Boston Impact Initiative

Interview with Deborah Frieze, Founder & President of Boston Impact Initiative (BII) Fund & COVID-19 BII Fund 

Deborah Frieze sat in the circle at the retreat center. It was day one of the RSF Social Finance Integrated Capital Investing retreat in the fall of 2017. She spoke about how she launched a fund focused on racial equity in Boston, one that involved the community as active, engaged partners and decision-makers. She was innovating and spoke about the future as one that we had to create. I sat down at her dinner table and listened. Here was someone who decided something new needed to be envisioned to solve a problem that no one was addressing. That courage is a quality that I have seen in every one of the Transformative 25 fund managers. They have a mix of vision, hustle and heart for finance that addresses racial, gender and environmental justice. 

Jen: How was the Boston Impact Initiative Fund created?

Deborah: We started the pilot fund (Boston Impact Initiative, LLC) in 2013 in order to test the thesis that it was possible to create a place-based fund deploying integrated capital to close the racial wealth divide. From 2013-2017, we deployed $3M across 30 different investments and determined that this was a viable investment thesis. So we created Boston Impact Initiative (BII) Fund, a 501(c)(3) charitable loan fund, in 2017 to raise money from other investors and demonstrate a model that could be scaled by sharing what we’d learned with other communities around the country.    

Jen: How are your investment funds catalytic in a way that is different from other funds?

Deborah: In 2016, the City of Boston commissioned a report to map the ecosystem of capital providers and technical assistance providers dedicated to supporting women and minority-owned businesses. They found 350 of the former and 250 of the latter–and yet, entrepreneurs of color were being denied access to capital and left out of support programs.

The purpose of our fund is to provide the kind of capital that will unlock the rest of the capital in our community. That means we can take a subordinate position to a bank; provide equity next to a CDFI’s debt; provide a feasibility study grant to support an angel investor’s equity. 

Jen: How do you describe the kind of non-financial returns the fund offers?

Deborah: We are an impact-first investor with the purpose of ensuring that our investments contribute to redistributing wealth and power among communities of color. We use impact covenants in our investments to ensure that workers are paid a living-wage, ownership is equitably distributed, compensation ratios remain low, hiring practices remain diverse, workers have a voice, and more. We also seek to support our portfolio companies in their efforts to decrease their carbon footprint and become ecological leaders in their sector. 

Jen: Can you describe how you use integrated capital to do your work?

Deborah: In addition to deploying the full spectrum of capital tools, as I shared above, we also seek to practice what we call “closed loop  investing” where we support our portfolio companies in being customers and suppliers of one another. Rather than seeing this concentration of investments as creating conflicts of interest in our portfolio, we see this as a “confluence of interest” (quoting Don Shaffer, formerly of RSF Social Finance), enabling our portfolio companies to build collective social capital and strengthen ties within their sectors so they become more resilient.   

Courtesy of Sunwealth.

Jen: What is transformational about the businesses that you invest in?

Deborah: On average, it takes $30,000 to bootstrap a business dream into reality. But many entrepreneurs of color may be starting with no personal savings, no credit history and no friends and family capital. When the asset base in an entrepreneur’s community has been stripped, it becomes nearly impossible to transform the economic outlook for that individual, his or her family and their neighborhood. 

Add to that the unprecedented and unpredictable fallout from the COVID-19 crisis. As cities, states and the federal government race to rollout relief funds and stimulus dollars, we know that these dollars may not reach the folks who need it most. 

Now more than ever we need to bring local dollars to local communities. We need to transform the governance structures that allocate capital so people most affected have the most say. And we need to design investment approaches that make wise use of grants, recoverable grants and loan guarantees —alongside debt and equity investments—to support recovery efforts. These are all aspects of fund design that BII has pioneered.   

Jen: How has the Fund responded to COVID-19?

Deborah: In response to COVID-19, BII Fund opened a recoverable grant pool in the spring of 2020 to support the recovery efforts of entrepreneurs and communities of color facing significant business disruption due to COVID-19. Today, these enterprises are at risk of collapse due to the long-term impacts of COVID-19. Even after economic activity is restored, many companies will need access to working capital to rehire employees, rebuild inventory, re-launch marketing campaigns and fund badly needed new receivables. 

Government stimulus programs are unlikely to fulfill all cash needs, and traditional lenders may continue to be reticent to provide capital to entrepreneurs who have low credit scores and can’t provide personal guarantees—which particularly affects the entrepreneurs BII serves. BII Fund is raising 0% recoverable grants that mature in December 2025 to help some of Eastern Massachusetts’ most vulnerable entrepreneurs meet the challenges they face due to the COVID-19 crisis. 

Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?

Deborah: We believe a fundamental shift in perspective is required to transform investing practices that are further entrenching inequality. That shift is to support entrepreneurs, policymakers, philanthropists and investors in building an economic system that self-organizes around regeneration and solidarity—a system that puts relationships, rather than competition and profit, at the center of an investing strategy. 

To do this, we have to re-imagine the way we deploy financial and social capital to catalyze asset building opportunities among communities of color. It’s no longer sufficient to put capital into the pockets of individual entrepreneurs and investors; we need to structure investments that create living-wage jobs, distribute profits, offer pathways to ownership, source locally and engage community members.   

Teresa Maynard of Sweet Teez Bakery (Photo credit: Hornick Rivlin Studio).

Jen: What does a foundation or investor need to understand in order to invest in transformational businesses?

Deborah: Many foundations and investors have begun to meaningfully engage in impact investing, where they seek double- or triple-bottom line returns. However, they still measure those returns separately: the finance team measures financial performance and the program or evaluation team measures impact performance. 

We advocate for a deeper exploration of “Integrated Returns” and “Integrated Risk” (see this article in the Nonprofit Quarterly). Measuring integrated risk and return means taking a system-wide view of a portfolio of investments and grantmaking so that you can evaluate how all of your assets are working on behalf of your mission. Foundations and investors who are committed to addressing inequality need to consider what effect their efforts to maximize financial returns is having on the wealth divide. 

Jen: What do you tell people who think your fund is risky?

Deborah: When we think about risk, we consider not just the risk of losing your financial capital, but also the societal risk of continuing to invest in enterprises that cause social or ecological harm. As the United States moves toward becoming a New Majority country just 20 or so years from now, it is an enormous risk to our economic and social fabric to persist in stripping communities of color of economic opportunity. It is risky NOT to invest in our emerging new majority.

Boston Impact Initiative

Investment thesis / What is your rationale for your approach to investing? We believe we can create a sustainable, inclusive and equitable economy by investing integrated capital (equity, debt and grants) in regenerative enterprises that restore the productive capacity of communities of color in Eastern Massachusetts.
Geography Eastern Massachusetts
Year Founded 2017
# of Investments 36
Funds Raised $7,121,417 Million 


What’s on Deborah’s Mind?

Book  Winners Take All, Anand Giridharadas
Song Nostalgie Amoureuse, Zap Mama
Podcast / Film Podcast – Reveal