Closing the racial wealth gap 

Two local leaders see the beginning of progress, with a lot more left to do 

IT’S BEEN MORE than seven years since the Boston Federal Reserve Bank published a report, titled “The Color of Wealth in Boston,” that has served as something of a regional wake-up call to the issue of the enormous racial wealth gap in Greater Boston. The report highlighted the now-often cited, but still no less jaw-dropping figures on household net worth in the region. They showed that the median net worth of White households was $247,000; for Hispanics it ranged from $0 to $3,000 depending on their background, while for US born Black households it was just $8. 

Are we making any progress in closing those gaps? What are the most promising approaches to doing so? Betty Francisco, the CEO of the Boston Impact Initiative, a nonprofit impact investment fund working to increase wealth and asset-building opportunities for communities of color, and Mike, Leyba co-executive director of the community organizing group City Life/Vida Urbana, dug in on those questions on this week’s Codcast

“We think of Massachusetts as a very liberal, progressive state. We’re the first on many fronts, but yet we’re one of the most unequal states when it comes to asset wealth,” said Francisco. 

Francisco’s organization is one of the signs of movement by leaders in the region to begin tackling the problem. Founded in 2017, the Boston Impact Initiative uses figures from the Boston Fed study in its “pitch deck” to investors, said Francisco.

Boston Impact Initiative, she said, “is one of the first local place-based impact funds specifically focused on using what we call integrated capital. So it’s the whole spectrum of capital – equity, debt, grants – to support entrepreneurs of color or communities creating jobs in communities of color and with a racial justice-economic justice lens.” 

Their first round was a $7 million fund they used to invest in 50 businesses across Eastern Massachusetts ranging from manufacturing to retail, food, and climate-focused enterprises, said Francisco. 

“We want our business owners both to build wealth for themselves as founders, but also for their workers,” she said. “And so we support businesses owned cooperatively or employee-owned. We encourage businesses to adopt those models or move towards those models because that is how you start to create wealth for local communities. And we know that particularly business owners of color – they put that wealth back into their communities. They’re much more likely to buy locally or to source employees locally. So that wealth recycles in our own communities.”

Meanwhile, said Leyba, there are encouraging developments in public procurement, where attention is being drawn to making sure businesses owned by entrepreneurs of color get a fair share of public contracts. 

“I think it’s a really positive thing,” said Leyba. “It’s not going to get us out of this wealth inequality instantly, but I do think that there has been a lot of important groundwork that’s been a result of this [Color of Wealth] report and a result of a lot of the organizing that’s happened the last decade.”

Leyba and Francisco both pushed back on the singular focus on home ownership as the path to closing the racial wealth gap. The homeownership mantra has often seemed to flow logically from the observation that home equity often represents the biggest asset of middle-class households. Both Leyba and Francisco said the more people of color can own their own home the better. But, as he laid out in a recent Twitter thread on the topic, Leyba said homeownership is often out of reach for low-income households, who in the Boston area are often so rent-burdened they can barely keep their heads above water. 

“We can’t just have such a narrow vision of home ownership as the thing that’s going to get us out of this wealth gap,” Leyba said. That focus, he said, results in “skimming folks from the top,” but doing nothing to address the wealth gap facing lower-income households. Leyba said efforts to protect tenants from exorbitant rents – such as the innovative purchase of 114 units announced last week in East Boston – should be part of any broad effort to tackle the racial wealth gap. If currently rent-burdened households paid rent at a level that matched their income, “in Boston that would put an additional $9,300 in the pockets of families every single year,” he said. That money can then go toward investment in a business, educational costs, and all the other expenditures that can produce a return and help build wealth. 

He pointed to the announcement last week of a joint purchase by an East Boston nonprofit and the city of Boston of 114 units of housing in that neighborhood that will be maintained as affordable housing as an example of how preserving affordable rental housing can give households the financial breathing room to build wealth. 

Francisco said City Life/Vida Urbana and Boston Impact Initiative are looking at partnering in a new fund aimed at similar acquisitions of currently private-market rental housing that would be deed-restricted to maintain affordability. 

“We are in a time where we’ve got to be innovative around how we invest in real estate, how we bring in community to have an ownership stake and at least governance and control over what happens in their own backyard,” said Francisco. She called it an “exciting time,” but also one that requires cooperation of government when it comes to zoning, tax incentives, and other reforms needed to “test many of these models.” 

Meet the Author

Michael Jonas

Executive Editor, CommonWealth

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

Meanwhile, the Boston Fed, the Greater Boston Chamber of Commerce, the Barr Foundation, the Boston Foundation, and Eastern Bank are collaborating on an update of the wealth-gap report that will go deeper than the original, 2015 study.

“It will be more of a longitudinal study,” Francisco said, “to understand what has changed, how do we better measure the racial wealth gap, and then what are some of the innovations, what are some of the programs, policy changes that have been put in place and/or that need to be put in place to exponentially address the drivers and the causes of that gap.”