Using crowdfunding to push back against gentrification
Gentrification has long been a controversial topic. Some argue that the practice, which consists of wealthier people relocating into a neighborhood, brings benefits like improved quality of life and increased property values to the impacted neighborhood. But some studies reveal a myriad of other outcomes for the communities’ original residents, who are often financially disadvantaged Black Americans and other ethnic minorities. From the potential for displacement into areas that are even more economically deprived to the decrease of Black-owned businesses, gentrification is popularly regarded as an impediment to the success of the Black community.
In response, some business owners are tapping into the relatively new world of crowdfunding to help give Black people a stronger ownership stake in neighborhoods that tend to be the breeding grounds for gentrification efforts.
Crowdfunding is a strategy that allows business and even personal projects to be funded through donations made online. Unlike traditional methods of raising capital through venture capitalists and other typical business investors, crowdfunding allows for large groups of non-accredited investors to contribute their monies to the target project or company.
Entrepreneur Jay Morrison became a pioneer in using this industry for Black causes when, in 2018, he created the Atlanta-based Tulsa Real Estate Fund (TREF). Named in homage to the location of the begotten Black Wall Street that was destroyed by White rioters in 1921, the company asserts itself to be the first Black-owned real estate crowdfund whose mission is to revitalize urban communities across the United States.
Regulated under and qualified by the SEC, TREF, in a nutshell, pools monies contributed by both large accredited investors and smaller individual non-accredited investors into a real estate investment portfolio. Those monies are then used to invest in real estate development—from single family homes to commercial projects—throughout the U.S. All of the investors earn a return for their contributions to the fund while their money is put to work on projects in the communities and for the people that matter to them.
“With the current tone in Washington, D.C., urban neighborhoods across the country will not have control of their dollars, real estate, or small businesses for the foreseeable future,” said Morrison in a 2018 interview with The Network Journal. “As a result, urban neighborhoods across the country are being redeveloped by individuals who do not have the best interests of the community in mind.”
Lynne Smith, founder of Denver-based Buy the Block, seems to share a similar mindset. In 2017, her company opened its doors as a crowdfunding portal. Working similarly to popular platforms like GoFundMe, Buy the Block enables the creation of campaigns to raise money specifically for real estate projects. Through the company, members are empowered to find available properties in their local communities, make an offer, and create a campaign for other member investors to donate as little as $100 to help secure the purchase and potentially earn a return on their investment.
Said Smith in a 2018 interview with Locavesting, “XYZ developer that we’ve never seen or heard of before comes in and before you know it, the whole neighborhood gets turned around.” Through her platform, the community members get to have an ownership stake in the properties being developed in their neighborhoods.