Creating Shared Prosperity, Self-Determination, and Collective Power through Funding
The Restorative Economies Fund (REF) at the Kataly Foundation invests in community-owned and governed projects led by people of color that create shared prosperity, self-determination, and build collective power. REF is an integrated capital fund, which means that we support groups through a combination of grants, technical assistance, and non-extractive investments, like loans, loan guarantees, and lines of credit.
In this Q&A, Jocelyn Wong, Analyst with REF and Capacity Building Director for the Kataly Foundation, shares the political framework of REF, the financial tools REF uses for supporting its grantees, and what inspires them about the Fund.
What is the political analysis that guides the work of REF, and Kataly at large?
Kataly is an experiment in wealth redistribution. Like all foundations, the resources housed at Kataly were accumulated in a system of racial capitalism that extracts and exploits, and that is part of why our founders were compelled to redistribute their wealth.
Kataly is a family foundation that is in the process of spending out our resources. One of the reasons that we refer to ourselves as a “spend-out” instead of a “spend-down” is that we are intentionally redistributing resources out into communities where they will regenerate and support shared prosperity rather than individual riches.
We believe that communities who steward and govern infrastructure and resources can build economic, political, and cultural power.
Why does REF make loans and grants? What is the benefit of utilizing loans as a resource redistribution tool?
Black and Indigenous communities, and all people of color have faced barriers accessing capital because of historic injustices, including how those injustices manifest themselves within the economic system.
Mirroring what we see at the individual and family levels, white-led organizations are more likely to secure favorable financing than people of color-led organizations. Oftentimes, we are the first lender for organizations who have previously had little or no other options to finance projects at the pace and scale that their communities need. Making a patient, non-extractive loan can unlock capital from other lenders and serve as an especially important catalyst for community-governed development and loan funds.
What do patient and non-extractive loans look like?
Our loans are very low-interest and longer term. We do not take collateral, and our debt is subordinated, which means that we are assuming the highest degree of risk relative to other lenders, including community investors. By taking on the highest degree of risk ourselves, that opens up a less “risky” investment landscape for other funders. Essentially, our loan can provide a layer of security that allows the group to secure other resources.
What does regenerative mean to REF and the work that you fund?
REF seeds projects that have the potential to yield returns for community investors, and that have the capacity to be a form of economic self-determination.
Some groups we support are creating mixed use commercial and housing developments, providing below market rents to community members while also providing commercial space at an affordable rate for entrepreneurs and local businesses. Those types of projects yield returns not only for the community investors, but also in terms of quality of life, access to healthy food, and affordable housing. Building community wealth doesn’t just come in the form of a financial return on investment. It can be regenerative in other ways.
What inspires you about working on REF?
Working on the REF team means that I have sightline into some of the most promising and creative projects that present a future worth fighting for. Living in these times, it’s very easy to feel deflated and demoralized by the state of our country and the systems that are supposed to be providing care and support for communities. Seeing even small scale examples of how folks are organizing and building their own infrastructure gives me hope.
A special thanks to Kataly Foundation for writing this guest column and providing an example of their work around community-centered funding practices. Kataly is a member of GSP’s network of funders committed to supporting equity-focused structural change in the South. To learn more or become a member, contact us.
Image description: Nia Evans, director of Boston Ujima Project, talks with Ujima members and supporters about how to become investors in the Ujima Fund on the evening of the fund’s official launch. The gathering took place at the headquarters of housing justice organization City Life/ Vida Urbana in Boston. Credit: Sarah Jacqz