Community organizers with the Boston Ujima Project are building a novel loan fund to empower residents and entrepreneurs in Dorchester, Roxbury and Mattapan.
Unlike similar funds governed by small boards or committees, more than 200 members of Boston Ujima Project who live in these racially diverse target neighborhoods will decide who gets loans from the Ujima Community Fund. The concept was tested back in 2016 when the group loaned $20,000 it had raised from institutional and local investors. Ujima means collective work and responsibility in Swahili.
“With Ujima, you get to decide,” said Joyce Clark, a voting member. “You can take your $25, $50 or $75 that you’ve saved and actually put it towards something that’s going to impact your community.”
Clark, 59, is a Roxbury native who described an abundance of entrepreneurial will, but a lack of variety in the businesses in her neighborhood.
“There’s so much talent in our neighborhoods that should be benefiting and having their own businesses where we can shop,” she said an interview with WGBH News. “I see chiropractor offices and dollar stores — and not to say dollar stores are bad. I shop at a dollar store. But I think we also need to bring in additional options.”
The Ujima Community Fund aims to solve the issue by letting residents contribute to the fund and decide which local businesses to invest in, giving Boston's underserved communities of color more control in shaping their neighborhood landscapes and giving local entrepreneurs much-needed capital to start or expand their businesses.
The Boston Ujima Project and its new fund are connected to a larger national fund. The Working World is a U.S. Treasury-certified community development financial institution that invests in cooperative community development across the country.
Ujima officers told WGBH News their goal is to raise $5 million by January 2020. They’re aiming to raise at least 12 percent of that total from residents in Dorchester, Roxbury and Mattapan.
Clark said she invested $100 in the fund for the pilot round of lending and participated in a community assembly where local entrepreneurs pitched the Ujima group for funding. Noah and Jovanny De Amor, a married couple who are co-owners of the Spokehouse bicycle shop, were among the recipients of four zero-interest loans.
“We had developed our core and we had a lot of dedicated people around us, but we had some goals that capital would really help with,” Noah De Amor said.
The De Amors said they spent their first year building their bicycle recycle and repair business with “a lot of ramen noodle nights” to avoid taking on high-interest debt. By the time they received the $5,000 Ujima loan, they were operating their business out of a side-street garage, using donated hardware. They used fanny packs and an old cash register for sales.
"So we wanted to go digital, and normalize our bookkeeping,” Noah said. The other goal, Jovanny added, was to “start bringing people on board and paying them a fair wage.” They purchased a computerized system for processing payment, hired two temporary full-time employees and spent the next year hustling.
The Spokehouse, in partnership with Historic Boston Inc., is set to transform a restored comfort station into a joint bike shop and café in the Upham’s Corner section of Dorchester next spring.
The story of locally-driven community development is part of the pitch Lucas Turner-Owens, Ujima Fund's manager, wants to lay out for potential investors beyond the target neighborhoods.
“We’re encouraging folks to join in this collective movement and actually take a back seat to the folks who live in these neighborhoods,” he said. “For folks who live outside, I think the role is to ask how you can be in service of the development of these communities and how can you be led by residents.”
Turner-Owens said investors can expect to get only 1 percent to 3 percent returns from the fund. He argues the expectation of high returns will not improve underserved communities or counteract decades of discriminatory policies and practices like redlining or targeted predatory lending.
“We can't assume that broad-based policies throwing a wide net to support everyone who isn't a white man will necessarily reverse the impact of those policies,” he said, pointing to Boston’s widely-reported racial wealth gap.
According to a 2017 report from the nonprofit Association for Enterprise Opportunity, many black business owners in the country do not start out with much wealth — a challenge when it comes to accessing capital from traditional financial institutions. In the Boston metro area, the median net worth of white residents was $247,500, compared to $15,000 for some Hispanics, $8 for US-born blacks and zero for Dominicans, according a 2015 study by the Federal Reserve Bank of Boston.
Brian J. Beckon, finance attorney and vice president of consulting firm Cutting Edge Capital, said the challenge is compounded because private investors place a priority on scalability.
“If you’re looking to start a small business in a particular community that meets the needs of that community — a laundromat, a childcare business, a local restaurant — you’re not scalable,” said Beckon. “They can’t get the [venture capital] funding.”
“We are centering black and brown communities because that is where the greatest lack of wealth is and the greatest opportunity for providing access to capital to entrepreneurs that want to grow their businesses,” said Turner-Owens.