Driving impact through investment means getting real about race.

Too often, race-neutral approaches fail to deliver results for low-income people of color in the US. The lack of race-informed efforts worsens racial gaps in jobs, income, and wealth and systematically ignores historical disparities. In this context, the Blended Catalyst Fund (BCF) has recently committed to a more defined impact focus: closing the racial wealth gap by supporting the development of jobs, income, and wealth for low income people of color. We are actively seeking new transactions; please reach out with opportunities (catalystfund@livingcities.org).

Living Cities manages two structured debt funds. The Blended Catalyst Fund (BCF) is the second fund, which is capitalized at $36.9 million. Two-thirds of the fund remains to be invested. BCF’s twelve investors include some of the world’s largest financial institutions and foundations.

BCF was created to support Living Cities’ evolving programmatic objectives, while also serving as a new collaborative model for the impact investing field. More specifically, BCF blends capital from different types of investors; seeks to be on the cusp of innovation that help addresses long-standing economic disparities; leverages capital from other sources through its investments; and is transparent about lessons learned.

The investment team, under new leadership and in the context of clearer impact parameters adopted by the Living Cities Board, has recently committed to a more defined impact focus for BCF around closing the racial wealth gap. Any new investments made out of BCF will incorporate this focus.

This more defined impact strategy is in keeping with Living Cities’ commitment to racial equity and inclusion, driven by the fact that racial disparities exist in most key indicators of well-being. Communities of color tend to lack access to good jobs, decent wages, quality education, and access to opportunity. Additionally, research shows that the population of disadvantaged individuals – children, families and communities – is overrepresented by people of color. Despite the best efforts and intentions of many institutions, organizations and individuals, substantial inequities persist. Therefore, Living Cities believes addressing race and racism must be squarely at the center of how we work.

We believe this more focused impact strategy has numerous benefits, for BCF, Living Cities, and the impact investing field more broadly. These include:

  • Stronger organizational alignment between BCF and the broader Living Cities platform.
    • Living Cities is more likely to achieve its impact goals when the investment team is working alongside the rest of the organization to support those goals.
    • Deal sourcing, diligence, and post-close investment management for BCF will be more effectively supported by the rest of the organization.
  • Closing the racial wealth gap is a unique impact focus in the impact investing market. Lessons learned from this investment strategy will provide additional value to BCF investors and the broader impact investing field.
  • This focus aligns our investment strategy more directly with people. This makes it is easier for us to understand how Living Cities is doing and to hold ourselves accountable.
  • We believe this is an impact strategy that can be implemented with little to no financial implications.

We are actively seeking new debt opportunities that fit this impact profile. Please reach out to us if you have a transaction we should consider (catalystfund@livingcities.org).

If you have any questions or want to share your story on your racial equity journey, please email racialequity@livingcities.org

Published: February 8, 2018
Category: Blog