The past few months have elevated discussions surrounding diversity, equity, and inclusion to a new level. I believe that we are at a tipping point, in terms of the need for social and economic justice in our country as well as the need for greater equity and representation in our workplaces.
Generations of discrimination have created and calcified an enormous opportunity gap that has inhibited too many from attaining the full measure of the “American Dream,” most evident amongst Black Americans. That opportunity gap can be seen in all areas of American life, from under-funded educational systems, to a lack of healthcare access and an unjust criminal justice system. But we see it most clearly in terms of economic inequality — a lack of access to income and wealth-creation opportunities that makes it harder to achieve goals in education, health, and safety.
Economic inequality is not only one of the most important drivers of inequity in the Black community, it is also one of the fastest growing. There is an increasing income gap between white and Black Americans — and as that gap continues to grow, it feeds an expanding wealth chasm between white and Black families. According to data from the Federal Reserve, in 2016 the median net worth of white families was $171,000. The median net worth of Black families, on the other hand, was just over $17,000, less than one-tenth of that of whites.
As an African-American CEO, I have been more vocal publicly now than I have been in the past, in an effort to personalize much of the pain being surfaced for so many people, and to emphasize the urgency of addressing systemic inequity in an enduring manner. I have also expressed my views within Cadre, and over the past few months have met with dozens of our passionate employees to align on how we can make a real and lasting difference, both for our company and our communities.
The result of those conversations is a four-pronged approach to making sustained and impactful changes. I call them the Four Ds: Discuss, Donate, Diversify, and Deliver. Below, I offer more detail on how I define these areas and the commitments we are making within each of them.
We have a tremendous opportunity through our network and platform to foster open dialogue around the challenges facing marginalized communities in America. We know it is important to have difficult conversations regarding racial inequity and injustice, but we also know that only through open dialogue can we address previously hidden pain and suffering and work towards solutions.
At Cadre, we have a tradition of inviting industry mavericks to address our team members through our Cadre Chats program. Historically, these conversations have served as an opportunity for changemakers and leaders to discuss their life experiences, offer advice on navigating problems within their respective industries, and promote discussion around business solutions to these problems. Over the next two months, we will speak with several leaders who will specifically discuss social inequities and the ways we all can drive meaningful change. We will also open many of these conversations up to those outside of Cadre; by doing so, we hope to highlight the importance of broad-based support for enduring change – something that can only occur when more people commit themselves to doing what is necessary, and doing it well beyond the present moment. We are grateful to each of the initial leaders who have agreed to participate, including: Margaret Anadu (Head of Goldman Sachs Urban Investment Group), Shellye Archambeau (Former CEO of MetricStream, Board Member of Verizon Communications, Okta Inc., Nordstrom), Damien Hooper-Campbell (Chief Diversity Officer, Zoom), Wes Moore (CEO, The Robin Hood Foundation) and Darren Walker (President, Ford Foundation).
We also believe that financial support is necessary and important to advance the causes of economic justice, social justice, and equality. Beginning immediately, Cadre will commit to donating to pre-approved 501(c)(3) charities that promote equality and social justice through our employer match program, where we will match donations made by our employees dollar for dollar. The organizations on our list will be nominated by our employees themselves, so we can continue to support organizations that are both relevant to the cause and important to our Cadre family. Below are some of the organizations that we are currently supporting:
All Star Code: I currently serve as an Ambassador to All Star Code. All Star Code is a computer science education organization focused on motivated Black and Latino young men. They are doing a tremendous job developing a new generation of entrepreneurs, having graduated more than 500 scholars with 85% of scholars going on to study computer science in college.
Black Girls Code: Black Girls Code’s mission is to increase the number of Black women working in computer programming. Their mission is to provide African American girls with the skills needed to command some of the 1.4 million computing job openings expected to be available in the U.S. by 2020, and to train 1 million girls by 2040.
Campaign Zero: A comprehensive platform of research-based policy solutions to end police brutality in America. Campaign Zero developed the “8 Can’t Wait Project” in June 2020 to highlight eight policies aimed at curtailing police violence.
Echoing Green: Echoing Green discovers emerging social entrepreneurs and by directing donations towards EG's fellows fighting racial justice, Cadre employees will be supporting social entrepreneurs in their work to eliminate systems and policies that uphold the status-quo.
Equal Justice Initiative (EJI): EJI works to end mass incarceration, excessive punishment, and racial inequality. The Equal Justice Initiative has opened the Legacy Museum and the National Museum for Peace and Justice, both in Montgomery, Alabama, to highlight much of the post-slavery violence and treatment of African-Americans. The museum serves to help illuminate aspects of our nation’s history that are rarely discussed, including the horrible fact that there were more than 4,400 “terror lynchings” of African-Americans from 1880 to 1950. EJI’s work on criminal justice reform is personal to me, as I have family members who have been incarcerated and who also work in the prison system.
National Black Justice Coalition: This organization centers around HIV/AIDS and makes employment and education opportunities more inclusive for Black LGBTQ citizens.
Southern Poverty Law Center: The Southern Poverty Law Center is an American nonprofit legal advocacy organization specializing in civil rights and public interest litigation. It is known for its legal cases against white supremacist groups, its classification of hate groups and other extremist organizations, and for promoting tolerance-education programs. In 1980, the SPLC began a litigation strategy of filing civil suits for monetary damages on behalf of the victims of violence by the Ku Klux Klan. The SPLC also became involved in other civil rights causes, including cases to challenge what it considers institutional racial segregation and discrimination, inhumane and unconstitutional conditions in prisons and detention centers, discrimination based on sexual orientation, mistreatment of illegal immigrants, and the unconstitutional mixing of church and state.
The Sentencing Project: Founded in 1986, The Sentencing Project works for a fair and effective U.S. criminal justice system by promoting reforms in sentencing policy, addressing unjust racial disparities and practices, and advocating for alternatives to incarceration.
I will also be personally donating a portion of my equity to invest in Black-owned businesses and start-ups. I encourage other founders in the technology and venture capital communities to do the same and I am happy to be a resource for those who have questions on ways to get started.
Growing up, I was seldom told by my teachers to aim high, whether in regard to my academic achievements or professional pursuits. Neither were many of my peers who looked like me. By now, we have all heard the phrase you can’t be what you can’t see. Organizations need to do more to elevate diverse voices to the top so that the next generation can see them and aspire for more. We have a lot of work to do in this arena, and it begins with representation.
We know that diverse teams have been shown to outperform less diverse teams and have demonstrated higher degrees of innovation. At Cadre, in recognition of these realities, we have been taking steps to ensure that our leadership team includes a more diverse group. Today, more than 50% of Cadre’s leadership team are either people of color or women. For all future leadership and roles involving governance, we commit to ensuring that before we interview for a role, we will target a candidate pool where at least 50% of candidates are people of color and/or women. This isn’t just a moral imperative, it’s the right thing to do for our business. We want to make sure that our decision makers are as diverse as the world we live in. We will also commit to interviewing diverse slates for all hires beyond our executive team.
To ensure that members of our team all have equitable opportunities to succeed once hired, we will implement unbiasing checklists in our promotion and performance processes, and will invest in Employee Resource Groups for women and people of color, to make sure that everyone who walks through our doors is welcomed, supported, and celebrated.
We can’t expect young Black Americans to pursue careers in the corporate realm if they don’t have role models who look like them in those spaces, or if they have never set foot in an office or corporate setting prior to their first internship or full-time role. Exposure is a crucial first step in building a pipeline and creating opportunities. To create change here, we will build a strong internship and mentorship program within Cadre, and work to promote these efforts at other companies, particularly in the finance and technology fields. At the entry level, we will be proactively partnering with historically under-targeted and underrepresented institutions and organizations, such as Historically Black Colleges and Universities (“HBCUs”). As a first step, we will also launch a paid internship program for students from HBCUs beginning in 2021. HBCUs graduate about a third of the Black computer scientists and engineers in the U.S. and teach about a third of Black business school students, and yet those in technology and financial services seldom connect with these students in a sustained and organized way.
We believe that the best ways for companies to generate long-term change, especially in the fintech space, is to utilize their platforms, products, and services to deliver greater access to opportunities for underserved groups and communities. This belief was a key factor that led to the founding of Cadre and our conviction that we have an opportunity right now to make an impact.
Cadre’s mission is to expand and deliver access to quality real estate investments so more individuals can have vibrant financial futures. But, as the saying goes you need capital to build more capital. In order to simply invest in assets such as those on our platform, access to capital is critical. The Black community, in particular, has historically been underserved as it relates to access to capital. One clear reason is that Black-focused lenders and banks have been significantly undercapitalized, depriving many Black communities of wealth-building assets and opportunities.
Data about the ownership of banks in the United States offers a clear illustration of the dearth of capital in communities of color. There are about 4,700 banks in the U.S., holding approximately $20.3 trillion of assets, but only 21 of those banks are Black-owned or led, with total assets of just $5 billion. A 2019 study on factors contributing to the U.S. racial wealth gap by McKinsey & Co. highlighted that majority-white counties averaged 41 financial institutions for every 100,000 citizens, compared to 27 per 100,000 in majority-minority neighborhoods. This study also found that increasing access to basic banking services could save Black men and women $40,000 over their lifetimes.
One main determinant for the lack of well-capitalized Black banks has been systemic racism, a problem that has existed in America for generations. Long-established policies and practices have sustained a significant financial gap between Black and white families, preventing Black families from achieving enduring economic progress. For instance, after the end of the Civil War and abolishment of slavery, African-Americans constituted 14% of the American population, yet owned just 0.5% of the wealth. Today, the percentage of the Black population is slightly smaller (13.4%) and they own only about 1% of the wealth.
Since the Reconstruction era, there have been multiple failed efforts to establish greater economic vitality for the Black community through community development financial institutions (“CDFIs”). Many Black-managed banks were established to support the Black community, only to be cut off from full participation in the U.S. economy by subsequent Jim Crow laws. And when Jim Crow laws were abolished, fiscal and economic policy associated with the concepts of “Black capitalism” in the 1960s left much to be desired, as many promises to develop sustainable Black banks went unfulfilled. These inadequate efforts were more about mollifying Black activists and assuring white voters that racial tension would soon ease, and less about actually erasing racial economic inequality.
Nonetheless, the small number of Black-owned and Black-run banks that have persisted and exist today serve a uniquely effective role: these banks provide financing for small businesses and home mortgages for those in their communities, even as other banks do not.
I know the positive impact Black-owned community-focused banks can have firsthand. If it were not for a Black-owned bank, I may not have been able to launch Cadre.
A few years after launching a real estate investment business following the Great Financial Crisis in 2009, my partners, two other African-American men, and I were in the process of taking the next step in growing our business. We sought to acquire our first large-scale portfolio of commercial real estate, a nearly 600-unit multifamily portfolio in the Atlanta metropolitan area. In order to do so, we needed to secure a loan to finance the purchase. After being turned down by more than ten banks for a variety of “reasons,” the last bank we spoke with agreed to provide the loan that would catalyze significant growth for our business. That bank was Citizens Trust Bank, one of the oldest Black-owned banks in America. I will never forget the words of the bank’s Chairman, who told us shortly after our loan application was approved that he believed in each of us and knew that “everyone needed support to achieve their full potential.” Without their support, we would not have been able to acquire the portfolio that we ultimately sold for a meaningful profit a couple of years later.
Citizens Trust Bank was a critical partner to me, and their support ultimately propelled me forward and Cadre into existence. Founded in 1921 by five Black businessmen, Citizens Trust Bank seeks to promote greater economic prosperity for more individuals and move from “credit building to wealth building” – a mission that is in-line with Cadre’s own mission. Citizens Trust Bank is a federally certified CDFI and one of the largest Black-owned financial institutions in the U.S., with assets of more than $400 million. Citizens Trust Bank is a large mortgage provider whose efforts have resulted in the increase of home-ownership rates for African-Americans. Citizens Trust Bank is also a lender to small businesses and real estate developers in the Atlanta metropolitan area – a market in which Cadre has acquired assets exceeding $150,000,000 in value (representing nearly 10% of Cadre’s real estate portfolio). Citizens Trust Bank has been one of the largest drivers of economic growth and investment in Atlanta, a market in which Cadre continues to actively invest. Leaders of Citizens Trust Bank recognize the importance and interconnectivity of economic and social justice and have a deep history of promoting civil rights. Coretta Scott King worked as a teller at Citizens Trust Bank, and the Rev. Dr. Martin Luther King Jr. built an enduring relationship and friendship with the largest shareholder of Citizens Trust Bank, Herman Russell. Russell was a legendary African-American Civic leader and entrepreneur who worked directly alongside the Rev. Dr. Martin Luther King Jr throughout the 1960’s to further the Civil Rights Movement.
As we consider ways that Cadre can help deliver greater economic justice, we believe that supporting minority-owned, community-oriented banks such as Citizens Trust Bank is one clear and important way to do so. To this end, we will leverage our platform and resources to increase the flow of capital into financial institutions that service underserved Black and minority communities and businesses across America. We also will plan to invest more actively in underserved communities going forward. Today, we are proud to announce that we will:
- Deposit 5% of our cash holdings with leading minority depository institutions (“MDIs”), including Citizens Trust Bank and Liberty Bank. Liberty Bank is one of the largest and most successful Black-run banks in the country with headquarters in my home state of Louisiana.
- Commit to partnering with multiple MDIs to participate directly in the financing of future commercial real estate transactions on Cadre’s platform over the next five years
- Assemble a coalition of fintech companies to commit to invest more widely in Black-owned banks, with a focus on:
a. Increasing their level of deposits with Black-owned banks
b. Digitizing the infrastructure of Black-owned banks to ensure capital is more seamlessly distributed to Black-owned small businesses and individuals
While we are proud to announce these initial commitments with more to come in the near future, Cadre does not operate in a vacuum. We are part of a larger ecosystem of companies and organizations, and it will take all of us to shift the industry as a whole towards greater diversity, equity, and inclusion. As true progress comes from collective action, we must all expect – and insist on – more. More action from our leaders, more support for our communities, and more willingness to change from ourselves.
In the work ahead, we must never forget that each of us is the product of our communities and the support of those around us. When the most underserved communities in our society are strong, we all thrive. When they are strained, our options are limited, and the entire nation suffers. Investing in communities – specifically in the structures and systems that form and support them – is a needed and vital investment in a stronger future.
As I said before: I believe we are at a tipping point. How we choose to respond now and in the coming months has the power to change our collective stories and leave the world better, and more equitable, than when we joined it. This growth and change will not be easy. As Frederick Douglass said more than 150 years ago, “if there is no struggle, there is no progress.” We each have a choice: Let us choose to make progress, not excuses. Let us choose to unite, not divide. And let us choose to exemplify the American ideals of “liberty and justice for all,” not just for some.
The views expressed above are presented only for educational and informational purposes and are subject to change in the future. No specific securities or services are being promoted or offered herein.
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Opportunity Zones Disclosure
Any discussion regarding “Opportunity Zones” — including the viability of recycling proceeds from a sale or buyout — is based on advice received regarding the interpretation of provisions of the Tax Cut and Jobs Act of 2017 (the “Jobs Act”) and relevant guidances, including, among other things, two sets of proposed regulations and the final regulations issued by the IRS and Treasury Department in December of 2019. A number of unanswered questions still exist and various uncertainties remain as to the interpretation of the Jobs Act and the rules related to Opportunity Zones investments. We cannot predict what impact, if any, additional guidance, including future legislation, administrative rulings, or court decisions will have and there is risk that any investment marketed as an Opportunity Zone investment will not qualify for, and investors will not realize the benefits they expect from, an Opportunity Zone investment. We also cannot guarantee any specific benefit or outcome of any investment made in reliance upon the above.
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