In honor of Black Business Month, Baltimore Community Foundation (BCF) is revisiting one of its important impact investments in Ignite Capital. Launched to support Baltimore’s mission-driven entrepreneurs, many of whom are Black founders, Ignite Capital addresses the critical capital gap that traditional financing often overlooks.
When BCF decided to invest in Ignite Capital over a year ago, it was one of the foundation’s early philanthropic commitments in the growing field of impact investing, helping to validate an innovative model tailored to Baltimore’s social enterprise ecosystem.
As part of this commemoration, we caught up again with Jay Nwachu, President and CEO of Innovation Works and Ignite Capital, to reflect on the ongoing importance of impact investing for Black entrepreneurs and the Baltimore community.
Q: Why is it important to have an organization like Ignite Capital making investments in social enterprises?
A: We know there’s an access to capital gap, especially for Black entrepreneurs. And we also recognize when you are in this field of social enterprise, the traditional financing mechanisms don’t often fit. There are several features of our impact investing framework that you wouldn’t necessarily find in a traditional bank. Initially, it sounds scary when I tell some people that we don’t do credit checks. But we don’t just process loans. We invest in relationships over time with entrepreneurs, listening to their goals and concerns, and connecting them with mentors, training, and other resources. Given all the things we do to support them prior to funding, those trust-based relationships are probably one of the best risk management measures that we have.
Q: How did you connect with BCF?
A: Impact investing as a framework in Baltimore is still relatively young. When we were doing our due diligence about what it would take to launch Ignite Capital there were only a few people you could point me to and BCF had one. I would say BCF is one of the most practiced and experienced at impact investing of any entity in Baltimore. The due diligence period for BCF to invest in Ignite Capital itself was a learning experience. And their investment in Ignite Capital was certainly instrumental, because they were the first philanthropic institutional investment, which was a validator of our model.
Q: Aside from investment, how has BCF benefited Ignite Capital?
A: I was invited to be on BCF’s Impact Investing Subcommittee and a BCF program officer is on our own investment committee helping us think about our practices and policies and how to sharpen them based on what BCF has learned over time. That’s extremely helpful. I count on them for advice. And they have been helpful in educating BCF donors about Ignite Capital. We have been able to secure at least one other investment from a donor advised fund based on their introduction. Social capital, knowledge capital, financial capital—BCF shows up fully with it all.
Q: Why is it important for a community foundation to get involved in impact investments?
Philanthropy has a unique role in helping to build the field because of the institutional memory and knowledge they have around what it has taken to support nonprofits, especially in Baltimore. And I think it’s an opportunity to continue to figure out how we find better ways and more effective ways to put money to work for a mission. Community foundations can aggregate resources, use their knowledge to help inform the field, and then rely on practitioners who then have the capacity to be able to actually go out there and make it happen.
Q: What do you enjoy about doing this work?
A: I’m not of the belief that everyone needs a $5 million check to make something great, but I do think we need more responsible capital at the table. So what excites me is the ability to think creatively about how to help our investors reimagine the role of capital and how it builds our communities in ways that may be foreign to them. Investors are so used to needing big capital to do big things on a national scale, as opposed to a neighborhood scale where smaller amounts can have outsized impact. And then on the other side, [I enjoy] helping the entrepreneurs repair their relationship with capital and think about using capital responsibly to do the things they want to do for themselves and for their community. I love that process of bringing people together in alignment. Baltimore has a lot of amazing people who really do love Baltimore, but we have to figure out a way to bring people to the table around these common challenges. That’s what brings me joy.
This Q&A was first featured in Baltimore Community Foundation’s 2023 Annual Report. BCF was the first foundation to invest in Ignite Capital, which assists social enterprises in Baltimore City, enabling burgeoning entrepreneurs to remain mission-based even as they work toward financial and organizational sustainability. To learn more about Ignite Capital and explore their portfolio, visit ignitecapital.org.
