Wealth Building in Communities of Color

Abstract

Racial disparities exist in many aspects of social and economic life in the United States. One of the more persistent and potentially damaging disparities is the racial gap in wealth. In this chapter, we (a) explore why communities of color remain behind in asset accumulation, (b) introduce blueprints for individual and collective strategies for building wealth in communities of color, and (c) provide three brief case studies. We acknowledge that it has taken generations to create the current racial wealth gap in the United States and it will not go away quickly. Yet, it is still possible to reduce the number of people living in asset poverty and improve economic security among communities of color. Individual-level strategies and assets discussed in this chapter include investing a portion of Earned Income Tax Credit refunds, Individual Development Accounts, retirement savings, real estate, and estate planning through a trust or family endowment. Collective-level strategies and assets discussed include shared risk pools for insurance, housing cooperatives, investment clubs, worker-owned and microenterprise cooperatives, Community Development Corporations, venture capital entities, and foundations. We note the need for “gap-closing methods” that collectively implement these strategies on a large scale and make suggestions for how this might happen.