Richard Rothstein, a scholar at the Economic Policy Institute, recently published a disturbing book, The Color of Law, about how the federal government played a central role in segregating America during the great boom decades of the 20th century. One result of these policies is that African Americans were unable to build wealth by buying homes in the new suburbs, with ramifications that play out to this day. As Emanuel Nieves writes for the Corporation for Enterprise Development, “African American and Latino families face a racial wealth divide that sees them owning just $11,000 and $13,700 in median wealth, respectively, compared to the $142,000 owned by the median White household.”
Few organizations have done more than CFED to bring attention to the racial wealth gap and address it through public policy. As we've reported before, CFED is a pioneering leader in the asset building movement, with a focus on building wealth among lower income groups historically bypassed by the engines of American prosperity.
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Over the years, CFED has drawn support from a who's who of progressive foundations, but it's increasingly won backing from major banks focusing new attention on low-income urban communities of color. The mix of funders worried about America's vast racial gaps in wealth and opportunity is increasingly diverse and interesting. Most strikingly, as we've noted, is how more top financial firms now seem to grasp that economic inequality is likely to serve as a long-term drag on their growth and profits. The future of these institutions will be adversely affected if America's growing non-white population can't move faster to build earning power and wealth.
That insight is among the drivers of all the new grantmaking by banks to promote equity that we've been reporting on lately, including some specifically focused on building wealth in communities of color. Last year, for example, we reported on a new partnership between CFED and JPMorgan Chase to bring asset building initiatives to multiple cities across the country, starting with New Orleans and Miami. JPMorgan Chase committed to investing $2 million in developing local nonprofit leadership in order to address racial and financial equity issues.
Meanwhile, it's not at all surprising to see the W.K. Kellogg Foundation addressing the racial wealth gap in a sustained way. No major foundation has made racial equity a bigger focus of grantmaking than Kellogg. And while this work takes many forms, addressing the wealth gap is high on Kellogg's agenda. In fact, this month, Kellogg directed $2 million to CFED for research and advocacy toward that goal.
Over the next three years, CFED will use the money for research that aims to "change public discourse and ensure that millions of low- and moderate-income people of color gain access to practical solutions that expand their financial well-being."
On the national level, it’s hard to see Republicans embracing those priorities anytime soon. The Trump administration's proposed policies and budget cuts generally point in the opposite direction—hurting communities of color (and white rural communities, too), while delivering tax cuts to wealthy households.
But at the local and state levels, there are plenty of opportunities to push forward efforts to close the racial wealth gap. In many ways, this gap (and economic inequality in general) is a highly localized phenomenon, dependent on factors like exclusionary zoning, unequal schools, and a dearth of financial capital to spur new businesses and growth in low-income areas. The federal situation matters, but local policy and procedure are also important.
In any case, Trump won't be around forever. The push for racial wealth equality is a marathon, not a sprint. Federal administrations will come and go, but the systemic problems CFED faces are very old and very pervasive, as Rothstein's new book underscores.