The Justice Imperative: Investing to Increase Equity
Stanford GSB Impact Fund: Our 2022 Justice Thesis
There are various definitions and interpretations of the concept of justice. The definition that resonates the most with our team is ‘the quality of being fair, impartial, and equitable.’ Our communities, our country, and our global society all have a long way to go in achieving justice. We believe that investment capital has a unique role to play in helping to advance justice, address systemic inequities, and close the disparities that pervade our society and systems.
Our team invests in early-stage companies that have a fundamental aim of changing systems and closing gaps in opportunity, access, and outcomes for historically marginalized and disadvantaged communities. We invest in teams with lived experience of the challenges they are seeking to address and who represent the communities they are serving. We are particularly focused on companies aiming to close gaps for low-income communities, underserved communities of color, LGBTQ+ communities, and people of marginalized genders. To this end, we believe that the following investment areas are high need and particularly well-positioned to catalyze change for these communities.
We note that while our search is mostly focused on the US, we are open and actively looking to invest in other countries for the appropriate opportunity.
Health Equity
Health inequity is widespread in the US, affecting low-income communities, communities of color, LGBTQ+ communities, and people of marginalized genders.
A Commonwealth Fund study in 2021 surveyed US adults across various income levels on access to medical care and found that 50% of lower income adults reported cost-related access problems (i.e., that they “skipped needed doctor visits, tests, treatments, follow-up, or prescription medicines because of cost”) versus 27% of higher income adults.¹
People of color in the US experience long standing disparities in healthcare access and quality, health outcomes, and wellbeing. In 2021, the Kaiser Family Foundation reported that people of color in the US fared worse compared to white Americans across many health measures, including “infant mortality, pregnancy-related deaths, prevalence of chronic conditions, and overall physical and mental health status.”²
Individuals who identify as LGBTQ+ face health disparities “linked to societal stigma, discrimination, and denial of their civil and human rights,” are at higher risk of certain mental and physical health issues, and often lack access to culturally competent care.³
The Center for Reproductive Rights reports that Black and Indigenous women in the US are “roughly three times more likely to die from pregnancy-related complications than white women.” They also report that US has the “highest maternal mortality ratio of all wealthy nations,” and that “contraception and assisted reproduction services are often unaffordable and out of reach for many.”⁴
Our colleagues on the Healthcare team are also passionate about health equity — check out their investment thesis here.
Financial Wellness & Inclusion
According to the US Census Bureau, there were 37.2 million people living in poverty in the US in 2020, representing a 11.4% poverty rate (up from 10.5% in 2019). Black and Hispanic Americans experienced the highest poverty rates, of 19.5% and 17.0%, respectively.⁵
According to Oxfam America, 31.9% of workers in the US (52 million people) currently earn less than $15 an hour. Workers who identify as women, Black, and Hispanic or Latinx are disproportionately represented, with 40% of women earning less than $15 (versus 25% of men), and 47% of Black workers and 46% of Hispanic or Latinx workers earning less than $15 (versus 26% of white workers). Among working single parents, 57% (11.2 million people) earn less than $15.⁶
Low-income individuals in the US face barriers of access to financial services such as affordable banking, credit, and emergency funds, as well as financial education.
Our colleagues on the FinTech team are also passionate about financial inclusion — check out their investment thesis here.
Future of Work & Workforce Development / Mobility
In 2021, the Brookings Institute issued a report on the workforce mobility crisis in the US, highlighting the rising inequality in the country’s labor force and the challenges that millions of low-wage workers face in achieving job security and benefits. People of color and people of marginalized genders are most affected by these challenges. Brookings measures mobility as “the ability to advance one’s career toward increasingly higher-paid work.” As a metric to measure mobility, Brookings calculates “for a given group of workers, the share of total transitions that results in a higher-than-expected wage increase (compared with the average wage increase for all transitions starting from the same wage level),” defined as “share of upward transitions.” The report finds that workers who identify as women, Black, and Hispanic or Latinx are disproportionately represented in the low-wage workforce, and that these groups also experience the lowest rates of upward mobility. Black women and Hispanic women experience the lowest share of upward transitions, at 43% and 37%, respectively, regardless of education.⁷
We believe that startup companies have a unique duty and opportunity to build services for workforce development that help combat our country’s intensifying mobility crisis.
Legal Representation & Incarceration
In October 2021, The Sentencing Project reported that Latinx Americans are incarcerated in state prisons at 1.3 times the rate of white Americans, Black Americans are incarcerated at nearly 5 times the rate of white Americans, and in the US, 1 in 81 Black adults is serving time in state prison.⁸
A Legal Services Corporation study from 2017 showed that while 71% of low-income households surveyed experienced at least one civil legal problem in the previous year (including problems with health care, housing conditions, disability benefits, veterans’ benefits, and domestic violence), 86% of the civil legal problems reported by these Americans received inadequate or no legal assistance. Further, the LSC estimates that only 20% of all civil legal challenges are actually reported.⁹ ¹⁰
There is a dire need for solutions that (1) increase education around, access to, and affordability of legal representation, and (2) fight against the racial inequity perpetuated by and within our country’s criminal justice system.
Last year, the Stanford GSB Impact Fund invested in Honest Jobs, a national job marketplace for people affected by the criminal justice system. Read more here.
These disparities are severe and pervasive, and closing these gaps will require extensive cross-sector collaboration and commitment. While we believe that public sector reform is needed to address these disparities, we also believe that the private sector has an enormous responsibility to acknowledge and work towards closing these gaps. We cannot make progress towards justice and equity in our society without both policy reform and private sector efforts.
As a team, we hope to contribute to these efforts by investing in companies that aim to address disparities in these spaces. We encourage our readers, fellow investment funds, and peers at Stanford University to explore the ways in which they can leverage their own expertise and community to contribute to advancing justice and equity.
In our first quarter as an investment team, we have been incredibly inspired by the early-stage companies we have met that are working to close gaps in opportunity, access, and outcomes for historically marginalized and disadvantaged communities, and look forward to meeting more as the year continues.
If you are building a justice-focused business and would like to chat about ways our team can help you grow, please get in touch with us at gsb_impact_fund-leadership@stanford.edu, or feel free to reach out to any of our team members via LinkedIn. We look forward to hearing from you!
Learn more about the GSB Impact Fund here.
Justice Team:
Aurora Beauclair, Chloe Colberg, Matt Devine, Saloni Gupta, Mackenzie Lee, Amanda McLean, Anisha Mudaliar, Carolina Oliveira, and Juan Saez Vera
References
- 2021–08. The Commonwealth Fund. “Mirror, Mirror 2021 — Reflecting Poorly: Health Care in the U.S. Compared to Other High-Income Countries.” Press Release: https://www.commonwealthfund.org/press-release/2021/new-international-study-us-health-system-ranks-last-among-11-countries-many. Full Report: https://www.commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021-reflecting-poorly.
- 2021–05. The Kaiser Family Foundation. “Disparities in Health and Health Care: 5 Key Questions and Answers.” https://www.kff.org/racial-equity-and-health-policy/issue-brief/disparities-in-health-and-health-care-5-key-question-and-answers/.
- Healthy People 2020, a US federal government initiative. “Lesbian, Gay, Bisexual, and Transgender Health.” https://www.healthypeople.gov/2020/topics-objectives/topic/lesbian-gay-bisexual-and-transgender-health.
- Center for Reproductive Rights. “United States — Summary & Key Facts.” https://reproductiverights.org/our-regions/united-states/.
- 2021–09. US Census Bureau. “Income and Poverty in the United States: 2020” https://www.census.gov/library/publications/2021/demo/p60-273.html, https://www.census.gov/content/dam/Census/library/visualizations/2021/demo/p60-273/Figure9.pdf.
- 2022–03. Oxfam America. “The Crisis of Low Wages in the US.” https://www.oxfamamerica.org/explore/research-publications/the-crisis-of-low-wages-in-the-us/.
- 2021–06. Brookings Institute. “Moving up: Promoting workers’ upward mobility using network analysis.” Overview and Main Findings: https://www.brookings.edu/research/moving-up-promoting-workers-upward-mobility-in-a-time-of-change/. Full Report: https://www.brookings.edu/wp-content/uploads/2021/06/Moving-Up.pdf.
- 2021–10. The Sentencing Project. “The Color of Justice: Racial and Ethnic Disparity in State Prisons.” Overview and Key Findings: https://www.sentencingproject.org/publications/color-of-justice-racial-and-ethnic-disparity-in-state-prisons/. Full Report: https://www.sentencingproject.org/wp-content/uploads/2016/06/The-Color-of-Justice-Racial-and-Ethnic-Disparity-in-State-Prisons.pdf.
- 2017–06. Legal Services Corporation. “The Justice Gap: Measuring the Unmet Civil Legal Needs of Low-income Americans.” https://www.lsc.gov/our-impact/publications/other-publications-and-reports/justice-gap-report.
- 2021–09. The White House Legal Aid Interagency Roundtable. “Access to Justice in the Age of COVID-19.” https://www.justice.gov/ag/page/file/1445356/download.
