Across the spectrum of funding, BIPOC (Black, Indigenous and people of color) entrepreneurs are routinely left out or underfunded by conventional investors, venture capital firms, and commercial banks. Founders of color face great challenges obtaining funding, and face significantly higher hurdles accessing capital than their white counterparts.
RSF’s Racial Justice Collaborative (RJC) is a philanthropic initiative that provides diverse forms of capital to social enterprises that are: owned and led by BIPOC entrepreneurs, use a stakeholder approach (supporting community, employees, customers, and the environment), and based in the U.S.
The RJC can provide partial first loss guarantees that will support enterprises that otherwise could not get access to financing. This means the RJC will assume debt obligations in the event a borrower is not able to repay. Loan guarantees are a vital way to provide earlier stage organizations with the financing needed in order to grow.
The RJC can provide investments to for-profit social enterprises and funds that align with the mission of the RJC. Investments can take the form of notes, fund stakes, or shared investment circles. Equity, SAFE notes, and convertible debt can be considered if there is a finite term as RSF’s intent is to not dilute equity ownership for founders.
The RJC can provide technical assistance grants to support the capacity and development of social enterprises.
Participatory grantmaking models bring collaboration, trust, transparency, and community wisdom into the grantmaking process. The RJC can deploy grants using a variety of participatory grantmaking models, including Flow Funding and Shared Gifting Circles.
The RJC can provide recoverable grants to 501(c)(3) organizations. Recoverable grants are repaid to the RJC if and when the grantee meets certain agreed upon thresholds for success.
The RJC working group is a collaborative partnership between RSF staff and a group of external advisors: Rodney Foxworth from Common Future, Nwamaka Agbo from Kataly, and Kate Poole & Tiffany Brown from Chordata Capital. The working group’s purpose is to identify and recommend funding opportunities that are mission aligned with the RJC. The external advisors are compensated by the collaborative to share their expertise in racial justice and community wealth building to ensure that the use of funds are regenerative, non-extractive, and in alignment with the purpose of the RJC.