradual buildup also has happened with the state’s Asian and Hispanic populations because of immigration. Immigrants were drawn to Michigan by the employment opportunities in sectors such as higher education, health care and technology, Turner said.
“Looking at Michigan, compared to other states, there’s quite a lot of activity here,” Turner said. “Michigan is in better shape economically than it was a few years ago, there is more optimism and we’re on a more solid financial footing then we were five years ago. In the long term, we still want to bring in good-paying jobs, but we have to have the workforce to support that.”
Regions need to understand the importance of investing in growing populations who are lagging in terms of economic status and access to health care, better education and employment opportunities, sources said.
The Kellogg Foundation’s new racial equity report also calls for action from various sectors on different levels, Walters said.
“Businesses need to evaluate their internal practices and create diverse and inclusive work environments and really craft a business that’s poised to thrive in the context of changing demographics,” he said. “It will take private organizations investing in workforce and economic development that targets certain groups.”
Businesses, Walters said, will need to be more intentional about shifting resources into those spaces.
“From an individual perspective, there is a need for public policy that promotes greater equity. We’re asking folks to really lean in to intentionally close the gaps,” Walters said.
BREAK THE CYCLE
Many of the kinds of policies that help to address poverty or lower-income individuals are going to make things more equitable, Turner said.
“People may be asking why we’re focusing on racial equity and supporting particular populations,” Turner said. “Populations of color have specific challenges. It hasn’t been that long since we had segregated schools. The way housing was developed after World War II, it created segregated, minority, low-income neighborhoods.”
That cycle of poverty is much more difficult to break for someone who is born into a neighborhood where they are surrounded by people who also are poor, Turner said.
“More than half of black children are born into concentrated poverty in Michigan. This number is 30 percent for Hispanic children, and 7 percent of white children,” she said. “When you’re in an area of concentrated poverty, it affects all of your opportunities in employment, schools, networks and connection, and the health of your environment.”
ROLE FOR BUSINESS
Although federal dollars have been allocated for initiatives such as Early Childhood Education and prenatal home visits, Turner said local businesses can make the types of investments that will result in more focused and reliable employees.
“You have to look at it as a longterm gain. Social change occurs with one step forward and two steps back,” she said. “You have to play the long game and speak to other constituencies by putting the message out there that these policy changes may have long term implications.”
While some people may refuse to change their worldview because of the report, Turner said she’s confident that there are enough people who want to work for meaningful and lasting change.
She said if Michigan lacks workers who can compete in a global economy and fails to grow its population and offer opportunities for all residents to succeed, she wonders who will pay to fund social services and support the tax base.
With so many countries growing a new middle class, Michigan has to start doing the right things to move forward, including creating opportunities for young people so that they will stay, she said. State high school graduation rates are increasing, but partnerships must be formed between the business and education sectors to address a smoother transition from high school to post-secondary education.
“The study is really out there to raise awareness and make this economic and business argument and to highlight what’s effective,” Turner said.
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