Closing America’s racial wealth gap faster

How can a financial services leader make a difference in the fight for racial equity?

This is a critically important question to answer. We know that Black and African Americans face gaps in representation, participation, and pay. Today, there is a 10 to 1 wealth gap in the U.S. between a typical white family (average net worth: $171,000) and a typical Black family ($17,150). Not only does this widening gap have an obvious negative impact on our Black and African American communities, it also constrains the U.S. economy as a whole.

At Northwestern Mutual, we are working to strategically address this challenge and accelerate change to create a more dynamic future to benefit everyone. As a company, we’ve invested millions in Black and African American entrepreneurs and in underserved neighborhoods with housing support, youth and family resources, and food programs.

More recently, our company’s Sustained Action for Racial Equity Task Force, led by our CEO John Schlifske working alongside 60 other leaders across our enterprise, has been reimagining what our organization can do to be part of the answer, drive progress, and do so faster. On day one, our task force members brought their diverse perspectives and backgrounds and recommended we focus on developing strategies that are bold, long-term, sustainable and impactful. Our high-level goal is to drive repeatable, enduring and significant change in the communities we serve.

Task force members made another significant observation: when we act, we should play to our strengths. Northwestern Mutual is not a media conglomerate that can rapidly drive public sentiment. We don’t make retail products that can address people’s immediate needs. But what we do have is unrivaled financial strength, expertise as an institutional investor, and insight into financial opportunity. For more than 160 years, we’ve flexed these muscles to help our millions of clients achieve financial security. What if we could use these same capabilities to help launch and advance minority-owned businesses and transform diverse communities?

Our task force came together and created an overarching strategy, including four key outcomes: creating cultures of inclusion and respect; attracting world-class talent; promoting financial inclusion and innovation; and building partnerships and investing in communities – which we are advancing today.

I’m proud to announce Northwestern Mutual will offer a $100-million impact investing fund aimed at advancing financial inclusion and closing the racial wealth gap.

Minority-owned businesses face similar challenges to the racial disparities seen by Black families. These businesses rely heavily on non-traditional financing sources like friends and families. And even when Black-owned businesses are able to access capital, they are often financed with amounts significantly lower than white-owned businesses. About 30% of Black-owned firms say credit availability is their primary concern post-pandemic, the highest among any demographic grouping.

Our new $100-million fund is built to invest in Black entrepreneurs and communities locally and across America, focusing on improving physical and social infrastructure; providing access to capital for Black individuals and businesses; and creating healthy, sustainable neighborhoods and communities. One of the funds that Northwestern Mutual has already committed to is Siebert Williams Shank's Clear Vision Fund. Siebert Williams Shank is a Black-owned business – and its Clear Vision Fund will make investments in minority-owned businesses with an emphasis on Black-and-Latino-owned businesses, enterprises that operate in or serve underserved markets, and businesses that foster inclusive growth through commercially sustainable business models.

Our new impact investing fund will leverage the expertise of many leaders within Northwestern Mutual. Our impact investing committee, which I will chair, also includes talented colleagues like VP – Client Experience Abim Kolawole, VP & Chief Audit Executive Stephanie Lyons, VP – Investment Strategy Rosanne Kropp, VP – Risk Products Kamilah Williams-Kemp, and others. We all believe that positive social impact and positive financial returns are not mutually exclusive – and are committed to driving both.

Over the years, we’ve worked to revitalize neighborhoods in Milwaukee that are far too familiar with racial and economic disparities. We’ve done this through our company’s foundation and our investment portfolio, building capacity in residents, leaders, and organizations – equipping and enabling neighborhoods to realize their community vision.

Our new impact investing fund will allow us to deepen our efforts, making an investment commitment to The Gateway Capital Fund, an African American led venture capital fund that primarily targets investment opportunities in Milwaukee County and the state of Wisconsin. The fund will make investments in companies seeking seed and early-stage investments. Managed by Dana Guthrie, founder of investment company Alchemy Angels, Gateway Capital Partners will serve as general partner of the fund and will oversee its investment strategy and portfolio. Dana sums up the challenge and the opportunity well:

"If you're in the Milwaukee startup ecosystem and you're not fortunate enough to be able to raise a significant friends and family round, it can be difficult getting an idea off the ground. Our fund is designed to be the first institutional check into promising young startups, giving them 15 to 18 months of runway to hit some key milestones that ultimately sets them up to attract follow-on capital in the future."

I believe we can accelerate the end of America’s racial wealth gap. Our new impact fund, as well as our commitment to Gateway Capital, are just two ways among many others that we are continuing to drive change and create demonstrable outcomes both in our hometown and nationwide. I’m proud of our task force and our strategy to strengthen and transform communities. Rest assured, this is a priority for Northwestern Mutual, and one that will receive sustained focus to ensure long-term, positive social change.