By James H. Lowry, senior advisor, The Boston Consulting Group Inc.
In the fall of 2021, the Washington Post published an insightful and succinct article: “Corporate America’s $50 Billion Promise” (Aug 24, 2021). I have reread this article often and agreed on three of the major themes:
- Corporate America is committed to make a difference after the George Floyd killing.
- Corporate America is willing to think in terms of billions, not millions.
- Corporate America’s top companies and CEOs are involved.
But as a 40-year warrior in the fight for social justice and economic parity, I once again am witnessing Corporate America making the same mistakes they have made in previous eras. The biggest mistake is rushing to action without a plan and not having the right people involved in the decision making.
- They quickly disburse billions of dollars to civil rights organizations, old and new, to address the symptoms of the problems not the overall problem.
- They overlook the real overall problem in America: minorities are not meaningfully involved in the free enterprise system and creating millions of jobs.
- They are investing a large portion of money in quick fixes that have a slim chance of success.
Corporations are responding to the cries of many, both in and outside of government, that minority communities, their financial institutions, and entrepreneurs that all is needed is “more capital.” They quickly allocated grants and loans to community development financial institutions and banks without doing invaluable research. I was once on the board and an investor in the largest Black bank in America. A bank that made money annually and was sold for a profit. How did we do that?
- We invested a sizable amount of our personal money and created a large equity foundation for the bank, the largest amount from our chair, George Johnson
- We hired the top Black talent from the larger banks and the University of Chicago Business School.
- We accepted the economic reality of the communities e.g., we had to invest in the few viable midsize businesses. Real estate mortgages were key to our revenues, and we created a model institution that engendered pride in the community.
- We needed to diversify our products and services e.g., local transportation entities, cash counting, ATMs (cash machines) in the airport.
But this was in the 80s; things have changed. There are fewer minority businesses in the community to invest in and property values have decreased. There are a few strong CDFIs and banks that still follow the game plan of our original bank--and I say fund and invest in them. I also say to corporations and government institutions: do your homework on the many CDFIs out there and use your capital to make better investments.
Another big mistake I am witnessing by corporate America is leaving big tech out of the discussion. Big tech companies have the capital, the size and talent to change not only minority communities, but entire cities. Some leaders might feel it was “a win” chasing Amazon out of New York. I see it as a major opportunity lost.
Moving forward, knowing that time may be running out, I make the following recommendations:
- Corporate America should expand the number of people at the discussion table.
- Corporate America should include the brilliant, young minority professionals who are not civil rights leaders currently at the table. They want to be involved.
- Couple these brilliant professionals with the Brookings Institution, top consultant firms, and top universities and create a master plan.
- Corporate America should develop a five-year plan, viewed as a business initiative not a “charity” endeavor.
- They should loan their top executives to support the development plan irrespective of race, region, or gender
With all partners working together, we could develop the plan that focuses both on short-term and long-term solutions, which creates jobs, creates larger MBEs and reduces crime. Crime in our major cities is forcing corporations to move to cities with low or small minority populations. Jobs create hope and stronger families. Like the great migration in the ‘40s, like the Cuban Americans’ immigration to Miami in the ‘60s, and like Mexican American Toyota plan to build a large truck manufacturing facility on the South side of San Antonio, Texas, in the ‘90s, these major events created jobs, economic impact and hope for the next generation. These efforts were successful.
In the end, if we focus on economic development, cities will win, minorities will win, and America will win.