The wealth gap between white and Black families with kids can be as large as 100 to 1, according to Gary Community Ventures, a Denver-based philanthropic organization that serves metro area families. Part of the Gary Community Ventures mission is increasing Black homeownership in the area through pay-it-forward loans.
The median wealth of a Black family is $18,000, noted the philanthropy in a statement. For a white family, it's $170,000. Gary Community Ventures attributes that massive wealth divide to generations of discrimination and inequality.
CEO and former State Rep. Mike Johnston said his organization has a fix through its Dearfield Fund for Black Wealth: raising money to give up to $40,000 to Black families in Colorado for a down payment on a home. At any point along the way or if they sell, families can pay back the loan, which will be reinvested into the program.
The ability to secure loans is crucial as people attempt to buy instead of rent. And home ownership is an important tool in wealth accumulation and bridging the racial wealth gap, as home equity is one of the major ways families can build wealth when properties go up in value.
Johnston explained that Black families have historically been less likely to receive loans than white families. He looks at his own family's story of how they accumulated some wealth and how racial bias gave his dad a leg up.
"My dad wanted to start a business. He went out and got his first loan to be able to start our bed and breakfast and pick us up by his bootstraps," Johnston said. "That whole success story always relied on the part where someone walked into the bank and got a loan, or someone walked into the bank and got a mortgage."
Had his father not been white, it would have been a different story.
"There's no chance that if my dad were Black in 1973, walking in to get a loan with his only record being a recovering drunk with a failed business, that he was gonna get a loan if he was Black," Johnston explained.
While $40,000 is a good start for a down payment, it's still rarely enough in this competitive housing market.
In Denver, properties are regularly being sold for $100,000 over the asking price. The median price of a home in Denver was $543,000 in December, and prices are expected to climb.
Johnston said other groups are working with the Dearfield Fund to offer loans.
"We've had a great partnership with 1STBANK," Johnston said. "It has just been incredible, where they're providing a $20,000 grant, often to applicants. So now, if you're buying a $400,000 home and your down payment is $80,000, we can put in $40,000 from Dearfield. 1STBANK puts in $20,000. That's $60,000. Now all you got to do is put together the last $10,000 or $20,000. All of a sudden it starts to look more affordable, even for some more expensive homes."
While the fund officially launched in February, Gary Community Ventures has given loans to fifty families who have closed on homes.
"We raised about $12 million into this fund already," Johnston said. "We're going to push to raise $20 million. And that $20 million would make it possible for us to get to 500 homes. I think we can get to that level to get to 1,000. If we get to 1,000 homes over the next 10 years, that would generate about $150 million dollars in wealth for Black families, which is a pretty amazing return on investment."
