The last year has seen tremendous growth in awareness around racial inequality, with the Black Lives Matter protests triggered by the murder of George Floyd prompting renewed introspection around the world.  This also translated into concerted efforts to improve opportunities for Black businesses, with #SupportBlackBusinesses and #BuyBlack popular and American companies pledging to invest around $50 billion in projects to improve racial equity.

Alas, it seems that while such efforts did provide a momentary improvement in the lot of Black businesses, it was far from sustained.  Indeed, recent estimates suggest that companies had only actually invested around 0.5% of the amount they had originally pledged.

Finding support

Research from Berkeley Haas suggests that we should not be surprised by this situation.  It shows that Black entrepreneurs have an even harder time raising money when racial inequality and discrimination are at the top of the news agenda.

“This confirms what sociologists have long known: When people are reminded of how they differ from others, they often become more inclined to identify—and side—with their own group,” the researchers say.

The analysis found that when the news covers racism, white investors seem more likely to question the underlying quality of the idea of a Black entrepreneur.  This underlines the fact that discrimination is not purely something internal to us but is also influenced by our environment.

“Reading about racial discrimination occurring elsewhere in the United States seems to affect one’s likelihood of shopping from an African-American-owned local business—completely unrelated to the event in the news,” the authors say.

Where support did increase, however, was among Black investors, who were found to be more likely to back Black entrepreneurs when the news frequently featured stories about racism and discrimination.  Suffice to say, however, that this was not sufficient to make up for the fall in investment from white backers.

“These research results add to the painful picture of pernicious and multifaceted discrimination against Black people in the U.S.,” the researchers explain.

Real-world implications

The findings emerged across three online experiments and one real-world experiment, all of which explored the impact the Black Lives Matter campaign had on investment in Kickstarter projects.

Interestingly, neither the political leanings of the investors or the tone of the media articles seemed to influence how people invested.  What did seem to matter, however, was when the coverage apportioned blame on one party or the other, as this tended to see lower evaluations of Black founders.

It seemed that such coverage resulted in a greater penalty for Black founders rather than increased empathy.  The researchers believe that their work prompts some fascinating questions that they hope will be examined further in future work.  For instance, might more positive coverage of African Americans result in lower levels of discrimination, even if general racial awareness remained heightened?  In the meantime, however, it appears as though any goodwill or empathy generated by the Black Lives Matter campaign may be rather more fleeting than we would hope.

“We post memes with hashtags like #BLM and write messages of support on social media profiles, but it doesn’t necessarily translate into shopping at, or investing in, Black-owned businesses,” the researchers conclude. “It’s important to understand why that is and learn how we can challenge and change this pattern of inequity and inequality in a durable fashion.”