Featured: Looking Ahead to 2025
Finding impact alpha in the ownership economy: Inclusive prosperity through broad ownership of businesses, homes and assets. The country’s political mood may not reflect it, but the gaping chasm of income inequality in the US actually narrowed, ever so slightly, in the last couple of years. But tiny improvements in income are not going to revive economic mobility, restore financial security, or create generational wealth for millions of families. Broad wealth-creation requires strategies to give millions more families ownership stakes in assets that appreciate over time, including homes, businesses and financial reserves. “The ownership economy has arrived,” ImpactAlpha declared this year, as disparate strategies around home ownership, employee ownership, community-owned real estate and individuals' finances converged to create a new category of ownership investing as “a structural intervention in how assets and returns are distributed,” as Bridgespan’s Devin Murphy puts it (see the new report, “Ownership investing: Financing the future of wealth”).
Crucially, ownership strategies represent a form of predistribution, rather than redistribution, making them a rare area of bipartisan agreement. The ownership narrative flips the script from zero-sum to bigger pie, from scarcity to abundance, and from disadvantage and division to “let’s all get richer, together.” As a response to rising economic populism, broad-based ownership strategies offer real results rather than rhetoric and reaction. Equally important, that appreciation enables private investors to earn decent returns while sharing the wealth with workers and households that have been largely excluded from it. Driving ownership of real assets – land, homes, businesses, equities – down the country’s wealth pyramid has become a viable, and arguably essential, investment strategy. The key metric: The share of return-generating assets distributed to the balance sheets of low-wealth households.
Five storylines we’ll be watching in 2025:
1. Private equity giants share a little bit more with low-income workers. Small ownership stakes that may not pay out for years won’t be enough to deliver the boosts in worker engagement and retention that create business value. To ignite the full benefit and unlock wealth, “broad-based ownership must be tied to a quality jobs strategy,” Ellen Frank-Miller of the Workforce and Organizational Research Center wrote in a guest post. According to Harvard Business Review, when at least 30% of the shares are owned by a broad-based group of employees, companies “are more productive, grow faster and are less likely to go out of business than their counterparts.”
More private equity investors are committing to sharing some of their profits with the employees of their portfolio companies. KKR’s Pete Stavros founded the nonprofit Ownership Works in 2021 and has recruited 34 private equity firms with over $1 trillion in assets under management to commit to creating $20 billion in working-class wealth by 2030. In the shared ownership exits to date, thousands of workers have received $570 million in payouts, or about 5% of the enterprise value of the companies they work for. As more private equity firms adopt shared ownership strategies, ImpactAlpha will be asking how much they’re sharing, with whom, and how much is going to private equity executives and investors.
2. Asset owners seek fund managers who see opportunities through ‘an ownership lens.’ A growing number of funds are financing employee ownership transitions in which workers end up with key, and eventually full, stakes in the businesses where they work. Nearly two-dozen such “specialized employee ownership funds” are currently seeking to raise a combined $670 million to provide subordinated, mezzanine and junior debt financing to selling owners, according to “Capitalizing the employee ownership opportunity” from Ownership Capital Lab and Transform Finance (see ImpactAlpha’s database of more than 65 funds investing in the Ownership Economy). Apis & Heritage Capital Partners has completed five employee-led buyouts with its $58 million Legacy Fund and is raising a second fund to finance worker-ownership conversions for businesses with large workforces of color.
New Majority Capital is raising a $50 million fund that will cover upfront capital costs for underrepresented entrepreneurs across US cities to acquire small businesses. Obran Cooperative is raising a $30 million acquisition fund to purchase small and mid-sized profitable businesses and transition them to 100% employee ownership through its worker-owned cooperative structure. Unlock Ownership Fund is looking to raise an initial $10 million for emerging managers focused on Black and Brown households in marginalized communities. “We sometimes say the first generation of wealth should go to the entrepreneur who took the risk and stood the business up, but that the next generation of wealth should go to the folks showing up everyday and driving value to keep the company thriving,” says Michael Brownrigg of Apis & Heritage.
3. Local and community ownership revive commercial corridors without displacement. In Baltimore, San Antonio and other US cities, developers are using local and community ownership of mixed-use real estate development, homes and businesses to revitalize commercial corridors without fueling displacement and gentrification. The "corridor" thesis: Local, broad-based ownership of real estate and business assets enables long-time residents to participate in neighborhoods' upswing without being displaced by rising rents and speculative developers.
For his “Real Revitalization” series, ImpactAlpha’s Roodgally Senatus visited three community-led efforts in West Baltimore that are redeveloping blocks of mostly-abandoned and dilapidated rowhomes in the city’s “Black Butterly.” Bree Jones’ Parity is using low-interest debt to acquire and rehabilitate homes a year in the Black middle-class neighborhood of Harlem Park. On once-bustling West Baltimore Street, Nadine Ngouabe Dlodlo’s Women’s Home Preservation is financing mixed-use developments to create affordable housing for single women and mothers, and retail and arts spaces for local residents. David Lidz’s WaterBottle is building a co-op real estate portfolio owned and governed by worker-owners and tenants.
4. Shared-equity strategies get another look from first-time home buyers. First-time home buyers are testing new approaches to becoming homeowners despite high mortgage rates and soaring housing costs. They’re trying out strategies that allow them to purchase their homes little by little over time, as well as share the responsibilities of homeownership with institutional investors. In North Carolina, Ownify is using shared-equity “bricks” to help first-time homebuyers purchase equity shares of a home through rental payments, via a fractional ownership scheme it is touting as an equitable upgrade from predatory rent-to-own models. In Colorado, Homium is piloting a shared-appreciation note that provides new buyers' down-payment assistance and helps existing homeowners unlock equity in their homes. “We want to put a billion dollars towards homeownership in the next 12 months,” says Homium’s David Jette. With $300 million in capital it could deploy the strategy for 2,000 homes, “which would make a huge dent, especially in target communities where you’re talking about uplifting families for generations.”
5. With equity and ownership, multi-racial prosperity transcends artificial divisions. OK, let’s acknowledge that this headline remains aspirational. “It’s clear that impact investing has fallen short of the promise to create substantive change in Black, Brown and modest wealth communities,” the social entrepreneur Napoleon Wallace says in ImpactAlpha’s new mini-documentary, “Equity and ownership: Napoleon Wallace and the Reconstruction of Black wealth” (watch the trailer). The film charts Wallace’s decision to leave his position as North Carolina’s deputy secretary of commerce to build Activest, Partners in Equity, the Southern Reconstruction Fund's first fund, and other enterprises that together, he believes, represent a path to racial equity through wealth creation for Black families and communities. “We’ve been on the long, uphill climb to expand access to the ownership economy to all, and remove the dangerous presuppositions of race, gender and wealth as indicators of entrepreneurial talent,” Wallace told ImpactAlpha through the text-to-voice “eye pad” he uses as he faces the challenges of advanced ALS.
The documentary connects today’s Reconstruction with the remarkable success story of Wilmington, NC’s “fusion” politics of the 1890s, before a white supremacist coup in 1898 overthrew the city’s elected government and massacred citizens in the streets (listen to our podcast, “Lessons from the Wilmington coup of 1898”). On ImpactAlpha’s final Call of the year, Wallace invited Agents of Impact to Durham in 2025 to build out the new model. “Together, we’ll explore pathways to economic mobility, social justice and political empowerment, building on the powerful legacy of fusion politics.”
Keep reading, “Finding impact alpha in the ownership economy: Inclusive prosperity through broad ownership of businesses, homes and assets,” by David Bank and Roodgally Senatus on ImpactAlpha. Catch up this week’s full series of lookaheads to 2025, with more than three dozen storylines to watch in climate, emerging markets, private equity and other places to find alpha in impact.
