By: Gailyn Rawls
January 12, 2020 6:01PM
MPAC's CEO and Founder, Michael Anderson started off 2020 with a testimony on economic justice to NJ State Senate & Assembly.
TRENTON, NJ – CEO & Founder Michael Anderson joined an all-star cast of Black asset managers in Trenton on Wednesday at the State House, to speak to the Joint Committee on Economic Justice and Equal Employment. Senator Rice, Chair of the Joint Committee, and Assemblyman Wimberly convened the occasion. Accomplished speakers also included Terrell Brown of Loyalty Alliance, and CEO of multi-Billion dollar value-oriented Ariel Investments, John Rogers.
A transcript of the testimony is below:
MPAC Solutions is committed to serving New Jersey’s 100,000 Black, and 250,000+ women, minority, & veterans businesses. At present, diverse (women/minority/veteran/disabled) businesses access around 3% of statewide contracting spend. Black businesses receive zero sustainable investment dollars that our diverse employee base has worked tirelessly to create. Discriminatory investment funds, limited partners, and institutional investors that receive state financing comprise an incestuous elite that has systematically maintained barriers to scaling diverse business development. As a result, most minority businesses are single-person employers. If minority business employment levels were operating at the same levels as white male owned-firms, New Jersey’s diverse businesses would add 2 million jobs over the next 3 years. Black businesses in particular, earn on average $400,000 less annually than white firms. At parity, NJ’s Black businesses would create over $25 Billion taxable revenue annually.
At a time such as now, a diverse revenue base is exceptionally relevant. According to the Philadelphia Federal Reserve’s latest release, New Jersey is 1 of just 6 states expected to experience noticeable economic declines (beyond 20 basis points) in the second half of 2020.
A gross underrepresentation in business compounds New Jersey’s extreme social disparities, with disastrous implications for our youth. Jersey’s Black boys and girls are 31 times more likely to be imprisoned than White children, meaning the future will not be brighter by osmosis. How dare we celebrate Dr. Martin Luther King Jr. two Mondays from now, if we do not put in perspective that New Jersey’s disparity in Black youth incarceration is twice as egregious as the next closest state, and 6X the national average? Our children bear the brunt of economic injustice. This is the dream of no respectable man or woman. Make no mistake, lack of access to capital and resources means that to even execute a normal purchase, such as buying a car, Blacks are subject to 110% to 450% greater markups than white borrowers with same credit risk.
Despite the monumental level of discriminatory treatment, Black companies employ about 1 Million people across the nation. Black businesses are more diverse than any other businesses in America, and have invested enormous resources in the Black community when no one else would. Predatory and discriminatory relationships have cost our community over hundreds of Trillions of denied and or extracted resources, resulting in 1.4 million fewer businesses, 6 million jobs, and a Quadrillion dollars of net worth. How big would America’s artificially low $20 Trillion domestic economy loom if we were not severely disenfranchising millions on arbitrary indicators of performance?
In perhaps, no other industry is race-based discrimination such a factor than the $70 Trillion world of asset management. In this game, nearly $100 Trillion of capital could be deployed into diverse business owners and communities. Hence, the influence that beneficial institutional investors have on the entire chain of financial intermediation, capitalism, and even society cannot be overstated, as just 1.3% of $70 Trillion is managed by non-white males. As evidence, August 2019’s Stanford SPARQ study found that Asset allocators have trouble gauging the competence of racially diverse teams. Racially diverse teams face bias at the top. At stronger performance levels, asset allocators rated white-led funds more favorably than they did black-led funds when evaluating investment skills, competence, and social fit. Meaning, the better Black-male managers perform, the less favorable he is viewed by an institutional asset allocator. Statistically, higher returns on investments make a Black male manager appear potentially more threatening, and thus less attractive to gatekeepers of capital.
While the problems are many, I have come to offer actionable solutions via MPAC Solutions. In this state, we were recently awarded as a STEM Innovator for our work in creating a digital and events platform that has catalyzed some of the world’s most impactful, diverse, founded and focusing Movements, Ventures, and People. MPAC is the obvious choice to programmatically partner with Public, Private, and Philanthropic partners including the State of New Jersey in order to help more women and People of Color gain access to business development and the necessary capital.
MPAC utilizes financial technology to make it easier and less costly for underserved entrepreneurs, funds, and institutions to create diverse inclusive wealth. MPAC offers a solution to Corporations, Governments, Sports Teams, Universities, Investment Funds, NGOs, or any other ecosystem builder seeking to create fair opportunities for women and minority businesses. Our digital partnerships represent the most prominent minority incubation network in America. We ask the State of New Jersey to allocate capital to creating a sustainable business and financing environment for all. At present, our tax dollars are being allocated to investment funds that invest in no ways reflective of the state’s population or business community. As of yet, no investment fund or digital platform that our state invests in through Economic Development has served to create a semblance of social equity. When New Jersey’s $80 Billion Division of Investments Assets Under Management is deployed into vehicles, funds, and companies, reflecting the entrepreneurial demographics of the state, millions of families and businesses will finally be able to have a legitimate chance at growing in the Garden State.
MPAC is the diverse business 1-stop shop, superstore, and events platform that will help New Jersey exceed expectations regarding increased access to business development resources, diversifying Government contracting spend, and leading all our businesses to private sector finance, structural mentorship, and the tools that enable the growth we need to ensure our state is competitive. MPAC is prepared to be the digital intermediary that sources, identifies, vets, and accelerates thousands of businesses at scale, democratizing access to the American dream for all our entrepreneurs and investors.
Bigger than any individual request, New Jersey must adopt formal policy stating 30% of the Division of Investments Assets be managed by Diverse funds, invested into diverse companies, and 30% of contracting spend be allocated to women and Diverse managers. We need formal policy decreeing State and Local spend must reflect the demographics of the community, and people that do the work to make New Jersey great. I leave you with a question. If my mother worked 30 years to receive a pension, and that pension has only grown at 0.1% a year because it gave all her money to companies and investors that looked like the the previous 400 years of power, and those companies don’t employ or invest in her grandchildren, no matter how deserving, how is our state adhering to its fiduciary duties to return investment?