Impact investors often look to ESG factors as a guiding beacon to prompt more social or environmental accountability among organizations. Restorative economics takes this concept further, focusing directly on building the most vulnerable communities from the ground up.
As the pioneer of restorative economics, Nwamaka Agbo and the Kataly Foundation work toward shared prosperity by reinvesting resources in projects owned and governed by communities, where “Black and brown people have the resources, power, and agency to execute their own visions for justice, well-being, and shared prosperity within their communities.”
Promoting Power to the People
As its name implies, restorative economics centers on healing and restoring vulnerable communities by addressing the systemic injustices of governance structures and the underlying power dynamics that perpetuate issues such as poverty, racism, and gender inequality.
Rather than simply funneling money into communities, restorative economics seeks to bolster a community’s own resources and people. These practices actively engage vulnerable populations and ensure that they hold the power to make decisions about the issues that affect them, positioning communities to leverage their collective economic power with more cultural and political force than they could as individuals. This contrasts with more usual models of investment, where investors, managers, and organizers retain the authority in the relationship to direct how funds are used and what programs are implemented.
Advancing Restorative Tenants
Nwamaka Agbo advocates for communities to adopt restorative economics as a way to make communities more self-sufficient. According to her framework, this entails:
- Moving to an economy that reinvests resources into community-owned and -governed projects and keeps residents in their communities
- Transitioning decision-making from the powerful and wealthy to impacted populations
- Sharing prosperity
- Giving communities voice to meaningfully participate in local governance and the economy
Seeing Restorative Economics in Action
Examples of programs instilling this framework include:
- The Kataly Mindfulness and Healing Justice program runs community-based mindfulness programs, teacher trainings, and restorative practice retreats aimed at bolstering leadership capacity and skills for the most systemically oppressed.
- The National Black Food and Justice Alliance supports Black farmers, organizers, and land stewards through measures such as the Justice for Black Farmers Act and a national Black food map and directory. Additionally, its Black Land and Power Fund seeks to develop collective strategies to foster regional and national Black land retention, protection, and recovery.
- Ecodistricts believes in “putting people and planet at the center of every urban development decision” and focuses on revitalizing neighborhoods to build more sustainable cities.
- Boston Impact Fund is a place‑based impact investment fund committed to investing in communities impacted by racial, social, and economic inequality.
- Ujima and its Good Business Alliance unites and supports local businesses to foster wealth creation, jobs, vital goods and services, and spaces to gather and organize.
Making an Impact
Restorative economics accounts not only for the fact that these problems exist but that they are a direct reflection of past and current inequities, power imbalances, and a lack of agency within vulnerable communities. As impact investors continue to support organizations and foundations on the ground that incorporate ESG issues in their operations, they may find restorative economics a means to shift power back to communities and strengthen a more democratic and equitable society.
Any company, security, fund or other investment identified herein is provided solely for illustrative purposes and should not be construed as a recommendation or solicitation for the purchase or sale of any such investment.