Investing in dreams of Minnesotans left behind

Opinion editor’s note: Star Tribune Opinion publishes a mix of national and local commentaries online and in print each day. (To contribute, click here.) This commentary is included among a collection of articles that were submitted in response to, or are otherwise applicable to, Star Tribune Opinion’s June 4 call for submissions on the question: “Where does Minnesota go from here?” Read the full collection of responses here.

•••

Minnesotans are sensible and action-oriented. We like to get things done for the people of our state. We’ve seen these characteristics applied recently, resulting in significant investments in affordable housing and efforts to close the region’s racial wealth gap.

Going forward, we can build on this progress, channeling this same energy to create a Minnesota where every person can thrive. All Minnesotans, no matter their race or background, deserve to share in our region’s economic prosperity.

It is achievable, and we all have a role to play in getting there. In particular, we need our regional leaders, including our corporate, philanthropic and financial leaders, to help make this vision a reality.

The good news is that many are already coming together, creating the building blocks to transform how investments in people, particularly our region’s Black residents, happen so more of these residents can buy a home, start a business, or bring their own startup or innovation to life.

In the aftermath of the murder of George Floyd, many regional leaders pledged to help build a Minnesota where Mr. Floyd could have thrived. Over the last year, we have been mobilizing alongside our peers through the GroundBreak Coalition, a group of more than 40 public, private and philanthropic leaders working to unlock billions of dollars in capital to meet this moment by investing in the aspirations of Minnesotans who have traditionally been excluded from accessing these dollars.

Our approach puts the onus on institutions that control capital, like ours, to change the systems for how money flows so investments get to people who need them yet have not been able to access them. This approach will create new generations of homeowners, business owners and entrepreneurs, generating wealth where it hasn’t existed and shrinking regional disparities.

For most people, building wealth requires access to money, whether from a bank to secure a mortgage or friends and family to start a business. But for generations, Black Minnesotans and other racial groups in our state have been denied these wealth-building opportunities. Land use policy, divestments of resources and a legacy of racial injustice have contributed to persistent racial wealth gaps.

All of these factors have resulted in declining Black homeownership and entrepreneurship rates. In 1950, 46% of Black Minnesotans owned their own home. By 2019, the rate of Black homeownership had fallen to 25%, a nearly 50% gap from their white counterparts in the state. By taking an honest account of this reality and who can access capital or not, we can change this trajectory.

Over the coming months, regional leaders will have the opportunity to match words with equally bold action. Our initial efforts will target opportunities for building Black wealth given the significant disparities and systemic inequities that have impacted this community. However, changing the financing system to address Black wealth disparities will create successful strategies and solutions that can be applied to reduce disparities for other communities of color, rural communities and people across the state who historically have not had access to the capital needed to fund their dreams.

As our state continues to diversify, ensuring everyone can share in its prosperity and bring their talents and dreams to bear will make Minnesota economically stronger, more competitive, attract outside investments and create more opportunities for all residents.

There are three parts to GroundBreak’s plan:

First, community work groups identified what solutions would address common obstacles for Black homeowners, entrepreneurs and neighborhood commercial developers. Many solutions, like forgivable loans for small businesses and down payment assistance programs for homebuyers, are tried and tested. But they have never been widely available to Black wealth builders and targeted in one region.

Second, GroundBreak is building a shared financial platform to deploy capital at scale. This will allow institutions to efficiently aggregate and mobilize billions of dollars toward Black wealth builders. A shared financial platform will allow banks, governments, individual investors and foundations to facilitate loan guarantees and provide credit, grants and low-cost capital in a predictable, scaled and permanent way. When we do this together, the impact is greater.

Third, GroundBreak is marshaling resources and long-term investments. Throughout the summer, we are asking corporate, philanthropic, public leaders and investors to commit not only funds but to fundamental change to launch GroundBreak’s shared financial platform in the fall.

If we are successful, in the next 10 years we will dramatically shrink regional racial wealth gaps, resulting in 11,000 new Black homeowners, 60 new commercial developments in culturally important corridors and financing for 5,000 new Black-owned startup businesses.

Together, this effort can benefit countless lives and improve our state, attracting national investments and creating a model for other regions facing similar challenges. We call on leaders to lean into the Minnesota tradition of taking sensible actions and join us in reimagining, redefining and resourcing what is possible to help deliver purposeful, reliable solutions that enable full participation and economic engagement of all people who call or want to call Minnesota home.

Tonya Allen is president of the McKnight Foundation. Jeanne Crain is president and CEO of Bremer Bank. Both are members of the GroundBreak Coalition Steering Committee.