For more than a year, the Twin Cities nonprofit community, elected leaders and bankers have been working on a development initiative that may ultimately be valued around $5 billion, the largest in absolute dollars that the region has ever seen.
Why Minnesota’s biggest development initiative starts with Black homeownership
A $5 billion effort led by the McKnight Foundation to help Black entrepreneurs and families represents a change in thinking.
Called the GroundBreak Coalition and coordinated by the Minneapolis-based McKnight Foundation, approximately 40 banks, nonprofits and economic development agencies are tackling wealth and opportunity differences by race, something they’ve all tried before with varied success.
The group last fall celebrated its first funding milestone. And 2024 is the “stand up year” when the hard process work is being done ahead of rolling out specific programs in 2025.
The first programs will be aimed at the region’s Black residents, the group farthest behind in owning homes and businesses.
“Next year it’s really going out and getting potential homeowners, business owners, wealth-builders, developers into the systems we set up this current year,” Tonya Allen, McKnight’s president, told me earlier this month.
It’s an amazing effort for many reasons, including the number of people and amount of money involved. Another is that the initiative is grounded in a concept called “targeted universalism,” which Allen mentioned briefly at the coalition’s public event in October.
The concept, she told me, is to set a goal that is good for everyone in a community, not just those who will be helped the most by reaching it. Doing that shifts the focus from ending a negative, such as income disparities, to creating a positive, such as everyone doing well.
“You have a universal goal, and you want to get everybody to that goal,” Allen said. “And we know with specific populations, you have to have targeted strategies to be able to get them to the goal. A one-size solution is not going to fit everyone.”
For more than a decade, targeted universalism has been promoted as a better approach for solving difficult problems involving race and inequality by the civil rights lawyer and professor john a. powell, who taught at the University of Minnesota in the 1990s and is now at the University of California-Berkeley.
Allen arrived at McKnight in early 2021, in between the police slayings of George Floyd and Daunte Wright that, among many effects, forced Twin Cities business leaders to more squarely face the region’s persistent racial inequality.
She was a new face at the right moment and came with a record of transformative work in Detroit. Allen quickly attracted leaders in business and other philanthropic organizations to think bigger than before.
“We have in our region done a really wonderful job of having multiple programs that serve, say, 300 families or 1,000 families,” she said. “But not at a scale to start reversing the decline we’ve seen.”
Over a series of meetings that McKnight convened starting in 2022, bankers and NGO leaders arrived at a goal of getting every racial group in the Twin Cities to a homeownership rate of 70%. They decided to start with Black residents because they are the farthest from that level, at 19%. Only white residents in the Twin Cities currently exceed the 70% threshold.
“What we’re trying to do is ask the institutions with capital to behave in a different way and to organize that capital to help people, particularly in this case Black families, to use it,” Allen said.
The coalition is developing a process for banks to be more flexible when they discuss loan opportunities with low-income residents. For Black entrepreneurs, the group is creating a loan guarantee program and a pool of low-cost, long-term investment capital. One goal is for Black real estate developers to find it easier to put together a stack of financing to get projects going.
“We are very supportive of this kind of clearinghouse around home ownership, entrepreneurship and commercial real estate because their goals align with the city’s goals,” Erik Hansen, director of economic policy and development for Minneapolis, said when I asked him recently about the city’s involvement in the GroundBreak Coalition.
“Ultimately it’s how are we going to get money in an inclusive way into the hands of those who are going to invest in the city,” Hansen said.
Inevitably, some people will see the work of the GroundBreak Coalition in zero-sum terms. They will argue that anything that puts one group of people ahead of others is unfair. Such critics are either unable to see the universal goal, or they willfully overlook it. To me, they appear to think that correcting historical unfairness can be done in a fair way. It can’t.
Part of why I write frequently about the need for Minnesota to sustain economic growth while its population levels off is because, without that growth, this fairness battle will get louder and uglier. And then, helping people who are behind will become harder to do.
“If there’s no growth, then when you’re trying to fix problems like this, you’re trying to figure out how to divide the current pie,” Allen said. “Our solutions can’t be about some people doing bad and some people doing good. Like, we don’t want white homeownership to decline. We want it to increase just like all the others because that creates more stability in our community.”
After a period of focus on Black residents, Allen said the GroundBreak Coalition will try to remove obstacles for others who trail the 70% homeownership target. The work could take a decade, she said.
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