In response to the Death of George Floyd, plus numerous incidents of racial inequity and injustice that have dominated headlines, MasterCard launched the ‘In Solidarity’ program which plans on connecting one billion people to the digital economy by 2025 while investing $500M in Black communities over the next five years by putting money into black owned businesses. For the next five years, MasterCard will connect Black businesses to products, services, technology, and financial support that will help to close the racial wealth and opportunity gap.
According to MasterCard, half of all Black Americans are excluded from the financial mainstream and small Black-owned businesses are often blocked from funding. For this reason, the card service company is working to deliver immediate impact for Black communities by focusing on expanding city programs to support black communities, affordable financial tools and services, capital, and resources for Black-owned businesses.
“Black families are likely to spend 50% more than white families for basic financial services, twice as likely to be denied a mortgage,” said Mike Froman, MasterCard Vice Chairman. “We took a step back and said ‘whereas a company can we play a useful role?’”
According to the Federal Reserve, data from the 2019 Survey of Consumer Finances (SCF) show that long-standing and substantial wealth disparities between families in different racial and ethnic groups were little changed since the last survey in 2016; the typical White family has eight times the wealth of the typical Black family and five times the wealth of the typical Hispanic family. Systemic racism has contributed to the persistence of race-based gaps that manifest in many different economic indicators. MasterCard wants to help America deal with this issue.
Froman says the company decided to focus on three areas. The first being helping cities address social and economic issues, the second being supporting small businesses—helping them digitize, and the third part being addressing systemic racism and inequities in the mainstream financial services system.
“We have created MasterCard money solutions which effectively makes it less expensive to be poor by allowing people to get access to their wages when they want to, to cash a check even if they don’t have an account so they don’t have to get an expensive cash checking provider, and to avoid payday lending,” said Froman. “Every city is different and every community is different so our focus has been digging into each community and trying to learn from local community organizers, business executives, political people, nonprofit organizations, and small business owners.”
As Vice Chairman Froman travels to Atlanta for the ‘In Solidarity’ Tour, community building is on his mind. MasterCard wants to know how the company can be helpful to the community, using panel discussions to find the solution. On April 20, Mastercard and Blavity will cohost 3-panel discussions— ‘Inclusive Recovery and the Racial Opportunity Gap in Atlanta’, ‘Addressing Income Inequality,’ and ‘Shaping an Inclusive Space for Economic Mobility’. These discussions aim to explore ways to address a financial system that has systemically disadvantaged and excluded Black communities with a view to advancing opportunity and equitable growth in Atlanta. Arian Simone of Fearless Fund will host a night-time virtual event featuring local small business experts and founders, that explores the challenges and opportunities for Black women-owned small businesses in Atlanta.
“We chose seven quite different cities, some very large like New York and Los Angeles. New York because that’s where our headquarter is. St. Louis because that’s where another large group of our employees is, but we also chose New Orleans, Atlanta, Dayton, and Birmingham because they’re different sizes and all have large African American populations and all are wrestling with challenges,” said Froman. “Atlanta is, as I’m told, the number 1 city for income inequality in America. There’s just a 4% chance of escaping poverty if you’re born into poverty in Atlanta.”
Froman says MasterCard intends to expand beyond the seven chosen cities. He says the company is looking for cities with a strong group of leaders who want to engage in conversation about racial wealth and the opportunity gap.