Inspire Access, a nonprofit founded by Patrice King Brickman aimed at reducing the gender and racial wealth gap, has launched an investment platform that invests charitable donations in for-profit women- and minority-owned businesses.
Brickman, who also operates a separate venture capital fund for underfunded startups, has raised more than $2 million since the nonprofit's soft launch in November.
Half of that investment came from Brickman's own philanthropic contributions, which have largely been fueled by returns she's earned on her own investments. The other half is from donor-advised funds, family offices and individuals.
Inspire Access has invested $1 million to date into 10 startups or small businesses owned by women or people of color, including Sacramento, California-based investment firm Black Star Fund; Bethesda-based wellness firm Keep Co.; Chevy Chase financial services firm Daintree Capital Inc.; and New York investment firm Lafayette Square.
Investments range between $25,000 and $1 million per company depending on the need of the business and the interest from a donor, but founders create the overall terms for any deal, said Brickman, founder and CEO of the Potomac-based nonprofit.
She's relying on her own network of investment connections to initially source and vet these companies. In addition to Inspire Capital LLC, her women- and minority-led business venture fund, she is a founder and investor in WE Capital, a local consortium of investors who back female startups, as well as a board member of Georgetown-based startup support fund Halcyon.
The requisite to receive investment for these companies is that they be owned by an underrepresented founder. Brickman is industry agnostic, though the companies picked so far have typically been ones that Inspire Capital has invested in previously.
Marketing efforts for the fund far have been limited to Brickman's own social circles. Plans are underway to meet with larger, high-net worth family offices across the country, she said.
"The demand has been really encouraging," she said during a phone interview. "It's been tremendous and I'm really excited."
Brickman told me it's a common misconception that charitable donations can't end up at for-profit entities.
She explained that donor-advised funds, or DAFs, can make charitable donations to Inspire Access, which invests in the small businesses or startups via grants or, at a DAF administrator's discretion, as a recoverable grant investment into a business of its choosing. Should the small business or startup reach certain milestones, the recoverable grant can see a return on its original investment, she said.
If pursuing a recoverable grant investment, Inspire Access does not make recommendations on the types of companies these donations should back, Brickman said.
Many DAF administrators are opting to donate the funds to Inspire Access directly and without pursuit of a possible investment return from recoverable grants, she said.
Brickman said Inspire Access can address the systemic funding challenges that women and Black or Brown founders often face in securing funding and capital. Startups owned by women and or people of color see less than 3% of the total investment capital that's offered to all startups on an annual basis, per startup investment tracking platform Crunchbase.
"These statistics have not changed, importantly, over the past few decades," Brickman said. "So unless we come up with something, which we have…we're just going to be having the same conversation and I think people are starting to realize that."
Inspire Access also hopes to address that shortfall in another way: It wants to activate otherwise dormant capital inside of DAFs by having it deployed into these promising young companies. A 2019 report from The Chronicle of Philanthropy found that uninvested capital in DAFs had reached $100 billion.
Inspire Access collects a 1% initiation fee at the time a donation is received and a 1% annual compounded fee if any returns go back to a DAF. The organization is in the process of hiring its third full-time employee and has two part-time workers on its payroll as well.
