Black Farmer Fund and the Power of Social Impact Capital
Black Farmer Fund (“BFF”) is on a mission to nurture Black community wealth & health by investing in black food and farm businesses in the Northeast.
This is a relatively simple concept - raise money and make it accessible to business owners that have historically had little or no ability to get loans or investments to build their businesses.
But when you break it down, BFF has a radical approach to deep structural issues within our banking and food industries.
BFF is structured to support Black farmers, food business owners, and land stewards by helping them benefit equitably from financing, intellectual capital, technical assistance, and social capital.
I have had the honor of serving Black Farmer Fund as CFO for two years as BFF moved through it’s startup period. In this post, I’ll share some of their story and why I am so committed to their success.
Before we dive too deep into the impact Black Farmer Fund is having in the world, let’s make sure we are all on the same page about what I mean by social impact capital.
What is Social Impact Capital?
Capital markets are places where suppliers of money (banks, investment funds, individual investors) interact with organizations or people who are seeking investments. The groups seeking investment can include businesses, individuals, governments or corporations. The most commonly known capital market is the stock market. But it is far from the only one.
Now, this brings us to the social impact part of social impact capital.
“Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” (The Global Impact Investing Network aka The GIIN.
Note: If you want to learn more about impact investing, check out The GIIN’s Guide: “What you need to know about impact investing”
The term social impact capital refers to funds or groups of angel investors that use impact investments to back businesses who pursue a mission to create positive social change in communities and the world. Organizations in the social Impact capital space bring together investors and businesses that are pursuing both financial and social impact returns.
Historically, of course, capital markets in the US have been a tool of the systems of white supremacy and patriarchy – so they have efficiently channeled money and investments into certain types of businesses owned primarily by white men, while largely ignoring businesses that did not fit the mold of people/companies expected to succeed. Companies owned by Black, BIPOC, women or LGBTQIA individuals have been massively and intentionally overlooked and under-funded.
While alternative lending and financing structures have always existed – most of them have used extractive and abusive lending techniques to take advantage of people with fewer means or less education.
Black Farmer Fund is part of a groundswell of funds, private investors and emerging venture capitalists that seek to change this by moving investment dollars into companies owned by overlooked and under-funded groups and to do so using non-extractive terms and relationships.
BFF is taking its mission deeper by embedding liberatory practices in every aspect of its organizational structure and operating practices. In this way the creation and growth of BFF is itself a step towards increased social justice for Black people and Black communities.
How does Black Farmer Fund invest social impact capital to address social justice for Black communities?
The idea to create Black Farmer Fund came from two Black farmer-activists, Karen Washington and Olivia Watkins who met at a conference in 2017 and shared their frustrations about the lack of financing available to Black farmers.
They were motivated to create a means for community members to access capital that recognized the historical discrimination of lending and banking that informs the present reality of Black communities. The BFF vision is to address the need for capital in a way that does not replicate the discriminatory and predatory lending practices driving Black farmers and land stewards off their land. Instead, the fund centers farmers’ lived knowledge, collective decision-making and community relationships.
The goals of Black Farmer Fund are...
To function as an investment vehicle that provides social impact capital built around individual needs to black food businesses in the northeastern US
To center Black farmers, business owners, and land stewards in funding decisions, through practicing collective decision-making with community-led investment committee
To serve as an investment vehicle that creates space for community members with varying levels of wealth to invest
To collaborate to provide other supports for black food businesses and land stewards
To increase the number of black business owners and create a strong network for them to collaborate across the food system
To understand and move away from historically ingrained attitudes of scarcity and adopt an abundance mindset.
These are lofty goals. But what does this mean in practice?
BFF launched a pilot program in 2020 and initially raised $1 million in grant and loan capital which they have invested in 8 Black farm and food businesses in New York.
They have built an incredible team united around this shared vision and are now raising a $20 million fund that will provide a mix of grant and loan capital. You can support Black Farmer Fund directly with a donation or by investing in the fund!
BFF uses a community-based lending model with an investment committee comprised of activists and business owners to advise on grant and loan decisions while their team of professionals holds responsibility for vetting and supporting the businesses.
Where to Go For More Information:
To hear about the founding of BFF and their practices, you can listen to this great podcast from the LIFT Economy: Closing the Racial Wealth Gap in the Food Industry
For more on BFF’s strategy and the pilot project read more on Impact Alpha: Black Farmer Fund is Reimagining US Agricultural Finance on Farmers Terms
CFO Lessons From Supporting the Black Farmer Fund
Being a CFO for a non-profit is not my standard engagement. But since impact finance is one of my geeky obsessions; and I have worked for many years with sustainable food and farm businesses, working with the Black Farmer Fund been a good fit, as well as a challenge. Black Farmer Fund most certainly meets our focus on working with companies/organizations where the business model is built to create and amplify social impact, as well as my personal commitment to supporting and amplifying Black leadership in racial justice work.
Even while Black Farmer Fund is a bit unusual in our CFO portfolio, there are some core themes of our work together that can be applied in any business.
Lesson 1: Connect the vision and strategic objectives of your business to your daily tasks.
When I started working with Black Farmer Fund, their strategic goals and objective of creating an investment vehicle to provide social impact capital and create social justice for the Black community through food were already set and clearly articulated. (Check and check!)
What we worked together to do was to ensure that their daily tasks and informed decisions were all pointing towards their ultimate goal.
One major way we did this was through accountability — something all business owners need in order to create maximum impact.
Lesson 2: Meaningful numbers have to be established early in your business.
Because Black Farmers Fund grew so rapidly, we needed to just as quickly make sure the numbers they were seeing made sense. We also needed to ensure that these numbers could help inform the big decisions that had to be made when investing the social impact capital in the Black businesses that needed it. In the first year working with Black Farmer Fund we spent time putting the basics in place: creating accounting processes and financial control policies; providing monthly financial reports to the very active and engaged board.
As BFF hired more staff and grew, my CFO role shifted and is now more focused on supporting the “owners” of each program area as they create and implement budgets and on further building out the finance department so that the finance team is ready to handle the more complex number and types of transactions as their investing programs begin to scale.
Getting your structures for meaningful numbers in place early helps to avoid any long-term mistakes and allows you to create the greatest impact with your decisions.
Lesson 3: Culture = Impact
While BFF is structured as a loan fund, it is also focused on building community and building Black wealth. Core to this mission is investing deeply in the well-being of its team, community participants and creating a support network that weaves healing into all elements of what they are building.
As a CFO - I’m often in the role of looking at the numbers and seeking impact through easily quantifiable results. Black Farmer Fund continually reaffirms the truth that the deepest impacts are often hardest to count and still immeasurably important.
Take Action:
Support Black Farmer Fund directly with a donation or by investing in their fund.
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