Investee Story: Closing the Racial Wealth Gap Through Black Homeownership
The Dearfield Fund for Black Wealth private equity impact fund is creating a model that others can emulate for using homeownership to address the racial wealth gap.
Mission
The Dearfield Fund for Black Wealth is advancing equity by helping Black communities build a foundation of intergenerational wealth and financial wellbeing, primarily through homeownership. Homeownership plays a crucial role in building wealth for many families in America, leading to better health and wellbeing. However, structural barriers and discrimination have resulted in homeownership rates among Black households that are the lowest of any racial group in the United States.
Launched by Gary Community Ventures in July of 2021, the Dearfield Fund is catalyzing a movement to build Black wealth and close the racial wealth gap. Its innovative approach is creating transformational opportunities for more Black families and communities each month, while creating a model others can emulate for using homeownership to address the racial wealth gap in the United States.
The Problem
We all want opportunity in the United States to be fair and equal, so everyone can reach their best health and wellbeing and put their children on a path to success. But entrenched structural barriers—including employment discrimination, housing segregation, predatory lending, and years of disinvestment in Black communities—have created a staggering racial wealth gap in our country. The median Black family has amassed a mere 10 percent of the wealth of the median White family, a disparity that is rooted in centuries of structural racism that have systematically deprived Black communities of resources that accumulate and transfer from one generation to the next.
Home ownership reflects those disparities as well. The Joint Center for Housing Studies of Harvard University reports that nearly 72 percent of White U.S. households owned their homes in 2015–2019 compared to nearly 42 percent of Black U.S. households. That means homeownership is approximately 70 percent higher among White households than among Black households.
The Solution
The Dearfield Fund’s goal is to make homeownership more accessible to Black homebuyers and help them grow equity in their homes, which tend to be people’s best assets for generating wealth. Its innovative approach is to provide $40,000 or up to 15 percent of the purchase price of a new home to first-time Black and African American homebuyers who qualify. The down-payment assistance is a deferred, no-interest loan: homeowners build equity in their homes with Dearfield and repay the loan when they sell or refinance their homes. So far, Dearfield has helped invest an astonishing $7 million in first-time Black homeowners, transforming lives and seeding intergenerational wealth by helping Coloradoans close on more than 150 homes.
In addition, when they sell or refinance their homes, they repay the down-payment plus 5 percent of their home’s appreciation. The Dearfield Fund then uses the money that was repaid to serve more new Black homeowners, and ultimately repay its investors.
The support from the Dearfield Fund is a partnership, not a handout. By structuring the assistance as a loan rather than a grant, Dearfield builds wealth with, and alongside, families. The no-interest down-payment assistance increases their buying power and for many, makes owning a home possible. That home or the proceeds from its sale is something they can pass on to their children.
The Dearfield Fund is unapologetically a race-specific solution to a race-specific problem.
A Long-Term Perspective
Aisha Weeks, the Dearfield Fund’s managing director, is working to shift the narrative of racial equity from solely a moral imperative to an imperative that recognizes the economic impact of, and business case for, dismantling systemic barriers to financial inclusion. “When investors activate their balance sheets and invest in Black communities, they see a financial return and meaningful social impact,” she says. By doing this, “we can catalyze economic development that dismantles long-standing barriers to racial equity and financial inclusion.”
The Dearfield Fund’s impact is both significant and lasting. It is “looking ahead at the kids, the babies that are being born into the households that they have helped create,” says Khadija Haynes, a fourth generation Coloradoan who is CEO of K-Solutions Political and Community Strategies and a member of the Dearfield Fund’s Advisory Committee. “Curing past wrongs and creating a beautiful future. To stand there and do what’s right, not just talk about it. That’s what the Dearfield Fund is about.”
It is, indeed, advancing intergenerational wealth as it realizes its vision of Black wealth, ownership, and equity.