HBCU Money™ Turns 10 Years Old

By William A. Foster, IV

The most basic question is not what is best, but who shall decide what is best.” – Thomas Sowell

A DECADE! HBCU Money is still here, still growing, and still strong. We continue to be here to ask the hard questions, present strategic analysis, and be objective about African American and African Diaspora economic, finance, and investment from an HBCU and institutional perspective. The HBCU Money culture remains deeply rooted in our Pan-African values in how we observe the investment world. This means that everything we see will always believe that African America and its institutions will always be stronger together and even more empowered as they connect and partner with our brethren African Diaspora institutions and the larger Diaspora ecosystem.

What does the next decade hold for HBCU Money? More. The original goals of HBCU Money have not changed and while the path there has taken longer than we expected, our constitution is as strong as ever. We plan to expand our staff, our coverage, and the mediums through which we provide information.

Thank you to those who have been there since the beginning, who have joined along the way, and all of you who continue to be our champions.

How the Government Helped White Americans Steal Black Farmland – And Why 1890 HBCUs Are Partially To Blame

Every good citizen makes his country’s honor his own, and cherishes it not only as precious but as sacred. He is willing to risk his life in its defense and is conscious that he gains protection while he gives it. – Andrew Jackson

Ukraine has been preparing for years for the eventual invasion that would come from Russia. It has been so even prior to Russia’s invasion and capture of Crimea in 2014. Why? Ukraine’s intelligence for one, President Vladamir Putin’s writings that expressed sentiment that the breakup of the Soviet Union was a great tragedy of the 20th century, Russia’s 2008 invasion of Georgia, and because well that is WHO Russia is and has shown itself to be. It would have been more of a shock were Ukraine to act shocked at Russia invading more than Russia invading. Put another way, if Ike Turner slapped someone and they were surprised, who is crazier – them or Ike Turner?

This seems to be African America always when it comes to European America though. Constantly surprised by consistent behavior. Harlem, Houston’s Third Ward, New Orleans, Compton, Roxbury, so on and so forth. What do all of these have in common? They were once thriving African American strongholds until gentrification. Each time the gentrification wave came, African Americans in those communities were caught off guard, unable and unprepared to launch a counterattack (or offensive).

In a recent article by The New Republic titled, “How the Government Helped White Americans Steal Black Farmland”, in detailed fashion we learned about one of the most vital departments of any country, agriculture, which impacts land, development, life expectancy, water and mineral rights, and so much more was used by the U.S. government through the USDA to spearhead the wealth transfer of African American farmland into European America’s hands. “Black farmers not only lost out on these massive subsidies—they have been effectively disenfranchised within the modern agricultural system. Under conditions of savage oppression, Black families emerged in the early 1900s with almost 20 million acres of farmland and “the largest amount of property they would ever own within the United States,” according to the historian Manning Marable. Since then, they have lost roughly 90 percent of that acreage” says New Republic. According to New Republic, there will be a study put out soon by the American Economic Association’s Papers and Proceedings journal that will value the land lost between 1920 and 1997 at approximately $326 billion. An amount that is equal to over 20 percent of African America’s $1.6 trillion buying power. The $326 billion valuation excludes the 160 million acres that Africa Americans who were enslaved were owed post Civil War from Special Order No. 15 that guaranteed the former enslaved population of around 4 million 40 acres apiece, but was reneged upon by the U.S. government ultimately making the loss arguably worth trillions today. Yes, trillions. The economic loss has had catastrophic social, economic, and political echoing impacts for generations. “Revolution is based on land. Land is the basis of all independence. Land is the basis of freedom, justice, and equality”, Malcolm X said. This alluded to the belief that every revolution was and is about land given that it impacts everything that lays to bear on any group, community, country, and diaspora. African American institutions, especially those focused on agriculture, should have made the protection of African American land a strategic priority.

Enter the 1890 HBCUs, which were created with the Second Morrill Act of 1890. There were 19 HBCUs created under this act (and two HBCUs which were created under the First Morrill Act of 1862, which primarily created HWCU agriculturally focused colleges and universities). For all intents and purpose, 1862 and 1890 colleges and universities were created with an emphasis on agriculture. Tuskegee, through the political clout of Booker T. Washington, is the only private HBCU that has land-grant status. The other two private universities that are land-grant institutions are Cornell and MIT. Among the 1890 HBCUs, they have three of the six HBCU law schools housed at Florida A&M University, Southern University System, and University of the District of the Columbia. Despite this, based on their websites none of three have any focus/concentration on agricultural law. This means that more than likely African American farmers and landowners are in the hands of lawyers who are both non-African American and trained at an HWCU/PWI institution. Given historical behavior, it is not hard to assume that those lawyers do not work in the best interest of our community. It also once again poses the question of the lack of strategy among African America at using its institutions to protect its social, economic, and political interest. Stemming the tide requires a change in HBCU strategy and realizing the purpose of our institutions is to serve and protect the other parts of the African American ecosystem.

There are a few pointed pivots that 1890 HBCUs can do to serve and protect the agricultural interest of African America. First, the three 1890 law schools (FAMU, SUS, and UDC) can create an African American agriculture concentration in their law schools. Again, to be clear, an African American agriculture concentration is not the same as general agriculture, which tends to be from a Eurocentric perspective. Focusing on agricultural law from the African American agricultural perspective and interest is paramount. Secondly, the three 1890 law schools can create a joint organization for African American Agriculture Defense Fund that will serve as a means to fund law defense for African American farmers, lobbying efforts towards African American agriculture, and regional African American agriculture legal research. Thirdly, all of the 1890 HBCUs needs to create master’s programs in agricultural law and policy focused on their respective local, state, and regional geographies. They can then push for alumni to create scholarships that will allow for a pipeline of agriculture majors to pursue law degrees at the three 1890 HBCU law schools. Lastly (but not all), a concerted emphasis on offering courses, lectures, and seminars on the purchase and maintenance of African American land ownership emphasized to students and alumni and available to our entire community.

If HBCUs are not going to be part of the institutional ecosystem built to serve and protect African American interest, then what is their purpose? Without protecting African American land, what little is left of it, then what is to come of African America? Protecting African American land takes more than just HBCUs, it also requires African American owned financial institutions, real estate organizations, families, communities, and more. However, 1890 HBCUs must take the vanguard and protect what we have so that we can start to stem the tide and move the trend upward again. The notion that land theft and assaults have been happening to African America for 100 years and we still have yet to respond with a counterattack or an offensive of our own is telling. HBCUs also are becoming more and more vulnerable to their land and the communities they are in, which are typically African American, being gentrified and the use of predatory land theft and assaults heightened. Howard University, Prairie View A&M University, and Texas Southern University all are witnessing land theft and assaults on the land surrounding their institutions. Unfortunately, there was and continues to be no unified strategic planning to protect them. In Howard University’s case, white residents have even been so gall as to suggest that the school be moved. This is just one example of over a century of attitudes that have helped lead to others justifying land assaults on African American landownership. We know who are our enemies are, we have the intelligence and tools, now is the time to start urgently preparing our troops to defend our lands.

Bun B Advises African America To Get A Larger Worldview When It Comes To Wealth

”Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson

The Walton Family, most notably known as the “owners” or dominant shareholders of Wal-Mart. As of March 31, 2022 they are worth an estimated $234.2 billion or 20 percent of African America’s $1.1 trillion buying power.

In an interview with Brandon Hightower, who is better known as B High and a journalist in Atlanta, on his YouTube channel BHighTV, Bernard Freeman, better known as hip-hop legend Bun B, lays down an immense amount of financial wisdom that he has accumulated over the years. Primarily speaking to up and coming hip-hop artists, the conversation could apply to any room in African America. According to an economic study done by McKinsey, African America continues to be the poorest racial group in America with a median net worth of only $24,000 and yet its financial behavior according to Mr. Freeman reflects anything but that.

Mr. Freeman immediately addresses the issue of ownership versus labor that many may have overlooked in the conversation. Asked about how to navigate the issues of artist feeling like they are being robbed by their labels Freeman says, “Don’t sign to a label. I mean that’s just it. Don’t sign to a label and take the slow road.” When pressed by Hightower of people not wanting to take the slow road, Freeman counters with, “Take the fast and get robbed then. Do you want to be famous or do you want to be rich? Because there is a likeliness that you might not be able to be both in this game. At a certain point you have to decide, do you want to be seen and known and look like you got bread and have everybody assume you got bread? Or do you really want to have bread and have people just assume you broke and not really getting it?” The slow road being an independent label that you own and own the masters and all rights to your music or going with a major label who owns the rights to everything you produce in exchange for a small royalty. Do you want to be the owner or do you want to be the labor? This is a question that is consistently overlooked in our community and institutions. HBCUs love to discuss how many of their students have gotten jobs, but when is the last time you saw an HBCU produce an entrepreneurship report detailing how many of their students started companies, hired other HBCU graduates, brought jobs to their community, wealth creation, and overall economic impact in the community? You do not because we do not have a focus there. Our community too often prides itself on finding a “good” job. Despite this push, our unemployment rate always remains twice the national average. Why? Because there is not nearly enough ownership within the community and therefore the ability to dictate employment, wages, and wealth in our community are always at the hands of others.

After a brief exchange on how the African American community seems to not believe that you can be famous and not be rich and be rich and not be famous, Mr. Freeman ask Mr. Hightower if he knows what the Walton Family (pictured above) looks like to which the latter replies no idea. The irony that members of the Walton family could walk into many Wal-Marts around the country and not be recognized, while controlling one of the world’s largest corporations and being one of the wealthiest families on Earth is not to be lost in this age of social media influencer and the like that more and more see as a path to riches. Again, associating being known with being financially successful. And while a few people listed on the Bloomberg Billionaires’ Index maybe well known, such as Bill Gates, Elon Musk, Mark Zuckerberg, 99 percent of that list could walk into many households and be absolutely unknown. However, one thing they all have in common? 100 percent of them are owners.

Mr. Freeman then says in response to Mr. Hightower asking how do we get kids to see beyond the drug dealers, ballplayers, and rap stars, “You have to give them a broader worldview so they can see what real money look like. Because I tell young people all the time everybody that you looking on TV and on the internet that’s rich, with the exception of a hand full of people, maybe ten people, somebody pay them.” He even goes on to discuss Shaquille O’Neal, who he believes either is close to or already a billionaire, but also states that a large portion of O’Neal’s wealth comes from people paying him, but who they themselves were already billionaires and O’Neal had no idea what they looked like before getting paid by them. We often hear of athlete’s salaries, but rarely if ever think about what the owner’s of these teams make. The NFL for instance, which is one of the worst paying professional sports leagues for players based on salaries and career expectancy, is also the most profitable sports league for owners. It is no coincidence that those two things go hand in hand. As of this article, Deshaun Watson, quarterback for the Cleveland Browns, recently signed to become the highest paid player in NFL history at 5 years, $230 million or $46 million per year. Compare that with Jerry Jones, owner of the Dallas Cowboys, who last year took home $280.4 million or six times what Deshaun Watson’s contract is. Even more so, Jerry Jones does not have to take one hit owning the team, can own it longer than any player can play, and then can pass it onto his children (as of this article the Dallas Cowboys are valued at $6.5 billion according to Forbes). Deshaun Watson can claim none of those things. Again, labor versus ownership.

This is not to say that Mr. Freeman is against having fun and enjoying your money as he points out discussing the trend of people who count money on the internet as a form of showing off. But he also follows it with, “Jay-Z is getting richer and richer and he is wearing less and less s**t that looks rich. And you keep going into these rooms with these people trying to look like money. No, you have to sound like money, think like money.” He points out that you will do little to impress Jeff Bezos or Warren Buffett walking into a meeting with them wearing a $4-5 million watch, number 2 and 5 on Bloomberg’s Billionaire Index and worth a combined $400 billion or 36 percent of African America’s buying power. One could argue that you may even turn them off by spending so lavishly. Spending $5 million on a watch versus leveraging that $5 million into $25 million worth of real estate and $2.5 million in annual income from that real estate looks like someone who is not really interested in building generational wealth. Especially for African America when every single dollar is going to count for families, communities, and institutions. In 2019, African Americans accounted for 13.2 percent of the population, but a heartbreaking 23.8 percent of poverty according to the U.S. Census.

“Wealthy does not have to prove to anybody that they are wealthy”, says Mr. Freeman in closing out the show’s segment. And to that point, the lack of wealth in our community and institutions continues to induce behavior that screams of lack. Unfortunately, wealth is not going to be generated by a job or even by starting a business per se. Wealth and power is generated by the building of an institutional ecosystem that is connected and circulates intellectual, social, economic, and political capital within it. African American banks having enough deposits to lend to an HBCU who wants to build a new research facility. An African American venture capital fund setting up and office at an HBCU to fund the next great idea in renewable energy. An HBCU alumni association putting money into an African American community to help ensure the K-12 system is providing the best education with the latest technology. Then all of those moments working together in unison. That is when we will see wealth and then power become not a scarcity in our community but a norm.

To watch the full interview segment, click below or go to http://www.bhightv.com.

HBCU Money’s 2021 Top 10 HBCU Endowments

If there was a short analysis of the 2021 HBCU endowment list it would be this – still not enough. Despite record breaking donations toward HBCUs from Mackenzie Scott and others in 2020-2021, the PWI-HBCU endowment gap among the Top 10 PWIs and HBCUs continues to balloon, a gap that stands at a staggering $121 to $1. This despite a 35 percent increase by the Top 10 HBCU endowments from last year. Simply put, winning the philanthropic “lottery” is not enough and it never will be when it comes to closing the endowment gap. The rabbit never beats the tortoise to put it another way. HBCUs must find a way to find consistent capital infusions over time as opposed to lighting quick one-offs.

The HBCU donor pool is simply too small and too poor (relatively speaking) to close the endowment gap. Without increasing the percentage of African Americans college students who go to HBCUs from 10 percent to 25-30 percent, it does not bode well for HBCUs to be able to close the endowment gap through traditional means. HBCUs and their alumni are going to have to be more creative and must be so expeditiously. While this is the most HBCU endowments we have ever reported with $100 million or greater, increasing from five in 2020 to seven in 2021, PWIs saw an 25 percent increase in the number of endowments over $2 billion going from 55 to 69 and an equally 25 percent rise in the number of endowments over $1 billion going from 114 to 142. This while HBCUs are still waiting for their first billion dollar endowment.

To that point, the race between Howard and Spelman is tightening. Last year’s $334 million lead that Howard held over Spelman has shrunk to $265 million. At one point it seemed a foregone conclusion that Howard would reach the milestone first (The Race To The First Billion Dollar HBCU Endowment: Can Anyone Catch Howard?), that is no longer the case. Howard’s public relations over the past year have not been favorable and while many people say all press is good press – not when you are an African American institution. With Hampton and North Carolina A&T’s departure from the MEAC, no HBCU conference (CIAA, GCAC, MEAC, SIAC, SWAC) is dominating the Top 10 and the list is split 50/50 between private and public HBCUs as well. Arguably this is the most diverse Top 10 HBCU endowment list since we first began publishing, but one thing remains feverishly consistent and that is there is a lot of work to be done to ensure HBCU endowments and therefore the institutions of HBCUs are sustainable and thriving.

HIGHLIGHTS:

  • Top 10 HBCU Endowment Total – $2.7 billion
  • Top 10 PWI Endowment Total – $328.7 billion
  • Number of PWIs Above $2 billion – 69
  • Number of PWIs Above $1 billion – 142
  • HBCU Median – $97.8 million (33.7%)
  • NACUBO Median – $200.4 million (25.8%)
  • HBCU Average – $203.8 million (53.6%)
  • NACUBO Average – $1.2 billion (35.2%)

All values are in millions ($000)*

1. Howard University – $795,203 (11.6%)

2. Spelman College – $530,399 (40.3%)

3.  Hampton University – $379,992 (35.4%)

4.  Morehouse College – $278,073 (77.0%)

5.  Meharry Medical College – $186,943 (19.3%)

6. North Carolina A&T State University  – $157,336 (113.2%)

7. Florida A&M University – $118,635 (24.4%)

8. Morgan State University$97,783 (162.9%)

9. Tennessee State University – $91,120 (33.2%)

10. The University of the Virgin Islands – $82,863 (23.9%)

OTHERS REPORTING:

*The change in market value does NOT represent the rate of return for the institution’s investments. Rather, the change in the market value of an endowment from FY20 to FY21 reflects the net impact of:
1) withdrawals to fund institutional operations and capital expenses;
2) the payment of endowment management and investment fees;
3) additions from donor gifts and other contributions; and
4) investment gains or losses.

SOURCE: NACUBO

Take a look at how an endowment works. Not only scholarships to reduce the student debt burden but research, recruiting talented faculty & students, faculty salaries, and a host of other things can be paid for through a strong endowment. It ultimately is the lifeblood of a college or university to ensure its success generation after generation.

Ariel Capital’s 2020 Black Investor Survey: African America’s Continued Fight To Close The Investment Gap

“On March 23, 2020, the S&P 500 fell 2.9%. In all, the index dropped nearly 34% in about a month, wiping out three years’ worth of gains for the market. It all led to a 76.1% surge for the S&P 500 and a shocking return to record heights. This run looks to be one of the, if not the, best 365-day stretches for the S&P 500 since before World War II. Based on month-end figures, the last time the S&P 500 rose this much in a 12-month stretch was in 1936, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.” – CBS News

Ariel Capital released their 2020 Black Investor Survey and the results show that there is reason to be pessimistic today, but potentially optimistic for tomorrow. The survey focuses on middle class African American and European American households earning over $50K in 2019. Some key financial points outside of this survey that should be taken into context though are poverty for African American stands at 21.2 percent versus 9.0 percent for European Americans. This high rate of poverty for African Americans means that middle class African Americans, as noted in the survey, are more likely to have high levels of assistance to family and friends which provides a damper on higher investing capabilities. These high levels of poverty are highly reflective of the median wealth gap between African and European Americas, $24,100 versus $188,200, respectively. African America continues to suffer from weak institution building and therefore the ability for its economic and financial ecosystem to strengthen continues to be suffocated. Firms like Ariel Capital and other African American financial institutions need more investment and support from other African American institutions, like HBCUs, in order to scale and create more employment, wealth, and economic opportunities beyond the grassroots level.

KEY HIGHLIGHTS:

  • The deep-rooted gap in stock market participation between the groups persists, with 55% of Black Americans and 71% of white Americans reporting stock market investments.
  • 63% of Black Americans under the age of 40 now participate in the stock market, equal to their white counterparts.
  • Ownership rates of 401(k) plans are now similar between Black and white Americans (53% vs. 55%).
  • White 401(k) plan participants put 26% more per month toward their retirement accounts than Black 401(k) plan participants ($291 vs. $231).
  • Black Americans are less likely than white Americans to own almost every kind of financial vehicle, with the exception of whole life insurance, which is favored in the Black community.
  • They are also less likely than white Americans to have written wills, financial plans, or retirement plans.
  • For Black Americans, disparities grow every month; while they save $393 per month, white Americans are saving 76% more ($693 per month).
  • Black Americans are also far less likely to have inherited (23% vs. 51%) or expect to inherit wealth (15% vs. 35%).
  • Black Americans are less likely to work with financial advisors (21% vs. 45% of whites).
  • Student loan delay or deferral was reported as being three times more common among Black Americans (16%) than whites (5%).
  • More than twice as many Black 401(k) participants (12% vs. 5%) borrowed money from their retirement accounts.
  • Almost twice as many Black Americans (18% vs. 10%) dipped into an emergency fund.
  • And 9% of Black Americans (vs. 4% of white Americans) say they asked their family or friends for financial support in 2020, while 18% of Black Americans and 13% of white Americans acknowledged giving financial support to family and friends last year.
  • Among Black Americans, 10% discussed the stock market with their families growing up, while 37% discuss the stock market with their families now (compared to 23% and 36%, respectively, for white Americans).
The chart above tracks the participation in the stock market through individual stocks, mutual funds, or ETFS. For African and European Americans, 2020 is an all-time low of participation since tracking began in January 1998. However, the gap of participation has closed from 24 percentage points in 1998 to 16 percentage points in 2020. Primarily due to the all-time low of European America’s participation falling by 10 percentage points and African America’s falling by only 2 percentage points. The closest the gap has been was in 2001 and 2002 when it was 10 percentage points and in 2002 saw African America break through 70 percentage points the only time in the survey’s history when we reached 74 percent.

HBCUs can play a significant role in closing the investment gap by introducing students to HBCU alumni who have gone on to become investors and financial advisors – thus circulating both intellectual and financial capital within the HBCU ecosystem. Even more so, they can assist in ensuring students set up investment accounts like a Roth IRA during their freshmen year and throughout matriculation. The earlier students are engaged in investing the more compounding can work for them over their lifetime which in turn makes for wealthier alumni, larger future donations, stronger African American communities, and more value proposition for HBCUs to promote within the African American community.