Neighborhood Economics: Crafting Hope through Equity and Inclusion

Stephanie's journey from the picturesque hills of Western North Carolina to the forefront of economic innovation is as remarkable as it is inspiring. Join us for a conversation that's as much about personal resilience as it is about the transformative power of community investment. Stephanie, a former journalist turned economic catalyst, opens up about the pivotal moments that led her from the world of finance to the heart of her local community, where she now pioneers change through initiatives like the Community Equity Fund. Her passion for inclusive growth shines a light on the often-unseen potential within our neighborhoods, proving that economic revitalization is not only possible but also essential.

Our discussion with Stephanie takes a deep dive into the innovative Community Equity Fund, a beacon of hope for entrepreneurs who have historically faced barriers to funding. By offering equity instead of debt, this fund challenges the traditional business financing model and provides a lifeline to BIPOC, women, and LGBTQI+ business owners. The fund’s unique approach, which includes a grace period and capped return, highlights a commitment to equity and inclusion in the startup ecosystem. With insights from Stephanie's own experience and her role at Eagle Market Streets, we uncover how these community-focused strategies are creating ripples of positive impact across the region.

Wrapping up, Stephanie gives us a preview of the upcoming Neighborhood Economics conference, an event that embodies the intersection of faith and finance and celebrates the power of local economies. It’s a gathering that promises to build bridges between diverse communities, fostering economic inclusion and uplifting businesses of color. Her story is a compelling reminder that by investing in people and the places they call home, we don't just change the narrative for individuals like Stephanie—we change the world. Join us for an episode that’s not only about the strategies for community revitalization but also about the stories of hope and endurance behind them.

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Transcript

Joel: 0:33

What if investing in each other could change the world? I'm Joel Skeen with bizradious, and this is the Mindful Marketplace. Hey y'all, thanks for watching. I just wanted to quickly inform you about my financial services agency, which operates in the life insurance space. So we help families with debt elimination plans and create tax-favored retirement solutions. We support small businesses, nonprofits, worker-owned co-ops, unions and social enterprises with employee and member benefits. We offer white-glove insuritax services to community banks, credit unions, financial co-ops and CDFIs, and we provide enduring acceleration and downside capture strategies for all kinds of investors.

Joel: 1:16

Check out the link in the video description and enjoy the show. Hey, stephanie, so with this series that we're doing for neighborhood economics, it's a lot of work. It's a lot more casual and less structured than my typical show goes. So basically, we just get to talk and we just get to spend the next 40, 45 minutes here just talking about you know kind of. I want to make sure that people understand your story, because I do think it's pretty incredible and the work that you've done, whether it's on the block, with Eagle Market Street's Development Corporation, with the Community Equity Fund, your background from finance, your you know. I think there's so many things about your story that are interesting and, I think, truly inspiring that I'm really glad that we get to get to spend some of this time here together today. So I guess, why don't we just start with kind of the you know a little bit of the history of you know? We either start with the history of the block or start with your history. I'm open to either one.

Stephanie : 2:24

Sure. So I think it's important for our audience to know that I'm a native of North Carolina, more particularly Western North Carolina. I live about 28 minutes outside of downtown Asheville, a little place called Old Fort excuse me in McDowell County. I was born and nurtured here in McDowell County. Yeah, my parents came from the far west one from Franklin, north Carolina, and one from Wilmington, north Carolina and they met in McDowell County, which is in Western North Carolina. So it was, I think, the beginnings of my introduction, if you will, or inception, into the work that I eventually came to do.

Stephanie : 3:21

I graduated high school here in the area, went on to undergrad school at Monterey School of Adult Studies it is now it was a community college then Started my career, or pursuit of my career, in journalism. Quickly understood, though, that to do that kind of work, you kind of need to be able to feed yourself a different weight. If you want to be the next Robin Roberts, you kind of got to have something under your belt already. So I pivoted, which became a super strength for me or super power is the power of pivot and I pivoted to what was then known as business administration. It led me into banking. I spent my first three careers in banking, finance and retail had some wonderful experiences and some not so wonderful experiences in the corporate world, as probably many of our listeners can attest to. But my last assignment was with the Credit Union, united Services Credit Union, which got bought by Self-Help Credit Union. United Services Credit Union gave me my first blush or look at the not-for-profit world because it's membership driven, but it was still heavily, heavily regulated in a corporate style as it related to the culture of the organization. So after about eight years of doing that work and being really satisfied with working with the membership, just found that still, that corporate piece of the structure was not for me.

Stephanie : 5:32

During that time my husband also suffered a massive heart attack on my birthday in 1999 and subsequently became disabled to be in the public domain as an employee, and so I kind of thought well, life is really short, we'll take a few minutes and he and I'll sit on the porch and we'll enjoy life together. And that lasted about six weeks. About six weeks in. We were like, no, this is not the time to sit on the porch, we're not going to be able to do that. So we quickly again pivoted and said OK, let's start our own little business that will be together and yet we'll have something that is distracting us so that we aren't focusing so much on sitting on the porch. We started a business called Stevie's Originals so soapstone and home decor from Ghana and the Ivory Coast. We had a shop in downtown Asheville, which is where I met Eagle Market Streets.

Stephanie : 6:43

Eagle Market Streets was on the cutting edge of what has now become a buzz industry, which is co-ops. They put together about five small businesses of color, and those businesses of color shared space and cost to try and become viable businesses. We survived about five years. We were in one of the most distressed and highly blighted and slummed areas of downtown Asheville and we just could not get the foot traffic to come toward us. In order to be successful.

Stephanie : 7:24

Coming out of that venture, eagle Market Streets was looking for an AmeriCorps intern and asked if I would take that role on. I didn't have any idea about AmeriCorps, the details, at that time, but it was work and so you know I agreed to join Eagle Market Streets as an AmeriCorps intern. I served them two years in that role, mostly because two years got you a buy at a higher ed award and I wanted to continue my education for whatever I might be doing next, and was well on my way to doing that when the then executive director decided that she needed to transition, that she'd been doing this for about 13 years and this being not-for-profit work with Eagle Market Streets and was not able to move the needle in the way she wanted to. She petitioned the board to have me join them as their CEO, and the rest is kind of history, jewel. I joined them as their CEO in 2008,.

Stephanie : 8:44

A light side and I'll pause and give you a chance to ask questions and the light side is the day that they gave me the keys to the kingdom. I come to the office and the board chair and Elizabeth Russell, who has now become the treasurer of the board they were waiting there for me and they pointed out the lights and the water and the gas and my little cubby, which was truly a cubby. It was had level-all doors on it and a desk and a phone and a computer and I was like, okay, well, you know I'm not a woman of trapping, so I can make this work. They gave me the keys and they said go in the world and do good, stephanie, we know you're gonna be the person that turns this ship around. Call us if you need us. They went away for about 90 days. They didn't call me, they didn't ride by to see if the building was still there. Nobody emailed me or texted me at that time. There wasn't even text, wasn't even a thing.

Stephanie : 9:52

But yeah, I was 90 days, just kind of finding my own way, but I would say to any leader, it was the best opportunity that ever came my way. It forced me to use my own innate skills and the things that Elizabeth had instilled in me to do the work that I do. So I'll pause a minute and let you ask me questions.

Joel: 10:21

Well, you are taking me back to my nonprofit days a little bit there, because I remember, you know, I had been a social worker for chronically homeless folks and then I had been a program coordinator for a food bank.

Joel: 10:33

And I remember when I finally worked my way up to a title that had the word manager in it and I was like all right, I've arrived, I'm a manager now, and one of the things that that manager position involved doing was we were trying to convert, we were converting an old diesel truck to biodiesel, which involved me driving it by myself to Pittsburgh from Detroit and dropping it off and then staying on the couch of our executive director's friend in Pittsburgh, while I had to travel from Pittsburgh to the town just south of it via bike, my bicycle and if you've been there you know how like it's not mountainous like it is here, but it is hilly. When they say Polish Hill in Pittsburgh it is a hill and I just remember being like, all right, I'm riding my bike around town, I'm sleeping on a stranger's couch so we can get this truck converted to biodiesel. And I was like this is not exactly the corner office that I was thinking of when I heard the manager title there.

Stephanie : 11:32

Exactly, exactly. Well said, well said.

Joel: 11:36

Yeah, I guess you know. So Eagle Market Street. Another thing that I think is really interesting about is you mentioned the. I am seeing a lot more of that too where there's more emphasis and focus and, I think, just an eye opening happening around the idea of cooperatives and around cooperative ownership. I guess what was one of the biggest moments or insights that you took away from that experience there of the co-op of businesses that were together on at Eagle Market.

Stephanie : 12:09

That it could be a two-edged sword. Certainly, as we shared in the Lyft Lyft being cost of operations for leasing a space and the utilities and things that go along with that operating cost there was a commitment and a shared interest there. And yet we've been really socialized in this country, this nation, to be very competitive and very siloed in how we approach things. So the site of co-op that has emerged in some other industries, whereby folk are not only committed to sharing common space, they're also committed to a mission or to a social corporate thinking, we did not have that and that, along with the lack of foot traffic to serve our businesses, I think was ultimately our undoing. We were all kind of working at odds, if you will, just a little bit one against the other. But that's what we've been and I was just coming out of the corporate world and that's how the corporate world works you beat up your brother so you can get a hand.

Joel: 13:48

No, it's definitely a different paradigm and I shouldn't say new because that implies that it's never been done before and it definitely has but it's definitely a different paradigm from the ultra-competitive structure that we've been taught that the only way to have the tallest building in town is to blow up some other buildings in the process.

Joel: 14:07

And so one of the things we talk about and normally I do a thing called the balance sheet, where I talk about assets, liabilities, debts and investments, and in the assets column I often talk about the success of a lot of different cooperative-owned, worker-owned businesses that are, in a lot of cases, outperforming the private-owned businesses, especially in media I'm seeing now and in a few other industries there. But I think one thing that I definitely want to make sure that we get to dig in on and I want to make sure we get a lot of time is a innovation and a development that has come out of your work there with the Eagle Market Street work, and that is this Community Equity Fund. So tell us a little bit about kind of why you saw that as a need and then how that came to be.

Stephanie : 15:05

Sure, I think that again, you know I am a woman of faith and I don't think that anything that has occurred has been happenstance. I think every step of my journey was orchestrated in some way, even though steps that I took off the path, and so, if I think back, kind of tying together that cooperative experience to this moment in time, one of the things that I saw repeatedly was that there was a lack of not only a lack of access to capital, but a lack of access to capital that could be flexible for BIPOC and women and LGBTQI business owners. There just did not seem to be a vehicle that could offer a good friends and family kind of support, and it was unfortunate that most of the businesses of color could not partake of friends and family units. There just wasn't that kind of disposable income. So, jane Hatley, who was a dear and trusted friend from Self Help Credit Union, kevin Doyle Jones, who I came to know through Jane the three of us started early, long before there was a community equity fund, looking at different ways to approach that friends and family challenge.

Stephanie : 16:54

In late 2017, 2018, we hit on what became the community equity fund and it morphed over everything from charitable remainder trust to a DAP, to finally, the community equity fund, and so, at the 10,000 foot level, the equity fund infuses black and brown businesses, women owned businesses and LGBTQI plus businesses with pure equity versus debt. That, in and of itself, is not a novel or new thing. What is unique about our product is that it gives the business 24 months of grace before they ever return a payment to the fund. Once they start to return payment to the fund, they do it by revenue share and we cap our return on investment at 7%. That's we're sitting today and that is still not replicated anywhere in the country. Joel, at the moment, always knock on wood because I know somebody's listening and they're going. Hmm, we can do that and we can do it better Because we live in America and that's what we do.

Joel: 18:25

So and I want to make sure we clarify terms for you know, someone listening that might not be familiar with the different rounds of funding that a startup business or an entrepreneur tend to get. We had on Jeremiah Robinson from Mountain BizWorks yeah, great, great guy and he was talking about, how you know, 95% of. He was specifically in this conversation talking about black owned businesses and he said that 95% are sole proprietorships and that when they go to the bank, they on average receive a $35,000 loan to start their business, whereas their white counterparts receive $106,000 in capital. And for a lot of people, when they're starting a new business, there's a few different rounds of funding that you need to just get started.

Joel: 19:15

You have what you're talking about, which is your friends and family around, and then once you've kind of gotten that, you know you kind of got your your minimum viable product, you know you got your your basics, just you know kind of the the bare bones out there.

Joel: 19:28

Then you can take that to a lender, whether it's a CDFI, community development financial institution like Mountain BizWorks, or whether it's to a bank or to a credit union, like self help credit union. We had on Tara Brown from self help love them as an organization as well. But for a lot of entrepreneurs who come from disadvantaged communities whether that's just due to income or whether it's due to income and some kind of identity, you know, race, gender or anything like that that friends and family around can sometimes be a lot more difficult because the people in their friends and family there's their real social network may not have those resources or may not be able to give those resources. So is that kind of a good understanding of of where this particular community equity fund focuses its attention is on that really early stage.

Stephanie : 20:21

Absolutely Our target or ideal business. It's one that's been in operation about three to five years. They're trending upward of about 100,000 or better. They have the propensity to scale by job creation or by gaining a greater share of the market so that they can create jobs. And it's that, to your eloquent point, that next round of friends and family. That often happens when you're, when you're in a business mode. So, yeah, so you, you've covered the hurdle of having a concept and fleshing it out and and saying, wow, we got demand and we got market, you know, and, and we got little money to cover that. We've gone to the next step, where we have purchased the inventory or or the service capacity that we need. But now we're at that little sweet spot where we just want to be able to hire one or two people so that we can work on the business and not in the business, and our money supports those, those business owners.

Joel: 21:42

Yeah, that's, that's great. So then, and then I want to make sure I understand, because if I was brand new listening to this and I hadn't really heard about community funds or impact funds or, you know, place based investment funds, what does that look like from the side of an investor, like who could, who can, invest, and how do they do that? And then what is that are? Why is it? You know, I mean Kevin, when we talk to him, says sometimes when you want to do good, you might not get market rate. There's a cost to doing good, but I think there's also a cost to not doing good. But what does that actually look like on the from, like, the side of an investor who would want to invest their money, get a financial ROI, but also see a social ROI in their community?

Stephanie : 22:29

So the equity fund currently is. It has attracted that pure philanthropic support that is, foundational, or investors that are investing for social impact, not looking for financial return on their dollars. Part of that is because we have are still in the building phase of the fund and have not been able to purchase money ourselves, for those of us who live this stuff know that there's a cost of money to a fund or to an institution that deploys capital, and it takes a lot of time to get to, to even that stage of your operations. We've been fortunate that that foundations and the county of Buncombe County funded us at almost a million dollars to seed our fund. Our next round. We are in discussions about what it would look like to have a DAP, have DAP investors that are looking for impact and some return, and so the I guess the short answer, joel, is I'm not sure what it looks like for for a community equity fund. For other funds, though, I know that you know those returns can be anywhere between one and a half and five percent.

Joel: 24:18

So yeah, yeah, I guess, because it does seem like there's. What I like about it is that it's it's one of the pieces of the puzzle. It's not the entire piece of the puzzle, but it does seem like one of the pieces of the puzzle. That is shifting a bit of a paradigm about how capital is used and what its end goal has to be. Do you have anything that you could you could speak to on that and and how that's how that's playing out?

Stephanie : 24:49

Yeah, you know, I think the overarching premise when we started the community equity fund and continues to be our mantra, if you will is how to build wealth and communities of color where you have an anchor institution that is has leadership as well as can create jobs and improve or make that community resilient. And so I would say that's the real impact, if you're looking long term, is that you are now building healthy, thriving communities.

Joel: 25:31

So, yeah, yeah, because, you know, it seems to me like if we're only focused on the short term financial ROI, we may not, we may be missing out on long term financial ROI.

Joel: 25:44

Not even to you know, not even if we're not even looking at kind of the social ROI of having a thriving business community, local business community. But right, you know, I was talking to him, he was he's a values based investment advisor and he was talking about how there's so much short term thinking in that, well, what, how can we turn a higher profit this quarter? But the way that we turn a higher profit this quarter is we do damage to our neighborhoods or we do damage to our environment, and those are the resources that sustain our businesses in the long run If we, if we turn a higher profit because we contaminate the water but we need that water to you know, sustain our businesses in the long haul, it's. It's like, even if we only, you know, look at capital in that traditional sense of only the shareholders really matter, it's like. But if a business or an industry is going to outlast you and I, we have to think about the future shareholders, even if we stay within that, within that paradigm. Yes, your thoughts on that?

Stephanie : 26:49

Sure, I think that that's a very valid point and certainly what what keeps me rowing in the in this waters is that you take a to your eloquent point. You take a coffee shop that's in a area that has become at least 90% gentrified and you you also add to it the burden of debt that they either can't access or when they do access it, it's at a higher rate than their counterparts. Add to it some environmental issues. If they brew coffee, they need good water.

Stephanie : 27:37

So you know, if you pile on all those things, your opportunity for success and to I like to I'll take a quick aside here I like to tell my businesses you can't have it both ways. You can't have a pure capitalistic approach to being in business and have all the caveats that go with that, unless you're intentional about pacing those things together. So you know, if you want to be a coffee brewer or have a coffee shop, then you have to start right from the inception thinking about what that long-term impact is. And that's the piece that I think you and I would agree on is you know, you can't wait until you build it and they come. You've got to build it from the inception.

Joel: 28:34

So yeah, yeah. Well, and speaking of how it's built, I kind of want to loop back to what you said earlier about the way that the Community Equity Fund does its capital. How that happens is through equity rather than through debt. Why is that the decision you guys made and why is that important to?

Stephanie : 29:01

you, because we felt like, in terms of being able to scale that a business, even if they were debt ready, that oftentimes that involved having equity and so our money being on their balance sheet as equity could be twofold it could be the operations that they need so that they can be a job creator, or it could be that asset that they need so that they can go and be a true borrower in the conventional sense.

Joel: 29:44

How does that impact, then the entrepreneurs that come from? These disadvantages communities from being able to leverage that capital through an equity share rather than through having to take on debt. What effect does it have on them?

Stephanie : 30:00

So again, you know the real advantage to our structure and our money is that. You know it's the terms that are attached to that equity. Typically in a venture equity deal there's equity stake in your business. There's an operating agreement between you and the business owner where you actually get to make some decision with the business owner. For us we take a 20% equity stake in the for the life of our transaction. Once we're out of the transaction they get all of their equity back into their business. We also see again the having equity as an equity with repay as a much as a lower barrier than equity with debt. The minute that you take on a conventional debt, about 30 to 45 days, you have a repay to that debtor at an interest rate that, whatever the market will bear. Again, with our equity you're only looking at, or you're looking at, a 24 month period before you do any repay and then when you do, it's capped at 7% of your annual gross revenues for your repay.

Joel: 31:35

Right. So it gives the business owner a way to be able to grow that business without ending up having to pay as much in interest. Is that kind of what I'm understanding from?

Stephanie : 31:45

you. That's a big part of it, absolutely.

Joel: 31:50

Yeah, I do want to talk a little bit about the neighborhood that this has kind of come out of and the hope that you have for this fund and the impact that it has on it. Could you give everyone listening a little history about kind of the block and about and then kind of what you maybe see this impact fund doing for the block in the long term?

Stephanie : 32:15

Sure. The Eagle Market Streets District, or the block as it's known, is the oldest thriving African American commercial district in the state. It was once the Black Wall Street of Western North Carolina. It housed about 72 conventional residences and about 50 small businesses. Eagle Market Streets, in its first work, purchased several buildings that were left in trust to the community. One of them we fashioned into the Eagle Market Place project, which is 62 units of attainable rental housing, 9,000 square feet of commercial, retail and office space and about 7,000 square feet of community space.

Stephanie : 33:21

Again, with each turn of our work, what we saw was that businesses of color were not being able to be prevalent or be prolific as a part of the total business community, and much of it was tied to things like access to capital or access to innovative capital, to commercial leases that were favorable, all of these things. So, again, as we looked at how to improve and I take a side and say that when I started this work, 2.4% of all the businesses in Asheville proper were businesses of color. As we sit here today, 2.7% of all the businesses in Asheville are businesses of color. So we see that you know as much as we move the needle. There's still much work to do, and so the community equity fund continues to be a really, I think, necessary tool to help us do that work. Where do we want to see it go? You know my heart's desire and work toward growing the fund is to have it be about a $10 million fund so that it could work across at least the region to support these businesses.

Stephanie : 35:05

To date we've served about 12 small businesses to the tune of about $800,000 we've put on the street. Those dollars are coming back into us in 2024. The first fruits of our labor at about 260,000 we'll see back. So we've got got work to do. But we also were receiving another allocation from Buncombe County so that we do still have funds to deploy. So you know I have an amazing fund manager, stephen Lawrence, who is eat, sleep and breathe this stuff. He came out of a conventional banking with a large institution here in Western North Carolina and with a CDFI before it, so he has a real understanding of our business and how to best serve them. So we the sky's the limit we feel like Joe.

Joel: 36:15

Yeah Well, there's lots of room to grow. You know and I'm curious when you think back over you know the years that you've been doing this work. You know your background in finance. I guess, what are you, what are you learning, or what's one of the biggest lessons that you feel like has surprised you in your time here?

Stephanie : 36:35

Two things I like quotes, and two quotes always bubble up for me with that question, and one of them is that you should always take the first step, even if you can't see the whole staircase. It's MLK Junior. And then the other one is that we should never forget that a small group of people can change the world, for indeed that is the only thing that ever has. That's Margaret Mead. I think those two things are my, if you will, mantra, or the things that drive me. When I have moments of despair or discouragement, I remember those two quotes. So that's where I would land with that.

Joel: 37:29

I love that because, at the end of the day you know, I recently I'm also a quote guy, and I recently heard one that I had not heard before.

Joel: 37:37

You know, because when you just put an emphasis on is about while it doesn't necessarily take the whole world to make a big impact, it does take some collaboration, it does take some working together with other people. No one person can really do it on their own, and this quote said together we bargain and alone we beg, and I think that that's that really is like kind of does does. Sum it up whether that's in, you know, these broader social issues that we talk about, or whether it's just in your own personal life. Like you can't do, you can't handle all the stresses and the burdens of life all by yourself. You need a team, you need some people in your corner, and so I think it's good for us to all remember what you are telling us there. I also am curious about what you're excited about when it comes to neighborhood economics and to this upcoming conference here at the end of February in San Antonio. What is it about neighborhood economics that excites you and has you involved?

Stephanie : 38:36

So at the top of the discussion I mentioned that I'm a woman of faith and Kevin and I, early on in our building our relational muscles, started to talk about what it looks like to marry faith and money. And they they, his wife and company had a Organization called faith and finance and they morphed it into neighborhood economics, which brings those 2 things together. And I think what I am most excited about it's an opportunity to look at the scale of what we've done with neighborhood economics in marrying faith and money and innovative thinking and money and opportunities For us to again collaborate as a small group of people small being, you know, relative sometimes. You know neighborhood economics is often upward of 150, 200 people, but that's a small group If we think about our nation and but for us to reason together and to come out of this every year with renewed commitment to leveling the field and to changing those Paradigm and and those thinking around zero sum.

Stephanie : 40:12

You know that's one of the biggest hindrance says I think we face In the coming year and years is that in order for us to survive it isn't that you don't survive, you know, we can thrive together I just but seriously, we're in one of the richest countries in the world. So there's no reason for us to think that because your neighbor has resources, that you won't have resources, or that you have less resources. So, yeah, yeah, that's what I'm most excited about is being with my peers and thinking together.

Joel: 40:55

Yeah, it does seem like a very unique and fresh and innovative approach to, as you said, both faith and finance, to just the way that we're going about this impact investing. I've been to I haven't been to tons of local economy conferences, but the ones I have gone to have not necessarily included, a lot of times, people of color, people of faith, and so it's really exciting to me to see just bridge building happening in any capacity, anywhere it is, and to kind of let us all kind of forget about the division and all those disagreements that we may have and we're allowed to have, but to really focus on something that we all know is good for each other, is good for ourselves ourselves, in investing into these communities who, if we put it in faith language, I've a lot of times been treated as the least of these, and so I'm also very excited to get to see you there and to get to spend some more time with you and the rest of the neighborhood economics crew. Any final words you have on what we've been talking about here today?

Stephanie : 42:02

Just a big round of thank you for allowing us to have voice in this moment and in this space. Joel, it's always an honor to be able to talk about the work and to be able to lift up businesses of color and the fact that they do thrive and they are contributors to our economy and need our support equally in the system.

Joel: 42:36

So yeah, yeah, thank you so much for your time today and we look forward to getting to spend with you soon. And for everyone out there, remember we are each other.

Stephanie : 42:49

Absolutely see you in February.