Reports of impact investing’s death have been greatly exaggerated.

Despite all the turmoil, uncertainty and harm faced by the country’s most vulnerable communities and, despite attacks on socially-responsible ESG investing, and despite attempts to undermine the CDFI Fund – it turns out that efforts to find investors for initiatives rooted in racial justice or community-control over land and development are actually on the upswing.

Worker-owned cooperatives, like Brooklyn cafe and cocktail bar Boyfriend Co-op, are finding lenders and investors who believe in who they are and why they want to run their business a certain way. The community-controlled Kensington Corridor Trust recently made its first multi-million dollar acquisition, raising more than $2 million in a matter of weeks.

It’s no overnight miracle, nor is it a rapid response to the Trump administration’s hostility toward anything that it labels “DEI” or “woke.” Both sides of the table — the groups raising capital and the investors financing their projects — have spent years building relationships and discussing the values and visions they share, inviting others to join them, and sharing lessons and resources with each other.

Nobody involved in these efforts would say it’s easy to raise capital from investors for this kind of work. It’s a lot of heavy lifting, with tons of paperwork and more meetings than anyone should have to attend. It’s often draining, intellectually as well as emotionally. And it will still be years before the true impact of any of these efforts is really known. Some are just getting to the hard part of actually owning and developing properties or managing a portfolio of emerging businesses that still need a lot of behind-the-scenes support.

When you zoom out to see the constellation of these efforts within the current context, a pattern of progress appears: progress for ways of financing businesses or developing real estate that reflect deep dissatisfaction with all the prevailing ways of doing those things. None of these models by themselves can reach the scale possible with the federal government’s backing, but for now, they’re showing what’s possible when you can’t rely on federal resources. In the process, they’re charting out pathways others can follow — even under an administration that insists on illegally impounding federal resources.

Meet Denkyem Co-op

Homeownership has long been seen as the most viable way to build household wealth for Americans. But with just 42% of Black households owning a home, versus 72% of white households, Seattle-based investment fund Denkyem Co-op is instead focused on building Black wealth in the region by serving Black entrepreneurs.

“In the Black community, we don’t necessarily have those rich aunties and uncles that can provide that first-in support,” says Denkyem Co-op co-founder and CEO Dion Cook. “So we’re really looking at ways to provide responsive funding to entrepreneurs that don’t have the financial or the social capital to actually build a successful business.”

Black business owners have, on average, 12 times the wealth of Black non-business owners, per a study by the Association for Enterprise Opportunity. It’s not because Black business owners start out with more wealth on average; in fact, the study found that Black business owners tend to start out less wealthy, while growing wealth faster than Black households who don’t own a business.

But Black business owners still aren’t quite catching up to their white counterparts. One reason is the lack of access to more affordable sources of capital, like personal or family wealth or community banks. Black business owners are nearly twice as likely as average to rely on personal credit cards to start a business, according to the U.S. Small Business Administration. The use of relatively high-cost sources of startup capital like credit cards helps explain why 30% of Black-owned businesses spent more than 50% of their revenues to service their debt in 2019, according to another study by McKinsey & Company.

That’s why Denkyem (pronounced DEN-chem) Co-op, the CDFI and investment fund Cook founded in 2018, uses what’s called revenue-based financing. Instead of a fixed payment every month, the small businesses that borrow from Denkyem pay a fixed percentage of their revenue that month. It’s a structure Cook saw others using for startups in the tech sector, but not as much for brick-and-mortar businesses like those he knew were struggling to access capital in the Seattle area.

“Every business eventually takes on loans to grow,” Cook says. “Some of the biggest businesses have taken on debt, but it’s about using it strategically, not just to survive, and figuring out ways to provide that funding but also make it a little easier to manage and still be able to focus on strategy.”

Denkyem Co-op isn’t a nonprofit, nor is it a for-profit corporation. It’s incorporated as a social purpose corporation in Washington State. More than 30 states now have similar legal incorporation structures available, more commonly known as public benefit corporations. It provides a layer of legal protection for the social purpose aspects of a company, so that shareholders can’t force management to change or eliminate those aspects for the sake of higher profits.

Cook’s own background is a display of the power of relationship building. An L.A. native, he and his spouse joined the Peace Corps after getting married, which took them to Paraguay. After their term of service, they began working as teachers, eventually landing at a private school in Seattle.

There, he connected with Rudy Gadre, one of the school’s board members, over their shared conviction that entrepreneurship was an underappreciated tool for building wealth for Black people like him. Cook and Gadre, who had previously worked at Amazon and Facebook as a lawyer, both invested their own savings to get Denkyem Co-op started. It helps being able to tell other investors that the co-founders and leader has invested his own dollars in the effort. The first outside investors came from philanthropy, in the form of recoverable grants — dollars that initially count as grants for the sources, but with a plan that Denkyem will repay the amount of the grant plus a small amount of interest after a certain period of time.

Over the past three years, Denkyem has quietly raised just shy of two million dollars from a handful of investors.

This year, Denkyem is embarking on a series of small, intimate dinner gatherings where current investors will help lead conversations with potential new investors — mostly people drawn from their own professional and personal networks in the Seattle metro area.

“Everyone we’ve spoken with and actually received funding from are people that we’ve probably built relationships with for probably a year or two before they actually invested,” Cook says. “This year is the first year we’re really going to start putting ourselves out there.”

Boston Ujima Project keeps pioneering

Prioritizing local investors has also proven to be a successful strategy for the Boston Ujima Project, which launched its democratically-controlled investment fund in 2018. It’s likely the first fund of its kind in the country.

Ujima’s voting members come from Boston’s working-class communities of color: Roxbury, Dorchester and Mattapan. Those voting members have worked with investment professionals and small business owners in their communities to draft, deliberate and vote to approve pretty much every aspect of the fund, from how businesses or projects become eligible to apply for investment, the criteria used to assess applications for investment. The voting members also approve each investment made.

Boston Ujima Project has raised $5 million for its democratically-controlled investment fund from 331 investors. Some have already made more than one investment into the fund.

A majority of the investors are Massachusetts residents who have invested as little as $50 of their personal savings into the fund, with a target return of 3% interest annually over three years. The fund has also accepted investments from investors across the country, primarily philanthropic funds and foundations, but those investors have accepted a “subordinate” position — meaning if the fund’s investments don’t ultimately pan out as expected, the local investors will be repaid what they are owed before any payments to non-local investors.

Out of the $5 million that Boston Ujima Project has raised, about half has been invested in eligible businesses so far — including the worker-owned CERO Commercial Composting Co-op, Black-owned Jazz Urbane Café, and even the local Black-owned newspaper Bay State Banner.

The Guild finds new paths forward

Depending on where you are, local investors may not be as receptive to these kinds of opportunities. In Atlanta, The Guild has been developing a portfolio of community-owned, community-controlled housing and commercial or mixed-use projects.

Founder Nikishka Iyengar and her team spent the better part of a decade scouring the country for real estate ownership and stewardship models that reflected their values and vision for using real estate development as a way to bring communities together instead of driving them apart the way that redlining and later urban renewal or predatory inclusion has left deep wounds especially in Black and Brown communities.

“There’s such a long-term horizon we have for this work and how much we’re trying to undo and repair along the way that has obviously been generations in the making,” Iyengar says.

The Guild created both a community land trust to develop and manage residential projects and what they call a community stewardship trust for commercial and mixed-use projects. The latter is nearly finished construction on its first project, an expansion of a 7,000 square-foot single-story commercial property into a 21,000 square-foot three-story building with 18 units of permanently affordable one- and tw0-bedroom apartments over a new grocery store, shared commercial kitchens and a coworking space.

Through The Guild’s community stewardship trust, the predominantly-Black residents of the surrounding Capitol View neighborhood will have the opportunity to become the owners of the expanded three-story property, located at 918 Dill Avenue, for as little as $10 a month. As the community buys-in to the ownership structure, they’ll slowly buyout The Guild. It’s an ownership model that takes inspiration from the East Portland Community Investment Trust, which has also spawned adaptations in the Twin Cities and Albany, New York.

“As our neighborhood has started to grow, it has been very frustrating because a lot of those [commercial] owners are people who are absent,” Christie Peters, a Capitol View activist and resident, told The Current Georgia in 2021. “They’re either out of state or live in some of the suburbs of Atlanta, and literally let their properties go to pot, like they don’t care that someone broke out the windows. They don’t care that it’s boarded up and looks terrible.”

To support both the community land trust and the community stewardship trust, The Guild created a single fund to pool low-cost capital from investors who buy-in to the values and vision of developing and stewarding real estate in this way. The Guild set a target to raise $10 million for its first few projects in the pipeline, including 918 Dill Avenue. It’s raised $8 million so far and is in the final stages of approval on the final $2 million.

The Guild tried with local investors first, but didn’t really find any takers, at least not at the level of institutions like foundations or financial advisors to wealthy families in the Atlanta area.

“We tried with the community foundations…but like so many other things in Atlanta, it’s a weird, very conservative space,” Iyengar says. “The amount of time you would spend to do that and get what you get in return, it’s not worth it, not to mention navigating the respectability politics.”

There was one local Atlanta foundation that did see the value of what The Guild was doing. Called the Kendeda Fund, it granted The Guild upwards of $750,000, which allowed it to acquire the 918 Dill Avenue property. That acquisition attracted a below-market rate investment from the Kataly Foundation, based in Oakland, California. Kataly’s investment is still the largest single investment The Guild has raised so far.

But Kendeda Fund was structured to sunset as a philanthropy, making its last grants in 2023. Kataly happens to be structured the same way, and plans to make its last grants and wind down as an organization by 2027.

Despite all the chaos that has erupted around The Guild and other groups working in similar neighborhoods, Iyengar still sees a path forward thanks to those early investments and the projects they’ll be able to show as concrete examples of their impact to other values-aligned investors.

“My hope is that people will see an investment in our work as an investment in building local economic democracy at a time when federal-level democracy is being obliterated,” Iyengar says.

Seed Commons proves another system is possible

Economic democracy is also the calling card for Seed Commons, a national network of more than 30 organizations that specialize in lending to worker-owned cooperatives. A number of Seed Commons network member organizations were created by workers themselves.

Workers see the cooperative model as a needed alternative to more exploitative conventional business models. In Brooklyn’s Bushwick Neighborhood, co-founder Nat Risk recently explained what it means to be a worker co-op and to work with Seed Commons network member The Working World as a lender for Boyfriend Co-op, a brand new cafe and cocktail bar centering queer women and gender-nonconforming people.

“Not just in service but in the world at large, the ones who are generating the profit see none of it,” Risk told Next City. “That inequity — both financial but also just the pure responsibilities and decision-making and autonomy over the work that you’re doing — is so unbalanced. When the pandemic happened, that became so glaringly apparent in so many ways, how expendable the most important people became in our society. Working in a cooperative setting was attractive to me in that sense.”

We first covered Seed Commons back in 2016, before it even had an official name. By 2018, the Seed Commons network had raised just shy of $10 million in capital for investing in worker-owned cooperatives. By the end of 2024, the network had raised more than $73 million from a national network of 346 investors, including philanthropic funds, foundations as well as wealthy individuals.

According to co-founder Brendan Martin, over time Seed Commons has attracted more and more of the latter kind of investor who isn’t quite familiar with the worker-owned cooperative model at first.

“I don’t believe we’ll have the capital markets we deserve unless policy changes our culture,” says Brendan Martin, co-executive director at Seed Commons. “Right now we’re still dependent on the goodwill of people. But beyond the impact on the real lives of people and workers, the purpose of Seed Commons is to be an example to show that you could have very functional, practical financial system that doesn’t require you to allow unfettered greed and you can’t allow people to just make decisions based on what works best for everyone democratically. We’re proving that’s not true.”

New moves for community-owned real estate

As I reported in February, after five years, the Kensington Corridor Trust has amassed 30 properties and counting, and just made its largest and first multi-million dollar acquisition to date. The trust set a target to borrow $20 million in startup capital to begin financing its work. So far, it’s borrowed $12 million from a range of investors, with another $3 million in borrowing requests nearing approval from investors.

Some of Kensington Corridor Trust’s startup investments have been from local sources, but most of the dollar amount comes from investors outside of its hometown of Philadelphia. The Kataly Foundation is one of the trust’s largest investors.

Another chunk of around $2 million came from a batch of 20 individual investors who all work with Chordata Capital. Billing itself as an “anticapitalist wealth management firm,” Chordata Capital works primarily with younger investors who have recently inherited wealth from their families.

Through networks like Resource Generation, a growing segment of this newest generation of wealthy investors has been grappling with the question of what it means to have inherited this wealth within an economic system that has long relied on stolen or exploited labor and environmental destruction. Since founding Chordata Capital in 2018, founders Kate Poole and Tiffany Brown offer these networks an alternative to the traditional Wall Street investment management firms or private equity.

“I hope that, as people are getting angry about what’s happening with our political situation, that they see how our political and economic and cultural problems are all connected – and that that spurs more people to join us in this work of supporting economic self-determination and economic democracy,” Poole says.

Today, Chordata Capital works with nearly 40 clients, managing more than $150 million in investments, none of which is invested in traditional stock markets or bond markets because in Brown and Poole’s assessment, those markets are inherently harmful to communities and the planet. All of those dollars are invested in projects like Kensington Corridor Trust, The Guild, Boston Ujima Project, Seed Commons — and Oakland’s East Bay Permanent Real Estate Cooperative.

Led by third-generation West Oaklander Noni Session, East Bay Permanent Real Estate Cooperative is a real estate entity whose owners include residents of the co-op’s properties, members of the surrounding community, the staff of the co-op itself and nearly 400 investor-owners who have purchased $4.9 million in ownership shares of the cooperative. The co-op has also borrowed an additional $8.4 million in low-interest loans and added $2 million in grants to its real estate fund, for a total of $15 million raised to support property acquisitions and rehab work. The co-op’s governance structure prioritizes residents, community members and staff over investor owners.

So far, East Bay Permanent Real Estate Cooperative has acquired or supported the acquisition of seven properties, including residential as well as commercial and mixed-use properties. Highlights include the historic organizing hub Omni Commons, as well as the landmark Esther’s Orbit Room — currently being restored to its former glory as a blues and jazz club with new affordable artist housing and gallery spaces. The co-op is also now co-leading the 7th Street Thrives initiative to restore West Oakland’s 7th Street Corridor into the cultural mecca it once was.

“Overall, it’s gotten a little bit easier attracting mission-aligned or values-aligned investors because there’s a little more awareness and visibility on our work,” says Annie McShiras, investment and fundraising director. “I would not say right now that raising investor capital is a bottleneck. We’re in a good position in terms of access to capital for the property acquisitions we potentially see coming down the line, and we’re in active fundraising mode to recapitalize our fund for that next set of projects.”

From Oakland to Seattle to Atlanta to Boston to Philadelphia and beyond, all of these initiatives continue to raise grant capital in addition to borrowed or invested capital that must someday be repaid. Grant funding is typically paying for operations, including staff salaries and benefits. Community organizing staff have been essential for bringing community voices into what is typically a closed-door process for making decisions about real estate or investments. Kensington Corridor Trust also has a seasonal garden manager to manage its pollinator and community garden.

Eventually, each group plans for rental income or investment income from their portfolios to cover at least some of their operational costs, once their portfolios grow large enough. But they’re still a long way off from that. Groups have been increasingly pairing requests for investment with requests for grants — what some call “integrated capital” or “blended capital.”

“It’s so much easier to just do both at the same time,” says Abizadeh at Kensington Corridor Trust. “Lend me $2 million, but couple that with a [$200,000] grant so that I can go operationalize your $2 million debt load. We’re far more successful at doing that now than we were when we first started.”

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Oscar is Next City’s senior economic justice correspondent and author of “The Banks We Deserve: Reclaiming Community Banking for a Just Economy“ (Island Press). Since 2011, Oscar has covered community development finance, impact investing, economic development, housing and more for media outlets such as Shelterforce, Impact Alpha, Yes! Magazine, City & State New York, The Philadelphia Inquirer, B Magazine and Fast Company. Oscar is a child of immigrants descended from the former colonial subjects of the Spanish and U.S. imperial regimes in the Philippines. He was born in New York City and raised in the inner-ring suburbs of Philadelphia. Reach Oscar anytime at oscar@nextcity.org or follow him on your favorite social media platform at @oscarthinks.

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