by Emily Andrews, Manager of Impact Analytics & Evaluation and Samantha Shimer, Evaluation & Impact Analytics Senior Specialist
Across the Momentus Capital branded family of organizations, our mission is to ensure people and communities have the capital and opportunities they deserve to overcome a history of systemic disinvestment.
To support underestimated communities in achieving positive social and economic outcomes, we need a shared understanding of what that looks like, and why those outcomes are so important. This blog will outline how we at Momentus Capital define economic stability and why it is important, how it is tied to the other social determinants of health, and how we are working to promote economic stability through our work.
Economic stability is more than managing dollars made and spent by an individual or household. When families have stable incomes and their basic needs are met, they are able to make long-term financial decisions that contribute to upward mobility and pursue opportunities they might otherwise avoid due to financial risk.
At Momentus Capital, we define economic stability as the ability of individuals and households to:
There is a growing body of interdisciplinary research explaining the strong relationship between economic stability and overall well-being. Economic stability leads to increased choice in matters of basic needs such as where to live, where and when to seek healthcare, where children go to school, and what their families eat. Increased choice and disposable income for things outside of basic necessities contribute to overall happiness and positive health outcomes.
This section will further illustrate how economic stability allows individuals and families to fully access the Social Determinants of Health (SDOH).
Economic stability and housing are intrinsically tied. Households with stable and adequate incomes have an easier time making mortgage or rent payments on time, accessing stable mortgages, and avoiding health and safety risks associated with overcrowding or derelict housing (i.e. vermin, mold, inadequate heating). According to the U.S. Department of Housing and Urban Development, people with lower incomes – especially older individuals – are more likely to live in “worst case” housing conditions, meaning they pay more than one-half of their income toward rent, live in severely inadequate conditions, or both.
Higher incomes are associated with a decrease in the prevalence of many health conditions. People with stable incomes and jobs are more likely to have health insurance and be able to cover other costs associated with healthcare such as co-pays and deductibles. Data shows that approximately 6 percent of adults with a household income of $100,000 or more did not have a consistent source of health care, but the rate was almost four times higher among adults with household incomes of $35,000 or less.
Research demonstrates a connection between economic stability and nutrition. With higher income, individuals and families have more access to food choices. High-income families tend to have better financial and physical access to a diversity of healthy foods. Because of their disposable income, higher-income households are able to afford a wider range of food options, including fresh produce, organic products, and nutrient-rich foods. Families with higher incomes are also more likely to live within reach of a grocery store. Conversely, people living in low-income neighborhoods may have limited access to full-service supermarkets or grocery stores – leaving them dependent on convenience stores, which tend to sell higher-priced and lower-quality foods. The situation is exacerbated when low-income households lack access to a personal vehicle or safe, reliable public transit.
The link between wealth and educational attainment is cyclical. Wealth creates more opportunities within education, while education creates more opportunities to build wealth. Households with stable incomes are better able to invest in quality education and access better schools, learning materials, and extracurricular activities that enhance academic, professional, and personal growth. This investment in education allows individuals to develop skills, improve their employability, and secure higher paying jobs.
When families have stable incomes and their basic needs are met, they are in a better position to invest their time and resources within their communities. Economic security frees up time and emotional bandwidth to volunteer, join civic organizations, and attend community meetings without the burden of financial constraints. It also empowers families to invest in their neighborhoods by supporting local businesses and participating in initiatives aimed at community improvement. This involvement enhances the overall well-being and connective tissue of the community.
Entrepreneurship has long been regarded as a pivotal avenue for individuals to build wealth, and it holds even greater significance as a potential solution to bridge the profound racial wealth disparities that persist in society. The Momentus Capital branded family of organizations – which includes Capital Impact Partners, CDC Small Business Finance, Ventures Lending Technologies, and Momentus Securities – plays an important role in helping borrowers establish economic stability for themselves, leading to more positive social and economic outcomes for them and their families.
Business ownership can be an important aspect of building wealth, and has been proposed as a great way to bridge the racial wealth gap. In the first three quarters of 2023, Momentus Capital has supported 495 small businesses, including real-estate developers, with 46% of capital going to businesses that are Minority-owned. For populations that have faced historic institutional barriers to building wealth, such as people of color and immigrants, business ownership can be a pathway to financial freedom and empowerment.
In addition to positively impacting business owners, the businesses financed by Momentus Capital – either through SBA 504 commercial real state loans or community advantage working capital loans – create employment opportunities in the communities they operate in. In the first three quarters of 2023, Momentus Capital has provided financing to support the creation of over 2,000 jobs and the retention of nearly 2,500 more. Stable employment has a positive impact on a person’s life; it can lead to better health, and allows a person to have more choices when it comes to where to live, the food they buy, and their family’s education.
In addition to deploying capital, Momentus accelerates the economic stability of business owners via the work of National Programs and Business Advising Services. Their work supports business owners with training that advances their careers and business planning that sets their companies up for success. This support contributes to the success of the entrepreneurs we work with, and can lay the foundation for our borrowers to attain further economic success and stability.
The work that Momentus Capital does has tremendous potential to impact the lives of the business owners we work with, beyond the financials. When we support business owners in their dreams of growing their businesses, we simultaneously support their ability to grow their wealth, expand the choices they have for themselves and their families, and create opportunities for them to achieve economic success and self-reliance.