Black Austin, $60M and the Dignity to Innovate & Right to Iterate

In 2016, I launched Code2College — an Austin-based nonprofit focused on equipping mostly Black and brown high school students with coding and professional skills, and placing them into paid, summer internships ahead of entering STEM careers after college — with a $100 deposit in our newly-opened small business bank account. I didn’t see my first paycheck from the organization until month 7 of programming. I didn’t hire employee #2 until Year 4 of programming.

Now, five years later, our budget will be just over $5M. (NOTE: Budget, not assets, as we’re still raising for the upcoming program/fiscal year)

The last five years have been nothing short of meteoric. The road has been paved with persistence amidst rejections and a stiff upper lip in the face of constant condescension. Even to this day, our work and vision continues to be disbelieved by naysayers, though many doubters along the way have become some of our most ardent champions. I’m one of the best in the country at what I do and proud to say that.

And with all that said, I am not an exception. Not nationally and certainly not in the Austin MSA. But despite the Austin region being rife with Black nonprofit programming and operational talent, I have become an exception.

Though I may be an Austin transplant, I have a great deal of privilege. And as hard as I’ve worked to bring our organization to where we are, I also attribute a great deal of Code2College’s success to my access to certain networks, as well as my professional experience and education. From my Wharton network — which is alive, well and thriving in Austin — to the “pass” that I often get as a Goldman Sachs alum, doors continue to open in a way that I don’t believe is the case for my peers.

While it’s clear that there’s an underinvestment in the Black community which gets further amplified when narrowing the focus to Black-led nonprofits, I lead with data. My background is in data and while storytelling is a critical part of nonprofit work, data should undergird each story. So a few weeks ago I began to dig in to understand and approximate the size of the Black-led nonprofit space in Austin.

It’s about $60M.

That’s right, the approximate size of the Black-led nonprofit space in Austin is $60M. Depending on who you share that with, that may seem like a lot or a little. I’ll tell you that it’s a little.

What I’d like to do for the remainder of this piece is

  1. Establish why a conversation around investing in Black-serving organizations should have a focus on “Black-led” organizations,
  2. Share the calculus behind sizing the Black-led NPO market at $60M and
  3. Affirm that Black-led NPOs need to have the Dignity to Innovate and deserve the Right to Iterate

Why “Black-led”?

‘Why not “Black-serving”?’ I heard someone ask recently and I’m sure is also on the minds of others reading this. Two reasons:

  1. Low-Bar: By definition, all that it takes to be “Black-serving” is to have a Black beneficiary. In other words, an organization could practically serve over 100,000 unique beneficiaries — one of them being Black — and qualify as “Black-serving”. And while it may seem disingenuous, unless a funder/grantmaker has specifically set a threshold/minimum for the proportion of Black beneficiaries (i.e. >25%, 50%+), it’s quite easy to become a “Black-serving” nonprofit. A similar approach can be/is often taken where, because an organization has at least one Black leader, they regard themselves in grant applications as “Black-led”. That said, the proportion of Black-led nonprofits still represents only 7% of nonprofits.
  2. Inequitable Funding towards Black-led nonprofits: The Black-led nonprofits have historically been and continue to be underfunded relative to their white-led peers. There are a variety of factors that contribute to this inequitable funding — proximity and access to networks, biased and/or inequitable assessment processes, a racial wealth chasm — and the data supports this inequity; Black-led nonprofits draw 45% less revenue and hold 91% less unrestricted net assets than white-led nonprofits.

Calculus behind sizing the Black-led NPO Market in Austin

First, I’ll share a) the quick, back-of-the-envelope calculation that I used to estimate the size of the Black-led nonprofit space, then I’ll share b) support used to gut-check the estimate.

Back-of-the-envelope Calculation

I rounded up from $56.9M to $60M for simplicity and also to account for modest growth (~5%) since 2018.

Bottom-up Gut-check

The $60M was calculated based on a top-down market-sizing, but I also performed a bottom-up gut-check. Excluding Central Texas Food Bank which is Black-led (but not majority black-serving) and has an annual revenue of roughly $40M, I was able to approximate about $45M in Black-led Austin NPO revenue. While the largest Black-led NPO is Huston-Tillotson University ($20M) — which happens to be both the oldest higher education institution in the city of Austin and the only HBCU in the city — there are a handful of Black-led NPOs with revenues between $1–3M including Austin Area Urban League and Code2College, but a great deal more with revenues under $1M including Six Square.

A few notes about the remaining $15M:

  1. I was able to identify 32 Black-led nonprofits in the Austin MSA and these are exclusive of the 61 Black churches that I could identify. Assuming that my non-Church, Black-led NPO list is exhaustive (which I don’t), that would amount to roughly $250K in revenue per church.
  2. Total expenses would likely be a more appropriate figure to use, but to align with the top-down measure that I had, I stuck with revenue. That said, both anecdotally and empirically, Black-led nonprofits are consistently underfunded, so even if the $45M were the correct revenue estimate, it serves that the likely expense total would be north of $45M.

The Dignity to Innovate & Right to Iterate

Over the last five decades, medical articles have been published around the “Dignity of Risk” as it relates to disabled populations. Most recently, a published article went further to discuss the “Dignity of Risk and Right to Failure” as it pertains to patient-focused care. The general premise of the ‘dignity of risk’ revolves around duty of care and the risk of overprotection within healthcare, but it’s also been applied as an analog to the venture financing and philanthropy spaces as it relates to the inequitable funding extended to Black and brown operators.

Funders and potential donors are wary of extending resources to Black and brown operators much in the way a parent has an orientation not to purchase that Kit Kat or crossword puzzle at the check-out lane just because their child has succumbed to the lure of a POS display.

But I’m not talking about children. I’m talking about Black and brown operators who run going concerns, are accountable to Boards, are obligated to make payroll and serve communities diligently daily, nightly and on the weekends when they should be off the clock.

Five years ago, when I launched Code2College and proposed a program that would leverage the latent talent of the Tech ecosystem, convince engineers to leave work early a couple times a week and travel to Austin-area high schools to teach students coding, professional skills and leadership, and ultimately place said high school students into internships, there were scoffs, laughs and blank stares. But through growth capital that we received from funders willing to take a risk, we were able to incubate, refine and scale Code2College from a pilot of thirty students in Austin back in 2016, to thousands of students nationally today.

At the May 2018 Philanthropitch event; data was still at the heart of that three-minute pitch

In 2018, I pitched our operating model and my vision for growth at Philanthropitch and was able to secure over $30,000 in growth capital to more than double our impact from serving 120 students to 250.

In 2019, we received a $50,000 growth grant from Glimmer | Austin and another $48,000 from the Social Impact Initiative through the University of Texas McCombs School of Business to hire our first staff members and once again more than double our impact from serving 250 students to nearly 600.

In 2020, we received a $300,000 commitment from the Draper Richards Kaplan Foundation to start to accelerate our national scaling efforts, which just a few months later actually accelerated due to the pandemic and our move to virtual programming.

And at the close of 2020 we successfully raised $1.5M to fund Vision 2024 — an initiative that Code2College launched just five months prior towards supporting and place 200 Black and Latina girls into STEM roles by the year 2024. A number of partners made significant multi-year commitments to fund this raise including NI who made the largest commitment at $400,000. Side note: the cover photo is of me next to Anne-Marie, our first Vision 2024 Legacy, whom has already secured a STEM role through Code2College and is now pursuing her Computer Science degree.

This year alone, we’ll be placing 75 high school students — mostly Black, brown and girls — into paid, summer internships within software engineering and development functions across nearly twenty leading industry partners, as well as serving over 1,500 high school students across the country.

And we’re just getting started.

But this was made possible through a bold vision that was met with unrestricted capital and a willingness to TRUST and INVEST in me as a founder, as well as our Code2College partners respecting my dignity to innovate and right to iterate.

The Dignity to Innovate

Their several aspects to our program model in Code2College that go against the grain. But our differences are our strengths. I was told years ago that you could NEVER get a software engineer to volunteer their time several hours per week to teach students programming. Five years in, and it’s become one of the most impactful aspects of our program model — economically, programmatically and relationally. We were also told that Tech companies would NEVER hire high school interns to do software engineering and development work. Five years in, and we’ve partnered with over twenty leading companies and placed nearly one hundred high school students into roles where more than HALF of the time their code gets pushed into production. And for every four No’s along the way, there was a Yes. And on many occasions, there were dollars behind that Yes. These funders and partners respected my ability to take an innovative approach to a problem that was not being solved in a meaningful way.

The Right to Iterate

I can’t tell you about the mistakes I’ve made over the past five years. It’s not because I haven’t made missteps or experienced failures along the way. It’s because I’ve taken each “misstep” as a lesson on what to 1) stop, 2) start or 3) continue. Iteration is just continuous improvement and recognizes that perfection is not the goal — improvement is. And through transparency and trust, Code2College’s partners have respected our right to continuously improve on our approach to serving students, the community and all of our partners.

Birate, a Code2College student and (likely) future financial analyst

This past week, Code2College hosted a STEM industry case competition with our partner, Factset Research Systems; a data analytics company that serves financial services and investment management clients.

Students from all of the country developed their own financial portfolios and were able to sharpen their programming skills, while also learning about asset management. One student in particular — Birate, a high school sophomore — was deeply invested (pun intended) in the session as she shared her own thoughts about memestocks like GameStop (GME) and even cryptocurrency trends. FactSet volunteers began peppering her with questions to which she responded with even more well-stated positions and defenses. In response to one volunteer’s question about why she chose a particular investment strategy for her portfolio, Birate said “no risk, no reward — right?”

And this is just a glimpse of what we’re building at Code2College. High school teens learning about otherwise esoteric content and industries foreign to their immediate networks. Historically excluded communities gaining access to pursue in-demand careers and starting on a path to building generational wealth.

We have a huge opportunity here. The Black founder community in Austin is strong, competent and ready. That $60M is a pittance considering the wealth in this city, the surge of companies moving headquarters and operations to Austin, and the relative influx of capital to the region.

Whether fixtures in the Black community like Community Radio Station KAZI 88.7 FM and the African American Youth Harvest Foundation or emergent, Black-led organizations like DivInc and the African American Leadership Institute, now is the time to ramp up investment in Black-led, Austin organizations who continue to innovate with engaging and rich content, direct and community-centered services as well as culturally-relevant products.

Just a few years ago, Code2College was a seedling, but this coming year, we will employ over twenty staff, who will serve thousands of students and go on to place hundreds of high school students into paid, software engineering and (other technical) internships in Summer 2022.

Final Note

My message to Black Austin: Be bold in your asks. Many of us have been extended (and quite a few of us have accepted) grants that amount to rounding errors from foundations and corporations. You know your worth. You know your competencies. You know your data. You know what your community needs. And you know what it will take to innovate and iterate. in order to serve them well. Don’t just ask for what you need — ask for what you need to innovate and iterate.

My message to funders of Black Austin: If innovation is the spark, iteration is the gasoline. There’s already so much greatness taking place in Black Austin and you can be the accelerant. You can participate in making that fire burn hotter and light shine brighter. Perfection is the enemy of progress and to expect the former before putting dollars behind the latter will result in failure, and quite possibly the greatest missed opportunity that this city has ever seen. Birate said it herself — “no risk, no reward — right?”

Black. Educator. Father. Executive Director & Co-Founder of Code2College.

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