We are pleased to announce a $15 million impact investment in the Black Economic Development Fund (BEDF), managed by the Local Initiatives Support Corporation (LISC). The BEDF is part of LISC’s Project 10X, a $1 billion strategy to address racial gaps in health, wealth, and opportunity.
McKinsey’s contribution, along with those of 10 public corporations, has helped the fund hit its goal of raising $250 million in capital to invest in Black-owned financial institutions, businesses, real estate developers, and anchor institutions across the US.
Earlier this week, the BEDF announced its first projects, all of which include building capacity at Black-owned banks and making loans to community-based real estate developers to help support economic opportunity in Black communities and close the racial wealth gap.
In Columbia, South Carolina, for example, the fund will be making a $4 million deposit in the century-old Optus Bank, which invests 90 percent of its loans in under-financed communities and minority-owned businesses. Optus has a strategy to build $100 million in Black wealth over 10 years.
Meanwhile in Pittsburgh, the fund will provide short-term pre-development financing of $1.5 million, the single missing piece of capital, to support Bridging the Gap’s mixed-income 171-apartment development on one of the largest housing sites in the city.
And in Houston, BEDF will make a $3 million deposit to Unity National Bank, the only Black-owned bank in Texas, to grow its small business investments and pursue partnerships in affordable housing. The fund expects to announce as many as 20 additional project investments by year end.
These businesses will greatly benefit from gaining access to the flexible capital they need to grow. “The BEDF identifies and invests in minority-owned institutions and their communities, creating economic opportunities, developing housing and improving quality of life,” says Eric Kutcher, McKinsey senior partner and chief financial officer. “This critical financing allows them to turn a corner and grow, laying the groundwork for other investors and organizations to follow.”
This partnership is part of our broader commitment to fight racism and social inequity...
Eric Kutcher, McKinsey senior partner and chief financial officer
Community context is a critical factor in closing the racial wealth gap, according to our research, which found that 65 percent of the Black population is concentrated in 16 states that rank below the national averages in economic opportunity, employment, healthcare access and quality, and broadband access.
“The BEDF’s targeted financing can energize Black businesses and communities and create a multiplier effect,” Eric adds. “This partnership is part of our broader commitment to fight racism and social inequity, as exemplified in our 10 actions to combat racism announced last year. We will draw on our strengths and expertise to help advance racial equity and social justice within our firm and throughout our communities.”