It’s harder for Blacks than other groups of Americans to obtain businesses loans, home financing and well-paying jobs.
For more than a century since slavery’s end, African Americans have been systemically excluded from economic opportunities afforded to the majority, resulting in a wealth gap between Blacks and Whites.
But the Charleston region hopes to be a leader in what’s been a nationwide effort to encourage people to invest in Black-owned banks, institutions that could, in turn, support minority-owned businesses and low-wealth communities.
Five Charleston-area churches have committed to placing thousands of dollars into Black-owned financial companies as part of an effort to address the wealth gap. Mt. Moriah Missionary Baptist, Royal Missionary Baptist, Charity Baptist, Mt. Zion AME, and Grace City Church will soon be taking 10 percent of either their operating budgets or savings to Black-owned financial intuitions, many of which were founded to provide African Americans with better access to financial opportunities.
Pastors at several other churches have also verbally committed to talking with congregations about possibly doing the same.
This isn’t the first time a house of worship in the Lowcountry has decided to shift money from a White-owned bank into an African American company. Royal Baptist took $20,000 from its savings two years ago to deposit into Charleston-based Community Owned Federal Credit Union as an attempt to help lift up the historic organization founded by Charleston area civil rights activist Esau Jenkins and a group of visionaries in 1966.
But the current effort is a multi-church, multi-racial initiative that crosses denominational lines. It involves some of the tri-county region’s largest and historic houses of worship that have long anchored their communities, serving as hubs for spiritual and social activity.
The investments will total hundreds of thousands of dollars collectively. Mt. Moriah has committed to $200,000, Royal Baptist $20,000 and Grace $90,000.
Charity Baptist hasn’t decided yet on an amount, but it’ll be at least 10 percent of the church’s operating budget, said Pastor Nelson Rivers. Mt. Zion’s investment will be “tens of thousands,” said the Rev. Kylon Middleton, the church’s pastor.
The size of the congregations is worthy of mention, too. Mt. Moriah and Royal alone — both based in North Charleston — collectively have at least 5,000 members.
The effort also takes place amid a wave social unrest against systemic injustices and during a time when increased attention is being paid to racial disparities.
The ongoing coronavirus pandemic has also shed further light on the plight of Black and Brown people, with minority-owned businesses struggling to get business loans to keep from shuttering their doors.
Leading the charge for churches to invest in minority-owned financial organizations is the Rev. Byron Benton, pastor of Mt. Moriah. Pastoring a church with more than 2,000 members, Benton hopes to begin a movement that sees Black and White houses of worship using their funds to invest in Black-owned banks, which could in turn better enable banks to invest in communities that have been systemically ignored by financial systems.
For Benton, decreasing the racial wealth gap is about focusing on the issues of education, crime and health.
“It’s about addressing the issues that are in our community,” he said. “Without fixing the racial wealth gap, it’d be hard to address those issues.”
History of systemic injustice
While slavery may mark America’s initial attempt at stripping Black people of any chance at success, economic injustices didn’t end when Blacks were freed.
In 1863, Blacks owned 0.5 percent of the total wealth in the United States. More than 150 years later, the number has barely moved to less than 2 percent.
“That gap is 400 years old,” said Dominik Mjartan, president and CEO of Optus Bank.
That isn’t accidental. In many cases, it’s been the result of systemic, intentional and even violent efforts to keep Blacks from climbing the economic ladder. Obtaining bank loans, fair wages, decent jobs, and safe spaces to operate business have all been made difficult for African Americans.
Noteworthy examples include:
- The 1921 Tulsa Race Massacre in Oklahoma that left hundreds of Blacks dead and 1,000 houses destroyed in a Black district that once featured a variety of businesses.
- The Federal Housing Authority efforts, starting in the 1930s, to enable segregation as the FHA refused to issue mortgages in and near Black neighborhoods. This practice, known as redlining, stripped Black families from one of the top wealth-gaining mechanisms in America: homeownership.
- Continued discriminatory practices by financial lenders: A 2018 study by the University of California found Black and Latino customers are often charged 5.6 to 8.6 points higher interest on mortgage refinance loans. This results in annual disparities of $250 million to $500 million.
The disparities have received further attention in light of the coronavirus that has disproportionately impacted minority communities. Little of the Paycheck Protection Program’s more than $600 billion in federal loans made it to communities of color, partly because mainstream lenders prioritized larger businesses, which are primarily White-owned.
Sandra Sims knows this all too well.
She and her husband own Columbia-based Carolina Concessions. When the federal government rolled out the Payroll Protection Program loans in April, Sims contacted her main bank, a large, mainstream financial institution.
There was no movement on her loan for more than a month, but Optus reached out to Sims just before the bill was finalized in early April. Within two weeks of the PPP loans being approved by Congress, Optus had approved Sims for a payroll loan.
She encourages all African Americans to invest at least some of their money in Black-owned banks.
“Optus came through for us when the mainstream (bank) didn’t,” Sims said.
Starting a movement
Optus was founded in 1921 by a group of African Americans who felt all people should have access to the American Dream.
The bank, one of 20 nationally designated as Black-owned, says investments from the churches will better equip the financial institution to intentionally seek opportunities to close the wealth gap, such as providing loans to those who’ve couldn’t get them from other banks.
Over 90 percent of the dollars loaned out from Optus are given to African American and women-owned businesses, and more capital can better enable the bank to carry out that mission, Mjartan said.
A larger movement that focuses on investing in minority communities has the potential to reshape America, he said.
“Imagine if institutions like ours were 100 times the size we are today,” Mjartan said. “What would this country looks like?”
While Optus isn’t as large as the nation’s top financial institutions, the bank has grown this year.
The bank’s assets have increased from $90 million before the pandemic to over $160 million, Mjartan said.
The initiative among the Charleston-area churches isn’t taking away from some banks as much as it is about supporting a minority-owned business. African Americans have long invested in White-owned financial institutions because they feel their money would be more secure.
But if an African American bank is federally insured, people should feel just as comfortable placing money with a Black-owned financial group, said the Rev. Isaac Holt, pastor of Royal Missionary Baptist.
Pastors and financial experts also note the initiative is two-fold. While it includes providing banks with more capital, it also involves equipping individuals money management and credit-building skills.
That’s because, even if banks have capital, a person with bad credit history may not be able to access those funds.
Dorothea Bernique’s North Charleston-based nonprofit Increasing Hope offers courses on credit rebuilding, foreclosure prevention, small business training and tax preparation. Earlier this year, she partnered with Mt. Moriah and used dfree, a financial empowerment curriculum, to teach over 80 people techniques on obtaining economic freedom.
Blacks are often not taught how to gain good credit, which is unfortunate because American society is credit-driven, she said.
“It behooves us to learn how the system works,” she said.
Pastors say economic empowerment is also about instilling hope and showing people what’s possible.
Some of the Charleston region’s Black neighborhoods have been plagued by crime, failing schools and lack of economic investment. But if families have more access to capital, that could have a ripple effect and revitalize communities.
Holt said that increased job opportunities can lead to a reduction in criminal activity. It can also enable people to financially support candidate who have people’s best interests in mind, he said.
“Money doesn’t buy happiness,” he said. “But it sure gives you a whole lot more options.”
The pastor said it can also can help African Americans remain in the neighborhoods that are increasingly threatened by the gentrification that can lead to increased housing prices.