In the last five to 10 years, it would seem as though Baltimore is finally emerging (at least economically) — from its slow, multi-decade decline. But if you’re a resident of one of the city’s poorer neighborhoods, you might not know it.
The region’s median household income — now 5th in the nation, according to the Economic Alliance of Greater Baltimore — is almost twice as high if you’re white; meanwhile, historically segregated, low-income African-American communities continue to be entrapped by a cycle of multi-generational poverty. More troubling, economic investment in the city sharpens that disparity: A recent Urban Institute report found neighborhoods that are less than 50% black receive nearly four times the investment (combined public, private and mission-led) of neighborhoods with a black population of more than 85%.
The good news is that for the first time we’ve actually got a group of players primed to make real changes, be it private foundations like Annie E Casey; academic-led alliances like the Johns Hopkins 21st Century Initiative (21CC); local philanthropic organizations like the Baltimore Community Foundation, Living Classrooms Foundation and the Abell Foundation; or impact investing programs from RBC GAM.
So why have we yet to move the needle? In short: We’re not working together. We may be on the same team, but we’re not empowered to act like it. We’re all doing what we can — a grant here, a new real-estate development there — but while these one-off projects may address short term pains, they can’t create sustainable transformation in Baltimore’s most impoverished communities. They can’t marshal the full-fledged private investment that all cities need to thrive.
A regional economic development strategy — one that connects neighborhood resources to regional growth, acknowledges a history of discriminatory economic policies and aligns operational capacity and technical assistance — would set the stage for more private investment into underserved communities and would be a monumental step in the right direction, uniting all the city’s players around defined goals.
In order to make that happen, though, a conversation needs to be had, so let’s get started: What objectives do we need to unite around the most and where? Who’s the most natural partner to take the lead? Is it a consortium? What are other cities doing, and how can we learn from them? How will we measure our success?
Imagine what true connectivity and an overarching economic strategy could bring. It might, for instance, attract more national capital to the city’s network of community development financial institutions (CDFIs) -- like the Latino Economic Development Center and Baltimore Community Lending -- which will build up an ecosystem that has the bandwidth, technical assistance and outside investment to fund projects at scale. CDFI’s are private financial institutions that are dedicated to delivering responsible, affordable lending to help low-income, low-wealth and other disadvantaged people and communities join the economic mainstream. In Detroit, CDFIs provided 60% of all directly lent mission capital between 2008 and 2015, and, as a recent 21CC report notes, CDFIs are crucial in funding the small businesses that can help them grow into the broader banking system and create enduring change in neighborhoods.
But a stronger network of CDFIs would just be the start, a catalyst for more private investment in every part of the region: individuals buying homes, businesses expanding into the area, banks opening branches, impact investors targeting capital to local communities and residents reaping the benefits of economic growth.
Connectivity would also encourage more joint initiatives like the Baltimore Integration Partnership (BIP), which is aimed at aligning the city’s anchoring institutions with its struggling communities. For instance, BIP has motivated the likes of Johns Hopkins and Kaiser Permanante to hire local contractors and purchase from minority-owned small businesses. If supported by national capital and effective technical assistance, CDFIs could more effectively invest in small businesses such as these. In this way, a multi-generational cycle of poverty can begin to reverse course, spooling out into a multi-generational cycle of growth.
We’ve had the privilege of being in rooms with willing donors, foundations, bankers, civic officials, entrepreneurs and others who all, like us, want to make a real change in Baltimore, one that would expand opportunity across communities. And while those discussions are fruitful, they will be more productive still once we have the conversations referenced above, with the goal of answering the question: What’s the overall regional economic development strategy for our city?
That way, the next time we’re all in a room together, we’ll all be on the same page, on the same team and empowered to act like it. Our CDFIs need our help, our support, and our financial and intellectual capital. Let’s convene to figure out how we can leverage our resources to build a robust small business community.
Catherine Banat (catherine.banat@rbc.com) is director of U.S. responsible investing at RBC Global Asset Management. Patti Chandler (pchandler@bcf.org) is vice president of finance and administration at the Baltimore Community Foundation.