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Private equity creates opportunity in underserved communities

The National Association of Investment Companies and the American Investment Council released a new report that highlights how carried interest capital gains is a key economic driver for diverse fund managers and underserved communities.

The report, authored by Dr. Maya A. Beasley:  

  • Found carried interest capital gains to be a vital tool for direct wealth creation for diverse business owners, and a driving force incentivizing investments in underserved communities. 
  • Includes quotes from business leaders across America who believe that eliminating carried interest capital gains will make it harder to deploy capital and support jobs in the areas that need it most.
  • Highlights that between 2004 and 2016, the number minority owned private equity firms have increased 33%. During this period assets under management at these firms have increased 1,323%
  • Notes that research has shown that investment companies with racially diverse investment teams are more likely to invest in minority businesses. For example, research on SBICs found that 12.7% of investments made by racially diverse SBICs go to companies led by a minority CEO, and 21.3 percent go to companies that are at least partially owned by people of color. In contrast only 5.2% of investments by SBICs that do not have diverse investment teams went to businesses with a minority CEO. And 12.2% of investments by these investors went to businesses at least partially owned by people of color.      

Along with the report, the AIC is also releasing new testimonial videos from diverse business leaders who speak directly about the role that carried interest capital gains plays in growing their businesses and achieving wealth.

The videos feature: 

  • Zane Venture Fund (Atlanta, GA)  – Founder and managing partner Shila Nieves Burney and venture partner Martina Edward emphasize how carried interest represents their sweat equity and should be treated like investment in any other capital asset. 
  • Patriot Investment Partners (Melbourne, FL) – Ryan Brown founded Patriot Investment Partners to invest in minority and veteran-owned businesses in his hometown of Melbourne, Florida and beyond. He explains how eliminating capital gains tax treatment for carried interest might force him to reconsider his investment plan. 

Read the report: