To address the racial wealth gap resulting from institutional racism and under-investment in Black communities, social entrepreneur Tim Lampkin started Higher Purpose Co. in 2016. Now his team supports a vibrant and growing membership of Black entrepreneurs, farmers, and artists across the region who are, together, shifting economic outcomes of Black communities in a sustained way. We spoke to Tim about how he and HPC are reimagining loan collateral and business funding and creating community wealth, plus new developments on the horizon.
Ashoka: Tim, you live in an iconic place — the Mississippi Delta. Can you tell us a bit about it?
Tim Lampkin: I’d love to. I’m proud to have been raised here in the Mississippi Delta — it’s 18 counties in the northwest part of the state. It’s mostly flat lands with fertile soil, and agriculture remains our main industry. It’s also the birthplace of the blues. Many musicians, artists, and creatives live here, some of them known all over the world. It’s home to changemakers, innovators, and civil rights leaders who have shaped this country, like Fannie Lou Hamer, Aaron E. Henry, Vera Mae Pigee, Reubin Smith, Unita Blackwell, Isaiah T. Montgomery, many more.
Ashoka: And you started Higher Purpose Co. here?
Lampkin: Correct. Black residents are 40% of the population, making Mississippi one of the Blackest states in the country. There is progress yet to be made to close the gender and racial wealth gaps resulting from institutional racism and under-investment in our communities. So in 2016, we started HPC to get things moving in a new direction. We work with 200 Black entrepreneurs, farmers, and artists in our business membership. The majority of our members identify as Black women, many of them single mothers starting businesses to increase their monthly income. Our farmers are typically mature in age and experience — less often young people due to the stigma of working on land associated with the cotton industry and slavery. Artists in our membership range from photographers, painters, and musicians.
Ashoka: Most HPC business members are first-time entrepreneurs seeking up to $10,000 to support their business. How does HPC help?
Lampkin: We offer a continuum of capital to get businesses the funding they need to move forward — by leveraging $2,500 business growth grants, individual development accounts, equity investments, loan guarantees, and low interest loans from community development financial institutions (CDFI), plus traditional loans from larger banks. We are also the only Kiva hub in Mississippi, which means we can offer zero interest loans up to $10,000 with no minimum score or collateral required.
Ashoka: An example?
Lampkin: Our member business Kay’s Kute Fruit had been growing their fruit arrangement business for a while and wanted to expand to a new location, to Greenville, MS. They applied for and completed our cohort-based business fellowship and won the pitch competition. So they had about $4,000 in grant funding secured from HPC. Then we connected them to one of our funding network partners, Communities Unlimited, and got them approved for a $40,000 loan. We leveraged our loan guarantee in partnership with RSF Social Finance to reduce the interest rate and closing costs. They purchased a building on Main Street in downtown Greenville and just celebrated their grand opening — so their business is growing. Because they are bringing fresh fruits and vegetables into the community, they are also helping reduce health disparities. This is just one of our many success stories. What’s exciting now is to see the membership come to life, with members exchanging expertise, mentoring each other, doing business together.
Ashoka: You are challenging traditional collateral. Why?
Lampkin: For centuries, the labor of Black people — our ancestors — created wealth for white people and institutions in Mississippi. So, when these institutions ask us to provide collateral to borrow money from the wealth Black people created, it is very extractive. So we’ve been really challenging ourselves and our partners to reimagine collateral and put some parameters around it to protect our business owners. In most cases, we do our best to remove personal collateral like homes and cars from the conversation, and focus on other kinds of collateral like equipment and buildings that, if lost, would not impinge on someone living their life. We do not want somebody’s home to be leveraged to start a business when the whole point is to build wealth.
Ashoka: Got it. Does HPC assist with reducing the loan risk?
Lampkin: Yes. We guarantee 60-75% of the total loan value that could be repaid to the financial institution. By vetting these entrepreneurs, having a support system for them, and leveraging these different types of capital, we’re able to reduce the risk for everybody involved. At the end of the day, we are advocates for our entrepreneurs. That’s why we don’t position HPC as a financial institution. We get the financial institutions to do what they do best, then we come in and do what we do best — supporting the entrepreneurs along their journey.
Ashoka: Banks are making public commitments to address the racial wealth gap. What are they getting right, and what do they have to learn?
Lampkin: We work with a lot of financial institutions, and many have great lending products. What’s missing is the conversation with the potential borrower. Let’s say you are a bank creating a new loan product because you want to support more Black-owned businesses. Have you talked to Black business owners? Have you asked them what they actually need to move their businesses forward? The other aspect we need to reimagine is true community engagement because having a physical branch in an area doesn’t mean you have a community connection. That’s why we invite lenders to come talk to HPC. We will help you develop products and plans that respond to what people actually need to succeed. HPC also submitted comments on the Community Reinvestment Act to encourage new banking procedures to ensure Black communities are not overlooked.
Ashoka: And you’re opening a hub in Clarksdale! Tell us more.
Lampkin: Yes, our regional community wealth hub will show people what’s possible when you trust your vision and work together and unite around a place. Higher Purpose HQ will be open to the public and focus its support on Black entrepreneurs, farmers, and artists. The $2.5 million hub scheduled to open in June 2023 will also have a food hall, multi-purpose theater, rental office space, and civil rights museum. Together we are reframing how people think about Mississippi — and in particular, how people think about Black people who live in Mississippi. How can we tell more of these positive stories in mainstream media? Of course we need to wrestle with our challenges, but let’s also talk about the innovation and creativity and the change that’s happening every single day in communities across our state. The hub will help us do that.
Ashoka: Tim, last question: 10 years from now, what do you hope has changed?
Lampkin: I hope the work that we’re doing is no longer needed. I hope that affordable capital will be available for everybody, that the conversation around collateral will be completely different, that businesses here in the Delta will be run by the majority of the population — Black people. I hope that disparities around the racial wealth gap will have shifted and that we will see an uptick in Black wealth, with many more people and families able to buy land, buy homes, invest in their children’s education, and reinvest back into the community.
This interview was condensed by Ashoka.