7/31/2018
By Courtney E. Martin
Ms. Martin is the author, most recently, of “The New Better Off: Reinventing the American Dream.â€
It appears we are experiencing a bit of an economic reckoning in this country. Historic wealth inequality has prompted a wide variety of experts to put some big ideas on the table.
Do we need a federal minimum wage, or should we expand the earned-income tax credit? Even more extreme, but gaining traction on both sides of the aisle, do we need a universal basic income? Or is the solution, as many conservatives would argue, less government intervention, not more?
While Democrats and Republicans tussle over how we address the fact that the top 1 percent of Americans now have more than twice as much wealth as the bottom 90 percent, one organization has been forwarding an unapologetically small, surprisingly radical idea: localism.
Rodney Foxworth, the executive director of the Business Alliance for Local Living Economies (known popularly as Balle), explains it this way: “By localism, we don’t mean parochialism. We mean creating direct relationships within the context of capital. In other words, when Wall Street bankers in New York or London can make important decisions that deeply affect the lives of people in Jackson, Miss., or rural Oklahoma, we’ve got a problem.â€
You wouldn’t be alone if you associate localism with white hippies of the 1970s who liked their granola homemade and their T-shirts tie-dyed. Mr. Foxworth’s entry point is anything but them.
The son of a court clerk from Baltimore, Mr. Foxworth remembers his mother reading Langston Hughes’s “Mother to Son†— “life for me ain’t been no crystal stairâ€â€” to him almost every night and exposing him early on to the criminal justice system and all the havoc it was wreaking in black communities. After graduating from the University of Maryland, Baltimore County, he worked as a journalist before finding himself pulled into the world of community-minded black entrepreneurs in his hometown — people who created jobs for formerly incarcerated citizens and incubated new businesses started by local residents.
Now 34, Mr. Foxworth explains: “I didn’t think about being part of a localism movement, but I was completely enmeshed in the place where I grew up and valued the set of relationships that I knew were required to move anything forward.â€
When some of the most interesting leaders he knew became Balle Fellows, he became intrigued by the organization. Founded by a Philadelphia business owner, Judy Wicks, it began as a membership organization in 2001 — a 21st-century sort of chamber of commerce for people trying to raise public awareness of the power of buying locally. But by 2010, the members began to think more deeply about how capitalism in the United States had evolved in a way that discriminated against people like the Foxworth family, people of color in urban centers, indigenous folk and poor rural Americans when they tried to buy homes or create small businesses.
Any attempt to encourage local economies, they reasoned, would have to acknowledge that history and embrace the under-resourced talent across the country. The Balle Local Economies Fellowship program, created in 2011, focused on bringing the “unofficial mayors of their towns†together to share best practices on building local, more equitable economies and gaining knowledge of alternative economic models like worker-ownership, land trusts and community-driven investment.
Mr. Foxworth became a fellow (a status that lasts 18 months) in 2016 and says he was transformed, both personally and professionally. He remembers a moment on the first day of the first gathering he attended, when a white woman from rural Kentucky with a strong accent started speaking and he felt himself recoil. “Wow, what have I gotten myself into?†he remembers thinking. “I was this black dude from Baltimore with all of these biases about what this person brings. By the end of the week, I connected with Ada Smith and realized she was a brilliant, passionate leader from Appalachia who was helping her small town transition into a postcoal economy and that we really shared the most fundamental value: love of our communities.â€
Mr. Foxworth became the executive director of Balle last year. To date the organization has had 101 fellows from 43 states and provinces, collectively serving 121,650 small businesses. People of color now make up a majority of both the board and the staff.
Balle is working on many of the United States’ most excruciating pain points — economic inequality, racial animosity, partisanship and rural vs. urban divides. They don’t do it by just making unusual allies of people like Mr. Foxworth and Ms. Smith, who have historically been excluded from the mechanisms that build wealth (like mortgages and business loans); they also seek to raise the awareness and change the practices of those with a disproportionate amount of privilege.
One of their newest and most successful efforts is called the Local Economy Foundation Circle. Since its founding in 2014, it has worked to encourage 50 philanthropic leaders, with combined resources of $8 billion, to rethink how they operate. Most of these leaders have come from community foundations, distinguished by their goal of enhancing the lives of the public in a given region; there are 750 such foundations throughout the United States, with assets ranging from $3 million to $8 billion.
The Local Economy Foundation Circle functions on two levels. One is interpersonal. Foundation leaders are guided through a framing and a vocabulary about race and equity. And they are invited to reflect on their own power and privilege. Balle facilitators ask questions like: Who are you, and why do you do the work that you do? What did you learn about money growing up? For many, this is a new experience. Jessica David, senior vice president of the Rhode Island Foundation, calls it “the most challenging, cage-rattling and integrated experience I’ve had in my professional career.â€
The other level is tactical — by systematically analyzing where their investments are held and how they are giving away money, leaders learn how to get ruthlessly honest about where their foundations are failing to live up to their values. Sarah Kinser, the chief program officer of the Arkansas Community Foundation, was surprised by the process: “I expected to find a step-by-step recipe for transitioning our portfolio, but the Foundation Circle helped me realize that there’s no one-size-fits-all approach.â€
But that doesn’t mean the Circle’s members can’t be helpful to one another; to the contrary, they create a support group as they go back to their home institutions and try to change them. This, not the accounting, is often the hardest work. It often involves a lot of pushback from boards, attorneys and others who are accustomed to the old ways. Ms. Kinser explains: “The members of my cohort are supporting one another in discovering ways forward that are specific to the needs of the communities we serve and the organizations we represent. It’s more difficult, but it’s more authentic and, I believe, will be more effective in the long run.â€
Many of the leaders go back to their institutions and do an audit of where their endowments are invested, then disinvest from companies that don’t align with their values and invest instead in local efforts like affordable housing developments, work force development programs and small businesses. To date, foundations involved in the program have committed to reallocating over $100 million into their communities and mission-aligned investing.
In some ways, that’s a drop in the bucket when compared with the larger philanthropic sector. In 2014, nearly 90,000 foundations operating in the United States reported giving away about $60 billion; they are legally required to give away just 5 percent of their assets each year. Much ink has been spilled analyzing the failures of various grand philanthropic gestures, like Mark Zuckerberg’s $100 million investment in the Newark public schools. But rarely do we hear about another, even more significant number: in 2014, those same foundations reported holding $865 billion in assets. In other words, we hear a lot about the 5 percent of foundation dollars actively at work, but almost nothing about the 95 percent that could be working.
Typically, foundations have operated with a sort of church-and-state mentality about their money and how it is handled — one set of people (finance guys) manages the money according to one set of values (creating profit), while a different set of people (do-gooders) donates the money according to another set of values (an equal start for everyone). Foundation leaders are evaluated, in large part, on the growth of their assets. But members of the Local Economy Foundation Circle are questioning whether growing, or even maintaining, wealth is even ethical.
The Heron Foundation, which is dedicated to helping people get out of poverty, is one of the leaders in this regard. In 2012, its then-president, Clara Miller, wrote: “Business as usual — with respect to both strategy and the way we operate as a foundation — is no longer an option.†She and her staff audited their entire $270 million endowment. They found that only 44 percent of the companies they were invested in actually aligned with their values. Today, after withdrawing funds from companies like CoreCivic, the largest operator of private prisons in the United States, formerly known as the Corrections Corporation of America, that number is an impressive 100 percent.
It wasn’t easy. In a reflection on the lessons learned for Stanford Social Innovation Review, Ms. Miller explains: “We looked underneath the traditional ‘asset allocation’ view — equities (stock), debt (bonds), real assets, alternatives and so on — to get visibility into the enterprises and projects that give these assets value. This practice has been labor intensive, but has sharply improved the integrity of the underwriting and monitoring of our holdings.â€
The Heron Foundation has gone on to fund Balle’s Local Economy Foundation Circle because they are intent on helping other foundations take these same steps. If even a fraction of the $865 billion that foundations currently invest in Wall Street were reallocated to Main Street, the country would look and feel profoundly different — particularly to those who have been left out.
In “Small Is Beautiful: Economics as if People Mattered,†E. F. Schumacher wrote, “from bigness comes impersonality, insensitivity and a lust to concentrate abstract power.†Forty-five years later, Rodney Foxworth and his unlikely band of brothers and sisters are modernizing the crusade for community-mindedness.
“The people and communities most adversely impacted by economic extraction and wealth inequality are resilient and have long innovated solutions to enduring systemic challenges,†Mr. Foxworth explains. “They’re doing the hard work. Now it’s time for policymakers, philanthropists and investors to follow their lead.â€
Courtney E. Martin, a co-founder of the Solutions Journalism Network, which supports reporting about responses to social problems, is the author of “Do It Anyway: The New Generation of Activists.â€
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