Tag Archives: black dollar

Why Do HBCUs Not Bank With Black Banks?

Posted on April 15, 2023 by | 2 comments

It could all be so simple But you‘d rather make it hard, loving you is like a battle and we both end up with scars. – Lauryn Hill

Something that should be so simple, HBCUs and other African American organizations, businesses, and other African American institutions have made not just a battle but sometimes it feels like a war. That battle, getting African American institutions to bank with the African American banking system with banks and/or credit unions owned and controlled by – African Americans. It is economic development 101 for other groups, but for African America it is seemingly Calculus III. Based on HBCU Money’s internal research on the matter only two, a PBI and HBCU, are believed to bank with a Black-owned bank. That means that just like the over 90 percent of African Americans who go to college not choosing HBCUs, well over 90 percent of HBCUs do not bank with a Black-owned bank. And in both cases, neither (AAOBs or HBCUs) are able to fulfill their potential as they would with the patronage and investment of those they were built to serve.

We asked the AI app Nova for their take on why HBCUs do not bank with African American owned banks and here was its answer: “There are a few reasons why many HBCUs may not bank with Black-owned banks. One reason is that larger, more established banks often offer more resources and services that HBCUs may need, such as investment services or customized financial solutions. Additionally, some HBCUs may feel more comfortable with larger, more established banks that have a long history of working with educational institutions. However, there has been a growing movement encouraging HBCUs to support Black-owned banks and businesses as a way to promote economic empowerment within the Black community. Many Black-owned banks have a strong commitment to supporting HBCUs, and may offer specialized products and services tailored to their needs.”

Despite AI being quite learned in its contribution to this. There are as they say – levels to this. Not least among them is the plight of public HBCUs lacking autonomy. It would take a massive student and alumni uprising in order to get a public HBCUs moved to an African American owned bank. Ultimately, public HBCUs are controlled by a board or if they are in a system, then a system’s board. In either case, the state’s flagship PWIs carrying the most financial weight and tend to be determinate of how all public universities in the state will behave and most certainly likely where they will bank. And while it is complicated to wrangle the institutional banking of public HBCUs into African American owned banks, their proxy organizations like alumni associations and foundations that serve them should not have anywhere near the issue of banking Black. Then there are the private HBCUs who have far more autonomy with their banking decisions and yet it seems potentially only one private HBCU actually banks Black. It is almost befuddling in the case of the Alabama and Georgia HBCUs not to bank Black. They both have two African American Owned Banks in headquartered in their states. Morehouse specifically just a few years ago had one of their alumni bring back African American owned banking to Oklahoma when alumnus Kevin Perry purchased controlling interest in First Security Bank & Trust. In fact, 14 of the 15 states and territories where there are African American owned banks have HBCUs/PBIs in them with Wisconsin being the lone exception.

African America’s flagship HBCU, Howard University, two years ago entered into a partnership with PNC Bank to create the PNC National Center for Entrepreneurship housed at Howard University. PNC’s Foundation providing Howard University with a rather obtuse $3.4 million a year grant for five years. PNC Bank is based in Pittsburgh,PA, its executive team in 2022 commanded $81 million in compensation, and the bank has assets over $550 billion – an amount that is over 100 times the size of all 16 remaining African American Owned Banks’ assets combined. We think Marcus Garvey just rolled over in his grave. Meanwhile, right in Howard University’s backyard is Industrial Bank, an African American Owned Bank with $723 million in assets, meaning PNC Bank has over 760 times the amount of assets of Industrial. There is in fact only one African American Owned Bank that has over $1 billion in assets, Liberty Bank & Trust in Louisiana.

That HBCU presidents and AAOB CEOs do not have closer relationships simply speaks to the island mentality that African American institutions as a whole have. Although our community loves to parrot the harsh reality of an African American dollar that does not circulate in our community’s even 6 hours while “the average lifespan of the dollar is approximately 28 days in Asian communities, 19 days in Jewish communities, 17 days in white communities”, according to a piece by the FAMUAN (see how we are circulating HBCU media capital). This has done nothing to make HBCU administrators understand that the circulation of the African American institutional dollar is far more impactful than the African American consumer collar. Despite as recently as 2017, there were four African American Owned Banks with HBCU alumni as CEOs. It is also not just on HBCUs, but AAOBs should be doing a better job of heavily pursuing those HBCUs that do have the autonomy to decide where they bank and forging deep relationships with them at multiple levels.

By forging that relationship HBCUs and AAOBs can multiply the probability of opportunities and profitability. That way when an HBCU alum creates the next Google, SpaceX, FedEx, or other Fortune 500 company, then they will already know the importance of banking with an AAOB and hiring HBCU alumni. It will be understood because the intentionality of our ecosystem’s success will be modeled and molded and as a result our community is empowered with success a rule and not the outlier it operates in now as so many of us continue to try and build a nation as an island instead of forging together.

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Posted in Banking & Credit Unions

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Why Are HBCUs Not Becoming College Towns Where African American Businesses Thrive?

Posted on February 2, 2023 by | 1 comment

As a leader, you must consistently drive effective communication. Meetings must be deliberate and intentional – your organizational rhythm should value purpose over habit and effectiveness over efficiency. – Chris Fussell

In the world of economic development and real estate development there are fundamentals that allow for development to take place. One of those fundamentals is what is known as an anchor. According to Janover Commercial Real Estate, “An anchor tenant is the largest or most prominent store in a retail commercial real estate development, intended to help draw customers into the area. In strip centers and power centers, anchor tenants are often big-box stores or grocery stores, while in shopping malls, they’re more likely to be department stores.” Anchors can be a myriad of things such as neighborhoods, megachurches, downtowns, boarding schools, and yes (but not limited too) colleges and universities. 

It is a simple question really. What good is African America’s $1.6 trillion in buying power if all of it goes into companies owned by non-African Americans? From the FAMUAN Online, “Studies say that the average lifespan of the dollar is approximately 28 days in Asian communities, 19 days in Jewish communities, 17 days in white communities — and just six hours in Black communities.” Yet it seems there is no actual intentionality on changing this. No thought to why it is happening and certainly no thought to solutions. One major issue of course is that everything African American institutionally operates on an island. There is virtually no interconnectivity between African American institutions or intentionality on creating it. The real question begs, do we understand what it would take to actually increase the African American dollars circulation? 

There are a plethora of independent Black owned coffee shops in every city where an HBCU is located and yet HBCUs are more excited to bring Starbucks to their campus. Texas Southern and Prairie View A&M University could feature The Breakfast Klub on their campus, but instead Sodexho, a French owned company, dominates their food services and many other HBCUs. An opportunity to create a food hall of locally owned African American food businesses both on and near our campuses is missed, ignored, simply not considered. The opportunity to have African American banks and credit unions present on or near our campuses – again, missed, ignored, and simply not considered. Many have argued that HBCUs banking needs are too big for African American owned banks. Despite, Florida Memorial University and Roxbury Community College, an HBCU and PBI both banking with OneUnited Bank. Albeit they are smaller HBCUs, this claim that HBCUs financial needs are beyond that of African American owned banks is not actually founded in any real assessment. Even if one were to go with this notion (as faulty as it is) this does not remove the institutions ability to ensure African American banks and credit unions have access to their faculty, staff, and students to open accounts and build relationships. What about the Divine 9, student organizations, and the like? Do we believe they too have to “complicated” of financial needs to not bank with an African American owned bank or credit union? Even if just the faculty, staff, students, and low level organizations with the campus banked with African American owned banks it would be enough to double the size of them alone. This lack of intentionality is painfully screaming at us. Opportunities for HBCU/African American health providers like dentists, doctors, therapists, etc. to be given space on or near HBCU campuses could be highly proactive in addressing and preventing many of the health crises we find the African American community facing. 

What happens if we become intentional? What happens if we become proactive and not reactive to trying to circulate the African American dollar using HBCUs as the anchor? These small businesses grow first and foremost. With this growth come jobs and interns for our students, new wealth for the owners of the businesses and an opportunity for HBCUs to build sponsorship and endowment relationships with them. Our students working for these African American firms are now using their intellectual capital to build more African American institutions, reducing their own student debt loads while in college, and maybe just maybe be an early employee that received stock options that make them a millionaire of the next Google, FedEx, Microsoft, Dell, Nike, SNL Financial, or any of the other major companies that we may or may not realize were started on college campuses and in college towns. Except in this case, they are companies that are HBCU Alumni/African American owned. Those banks and credit unions would then be able to open multiple branches and put predatory financial services in our communities out of business. They would have the deposit bases to offer more small business loans for HBCU entrepreneurs and mortgage loans for HBCU homeowners. This is not even to speak of the implications of such an increase in the tax base in those areas that the K-12 schools that often surround HBCUs would significantly benefit. K-12s that are usually filled with African American children who could one day be HBCU students. The multiplier effect due to the intentional circulation could be hard to measure because there are so many social, economic, and even political ramifications of our intentionality when it comes to the African American dollar, but to say it would be a profound paradigm shift would be an understatement. 

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