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The Issue

The Wealth Gap

Asset funders work to dismantle systemic barriers to economic security that create and sustain wealth gaps in our nation. They confront inequities based on race and gender.

The U.S. economic system advantages some and disadvantages many. In particular, African-Americans, Latinos, and women have faced historic, embedded discrimination —reinforced by institutional policies. This has created and sustained wealth inequality.

Misconceptions that racial wealth disparities result from individual choices are obstacles to systemic change. But research busts these damaging myths: attending college, raising children in a two-parent household, working full time, spending less—none of those personal behaviors can alone close the wealth gap. For women, the wealth gap has been largely overlooked in discussions of women’s economic security. These gaps, compounded by injustices in our tax system, impact the next generation. Funders who want to build assets for low and middle income families are finding ways to provide opportunity across race and gender.

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Owning a business: one powerful way to bridge the racial wealth gap

AFN’s The Racial Wealth Gap examines business ownership for diverse populations and how funders can leverage this wealth creation strategy.

Why It’s Important

AFN members explore and promote grantmaking strategies that can help build wealth for historically-disadvantaged individuals and families.

Fiscal stability brings greater capacity to manage emergencies

More prepared for children’s educational needs

Improved health outcomes

Increased economic activity and local prosperity

Systemic solutions disrupt assumptions and policies that reinforce gaps

Improved post-secondary educational outcomes

Grantmaking Strategies

With white households’ median wealth 12.9 times greater than black households and 10.3 times greater than Latino households, grantmakers are focused on finding ways to address this devastating wealth gap and the damage it causes. Some serve as conveners to build awareness of systemic barriers. They build relationships between stakeholders—like banks and community groups—needed to catalyze change. Funders also catalyze change themselves through investments to dismantle inequities.

Strategies to reduce the racial wealth gap certainly include savings programs and credit building. Beyond those building blocks, some funders are zeroing in on another root cause: the lack of business and financial assets. People of color have historically been challenged to secure the resources—such as capital, education, and experience, as well as access to markets—needed to start and grow businesses. So, funders support micro- and small-business development by addressing the needs of African-American and Latino entrepreneurs.

Funders concerned about the gender wealth gap seed and grow programs to serve a continuum of women’s needs as well. Some programs provide affordable and available child care while others support affordable college completion. Some initiatives build paths to attainable home ownership while others build attainable vehicles to grow retirement assets.

Grantmakers are also tackling the need to change federal and state tax policies. Right now, household savings and investment incentives are not accessible to the least economically mobile. Funders have opportunities to participate in tax reform coalitions, weave tax policy reform into current funding arenas, and support research and communications campaigns to both educate and move people to action.

AFN members explore and promote grantmaking strategies like these that can help build wealth for historically-disadvantaged individuals and families—wealth that creates a reservoir in times of need.

“With nearly half of mothers positioned as the sole or primary breadwinner for their families, the advancement of our nation relies on women more than ever before.”

Dena l. Jackson | Dallas Women’s Foundation