For Boston’s working-class communities of color, the city’s economy is not working. That’s evidenced by a shocking racial wealth gap—the median net worth for black households is just $8, compared to $247,500 for white households. As in many cities, when economic development does happen in these neighborhoods, it often displaces, rather than benefits existing residents.
The Boston Ujima Project is a unique initiative posing the question of just what it would take to make a lasting change to that deep inequality—combining philanthropy, investing, and organizing to build wealth in a way that benefits and is guided by communities.
“I think we’re trying to propose what a new economy could look like,” says Lucas Turner-Owens, fund manager for Boston Ujima Project.
At its core, Ujima is a place-based investment fund, controlled democratically by community members to support businesses, real estate, and infrastructure projects that would otherwise struggle to find financing. It also layers philanthropy with other forms of capital to mitigate risk and to make it easier for working-class and local people to invest in the fund themselves. Beyond investing, Ujima organizes the community in support of its projects and other social justice campaigns.
Planning to make its first round of investments this year, Ujima is initially aiming to raise and invest $5 million for projects that provide community benefit, which could mean anything from fresh food to energy efficiency. But the people behind Ujima are also hoping to model a new kind of economic development, one that relies on cooperation and local control, and mixes grants and investments to break down inequality.
“It might take grants to support the infancy stages of some of these businesses, but at a certain scale they can generate real wealth in communities of color,” Turner-Owens says. “Whereas there are some grant solutions that are more palliative that need to be replicated again and again.”
The Ideals (and Math) Behind Ujima
The long road to the Boston Ujima Project—including a lot of groundwork laid by predecessors like the Boston Impact Initiative and Pioneer Valley Grows in Western Massachusetts—has taken hundreds of hours and dozens of lawyers. The details of its particular formula of community-driven investing get a little complicated, but there are a few main components that make Ujima unique.
First, it’s an investment fund dedicated to projects that benefit Boston’s communities of color. But it also prioritizes investors within these communities. This principle, in particular, builds on the work of the Boston Impact Initiative, a project launched in 2013 to combat the racial wealth gap, by not only lending to enterprises in lower-income areas, but also offering investment opportunities to build wealth within them.
“What we’re trying to demonstrate is that you can raise capital from the community, deploy it into the community to help close the racial wealth divide, and layer capital together to accomplish those goals,” says Deborah Frieze, co-founder of Boston Impact Initiative, one of several organizations that helped launch Ujima.
That means weaving together a range of funds—including grants, lower-return philanthropic investments (like PRIs and recoverable grants), and other forms of capital—to offer reasonable rates and to allow a certain amount of risk in lending to projects that would otherwise have a hard time accessing capital.
One innovation that Boston Impact Initiative and Ujima share is that they flip the logic of most investment funds, which typically reward investors that have the most wealth, and that invest the most for the longest time. Instead, both funds actually favor investors that are not wealthy (known as non-accredited), offering them the least risk and equivalent or better returns. Philanthropy and philanthropic investments make that possible by building a buffer of potential loss that absorbs the risk of investment for ordinary folks and local institutions that want to be involved.
Philanthropy also makes the operation of these funds possible, as the income generated wouldn’t otherwise cover the costs of running them. So Boston Ujima Project is actually a grant-funded nonprofit, with about half a million dollars in salaries and operations that include running the Ujima Fund. The nonprofit’s main funders include the Oak Foundation, the Hyams Foundation, and the Financial Cooperative.
At the same time, the goal is to raise a philanthropic reserve within the Ujima Fund of $500,000 that it can basically afford to lose, as part of its overall fundraising goal of $5 million. If it loses more than that, low-wealth investors still have priority in terms of getting their money back.
“We’re challenging the premise of capitalism, if I can be that bold, that the holders of capital should be rewarded just for having accrued large amounts of capital,” Turner-Owens says.
So far, the philanthropic reserve and philanthropic investments have all come from individuals, often from donor-advised funds, although the team is pitching foundations. In the long term, the goal is to make the fund self-sustaining.
Another key point of difference in Ujima is that it’s drawing investments from working-class individuals for as little as $50. The reason for setting such a low financial bar for entry, and engaging ordinary folks to invest, has everything to do with Ujima’s biggest distinction—its democratic nature.
A Community-Led Fund
Right from its start, the Ujima Project was a highly collaborative endeavor. The idea took shape during a year of research in 2015, and gathered input from more than 40 social justice, investing, and social enterprise leaders. Aaron Tanaka, then working at Boston Impact Initiative, was a key co-founder, and Ujima drew on models of other impact investors, worker cooperatives, land trusts, and more.
In particular, the group looked at participatory budgeting, public banking, and credit unions, and came up with this local, democratically controlled fund. This mirrors a growing interest we’re seeing in philanthropy right now, in which participatory grantmakers are handing over leadership to members of the communities they serve.
In 2016, more than 175 investors crowdfunded $20,000 for an in-person pilot project, and voted in real time to make loans to five black- and immigrant-owned businesses. Organizers then fleshed out the concept, formed a team—led by Nia Evans, former executive director of Boston NAACP—and officially launched in 2017.
The full process now has multiple points in which local members (who are often but not always investors) steer investing decisions. They’ve gathered in a series of five assemblies to date, drawing more than 550 residents. Attendees developed a set of 36 standards for socially responsible businesses, and drew up a list of 150 businesses that residents valued and wanted to potentially support. That includes web development, composting, restaurants and catering, staffing, landscaping, and more.
During the application for funding, members will be able to send in questions to candidates, and after vetting by an investment committee, cast their votes. The voting is far from a formality. By Ujima’s charter, 51 percent of members must vote, and 51 percent of voters need to approve an investment.
That’s a big part of why it’s so important to get small investors involved—they need community members to be engaged, to have “skin in the game,” Turner-Owens says. “What’s happening with my hundred bucks?”
The project extends beyond the investments, too. The team and community members remain engaged, supporting the businesses from then on with consumer organizing to boost sales, aligning businesses along the supply chain, and helping to arrange contracts with large institutions. Residents are invited to participate in grassroots campaigns, and a “time bank,” an online platform for exchanging hours of skilled work.
A New Economy
If it sounds complicated, it is, and that’s by design. After all, Ujima is building in several elements that go beyond the comparatively simple mandate that otherwise rules the economy—profit.
That’s a big part of why the philanthropic presence is so important, at least in the beginning. I think of it as sort of picking up the tab to fold in these altruistic or cooperative elements into this new economy Ujima is envisioning. If nothing else, it will take a ton of staff time to make the model successful.
It’s that level of ambition that makes Ujima so compelling. Raising $5 million is no small task, and it’s an open question as to whether there’s enough interest from investors to pull it off—$500,000 has been raised so far. But what really makes Ujima ambitious is the extent to which it’s trying to envision a different version of capitalism. It’s part of a larger movement happening in Massachusetts and around the country to propose alternatives to an economic system that’s leaving behind or holding back large swaths of the population.
That raises the question: Is a project like Ujima merely a local bulwark within that economy, or can it really offer a path to building a new system that is more just? The folks at Ujima hope it’s the latter. The fund itself can only grow so much, but the idea is that other communities can replicate the project, taking advantage of the legwork that’s already been done. Deborah Frieze of Boston Impact Initiative describes a vision of existing entities like community foundations, local banks, or CDFIs adopting similar place-based investing strategies. And local solutions do tend to bubble up to broader change.
But there are hard truths the project has to overcome. Turner-Owens is wary of the challenge of market size, for example, and the chicken-egg problem of limited consumer dollars in the communities that these businesses are aiming to serve.
When it comes to fundraising, the risk of lower returns and participatory decision-making are two steps outside of many investors’ comfort zones. Foundations are an obvious fit with their endowments and missions for social good, but it requires them to break that dichotomy that investments are meant to maximize assets and grants are meant to do good. There’s clearly skepticism about venturing outside the traditional (and important) mission of just nonprofit grantmaking.
But projects like Ujima offer a compelling challenge to that dichotomy between investing and grantmaking, and asks what streams of money and sustained community involvement it takes to really shift wealth and power. And maybe that’s the difference between responding to an unjust economic system and starting to reshape it.