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A private-public coalition of philanthropic and business leaders has raised nearly $1 billion to boost Black homeownership, businesses and developments in the Twin Cities.

The GroundBreak Coalition, a group of more than 40 philanthropic and corporate entities, announced the fundraising milestone Tuesday. It comes more than a year after the coalition was launched with a goal of raising $5.3 billion over the next decade to help close racial wealth disparities and make broader changes in how capital is more equitably distributed.

"What makes this unique is that we're not trying to raise a fund, we're trying to create fundamental change," said Tonya Allen, president of the McKnight Foundation in Minneapolis. "This is about changing the rules and changing the way that capital grows, and I think that those are game-changers."

The money and lending commitments will support new financial tools and products — such as down payment assistance and start-up loans — to increase the number of Black homeowners and entrepreneurs in the Twin Cities. The aid is scheduled to start in 2025.

The GroundBreak Coalition started in 2022, aiming to rebuild Minneapolis and St. Paul corridors damaged during the riots after George Floyd's murder in 2020 and address longstanding racial gaps in the state for Black and Indigenous Minnesotans, and other people of color.

Only 12 states have a wider gap in homeownership rates between white residents and communities of color than Minnesota, according to Census Bureau data. Nearly 78% of white Minnesotans are homeowners, compared to less than a third of Black Minnesotans, according to the 2021 data — making them the racial group in the state least likely to own a home.

"We're really doing this work because we believe that every person, no matter their race or their background, should have the opportunity to have incredible prosperity," Allen said. "And we know if we do this work together and if we do it smartly, it's not just about those individual people, it's about the magnifying, the amplifying effect that will happen in our region."

Since the coalition started, the group has collected input from more than 170 people who helped identify financial tools and products that can reduce barriers people of color face when trying to buy a home or start a business.

Some of those tools include special bank loans with flexible underwriting and financial assistance, start-up loans to help more Black entrepreneurs, and commercial mortgage loans to increase Black-led neighborhood commercial developments.

While those tools aren't new, Allen said the coalition is scaling up existing programs to reach a broader segment of Minnesotans. What's more, she added, banks and financial institutions are teaming up with philanthropy for this work — a rare partnership.

"People are just being creative, innovative and bold in their thinking," she said. "If we can ... change the rules in the way that banking institutions work, what we aim to do is really create this long-term, systemic change."

The $926.75 million raised so far came from Bremer Bank, the Bush Foundation, GHR Foundation, Huntington Bank, M.A. Mortenson Cos., Margaret A. Cargill Philanthropies, McKnight Foundation, Pohlad Family Foundation, Securian Financial and U.S. Bank. Those organizations have pledged money or lending commitments over three to 10 years.

Over the next decade, the coalition plans to close racial wealth gaps by helping 11,000 new homeowners and 5,000 entrepreneurs, and spurring 60 developments and 23,500 new units of affordable housing.

"What you're doing here is truly transformational," Gov. Tim Walz told more than 200 nonprofit and business leaders Tuesday, referring to the coalition. "It's essential to our survival as a state."

After Floyd's murder in Minneapolis in 2020, many new efforts and philanthropic initiatives were started to address racial disparities in the state and push for broader reforms.

For instance, Black philanthropic leaders in 2020 started the Black Collective Foundation, Minnesota's first Black-led community foundation, to raise money for Black-led nonprofits and groups while pushing to reform the philanthropic sector.

In 2021, a group of local Black business, nonprofit and philanthropy leaders formed a coalition to advance racial equity changes. In St. Paul, the Bush Foundation dedicated an unprecedented $100 million toward closing wealth gaps among Native Americans and African Americans.

Many companies across the U.S. also pledged to tackle racial justice after Floyd's death, but some have since pulled back on their promises, Allen said. Minnesota can't afford to do that, she added, "because we know the ramifications if we do nothing."

Allen said the GroundBreak Coalition is different from other efforts because it's looking to create a financial system that will tap into banks' flexible capital and provide a long-term solution to narrow disparities, rather than simply building a fund that will be drawn down over time.

"This is an extraordinary start," said Kevin Bennett, senior program officer at the GHR Foundation in Minneapolis. "This is about collective will and collective action. And we're not done."

The coalition next seeks to raise $250 million by the end of 2024. Allen said she thinks the group will far exceed that goal as they aim to spark broader policy changes across Minnesota and the U.S.

"I think we're coming up with something that's pretty extraordinary for our country," she said. "We will be the scene-setters for the rest of the country on how we solve these challenges."