Here we are in 2015 and economic justice is on everyone's mind (or it should be). Five years after the official end of the Great Recession we are still witnessing historical levels of income inequality, but finally some crucial links are being made. One of the first calls to action post Ferguson, was #BlackoutBlackFriday. While most people may not have gotten the link between 'no indictment' and boycotting large retailers the day after Thanksgiving, I was thrilled that the organizers did. They said their aim was "to take a stand in the fight for economic freedom and equal human rights." Equally interesting to me was seeing September's People's Climate March in NYC not so much calling for environmental policy change as pointing out the flaws in our Wall Street-financed, underlying economic system.
I recently read an article that profiles a study looking at possible causes or correlations to the growing inequality in society over the past several decades. From the off-shoring of jobs due to globalization, to new technologies that displace workers, the defunding of unions, or the suppression of minimum wages, the study tracked many potential contributors across 71 countries. But the number-one cause (by multiples!) turned out to be something that they called "financialization: how much of a nation's economy is devoted to Wall Street-like financial activities."
Compare this to another article in the Washington Post, which decries the fact that local government investment funds are being swept clean from these same Wall Street financialization activities. But this article also shows a different path -- one that boosts the wealth of local people instead. Thirty years ago, Quebec's governmental pension fund started investing in small and medium sized businesses in their own province. Their calculations show that since then, they have created 86,624 new local jobs and kept 81,993 more from moving overseas. "The flow of public money into Wall Street coffers has greater ramifications than simply putting pension funds at risk and corrupting our political system. ... Consider what might happen if pension money were steered into the communities where pension beneficiaries live."
Indeed. And a growing number of us are well beyond the consideration stage -- change is underway.
Just last month, BALLE and RSF Social Finance convened about a dozen Community Foundations representing close to $2 billion in assets into a new Community Foundation Circle. This peer-learning group of Community Foundations leaders want to shift their investments toward place-based impact investing. For those unfamiliar, foundations generally invest their funds (and the funds of their community donors) in the stock market and then use the annual ~ 5 percent "earnings" to make grants in their communities. But these foundations have come to realize that investing in Wall Street with their funds rather than investing in their own communities, many of which are suffering mightily right now, is maintaining a system of inequality. And these path-breaking foundation leaders are committed not only to shifts in their own communities but they want to shift the field of all 800 community foundations across the country.
This is a paradigm that is ripe for evolution. Many of us remember years back when the Gates Foundation was widely criticized for making grants to solve health crises and challenges that came in part from the profits they "earned" from investing in companies that were causing health crises and challenges (according to The Nation, Gates Foundation's investments are still undermining its mission). Similarly, a local community foundation official told me early last year how horrified she was when she realized that while their programmatic grants were made primarily in low-income communities, some of their biggest investment returns were coming from predatory pay-day loan companies that harmed those same populations. The opportunity -- or better yet imperative -- ahead is the alignment of assets to mission: the integration of philanthropic gifts and investments for the health of all people in the community where you live.
In Reading, PA, one of the poorest cities in the nation, and increasingly in other poor areas, "elected officials ... view the systematic building of local economic democracy as a form of survival." "Part of it is understanding that in a globalized economy we have to re-localize as much as possible to keep money circulating here," says Eron Lloyd, the 34-year-old special assistant for policy and sustainability who returned to Reading, his hometown, to join the effort. "The first step is understanding that the status quo does not work. We've done everything you can do from a conventional (economic development) standpoint. We had all these fancy financial instruments right before everything collapsed in the stock market and we lost our shirts."
BALLE and its allies are committed to bringing this kind of common sense back into our economy. Over the coming months, much of our programming, including our annual conference in June, will focus on community capital. It is time to divest from Wall Street and invest instead in the local businesses and organizations that serve our communities and all of our people.
The impact that "financialization" has had on real people in our communities is extreme. The path ahead will not be easy, but it is right and it must be forged. We must replace our failing economy with a system that supports prosperity for all. I am deeply inspired by the courageous and innovative leaders in this circle who are taking the steps to build the path by walking on it.