The Myth Of Financial Literacy—And Why Wealth Justice Is A Better Goal

Chloe McKenzie is introducing the concept of “wealth justice” as a way to put into context generations of financial trauma resulting from extractive systems—starting with slavery and continuing today in various forms. She founded BlackFem to maximize the wealth building capabilities of Black women, women of color, and their communities. Ashoka’s Manmeet Mehta spoke with Chloe to learn more.

Manmeet Mehta: Chloe, your research shows that the framework of financial literacy actually perpetuates financial trauma for many girls and women of color. Why is this?

Chloe McKenzie: Right. It’s first of all rooted in financial shaming. But what’s most damaging is that it assumes a behavioral, not structural, starting point. How can we break free of this? New language helps us. What I call “wealth justice” is the overwhelming commitment to heal generational financial trauma, which has the largest influence on a person’s wealth building capability. If we go back to the inception of our American economic system, Black women’s bodies were not separable from their economic output—their economic imperative was to birth new wealth. This financial trauma, the cumulative harm that Black women have experienced historically, intergenerationally, and contemporarily, shows up in our financial behavior.

Mehta: What led you to this insight about wealth trauma and justice?

McKenzie: The answer is deeply personal. I grew up in Prince George’s county, Maryland—one of seven counties in the country where Black families have more wealth than white families. So, I had a very different early experience than many Black friends across the U.S. had. At the same time, I’ve been mostly on my own since I was 12 due to abuse in the household and my parents’ divorce. It was only later that I began to really look at the link between my early experience of trauma and my financial behavior as an adult—a question I later broadened after taking in narratives from other Black women and their experiences.

Mehta: This crystalized into your starting an organization, BlackFem, in 2015. Why did you call it that?

McKenzie: Well, the way we understand wealth inequality is usually one dimensional. We say the racial wealth gap, right? But this might render Black women and women of color invisible because you’re only talking about race. Meanwhile, for every dollar a single Black man owns, a Black woman only owns 42 cents—less than half. At BlackFem we consider race and gender, understanding that financial trauma is often compounded for people who occupy multiple vulnerable identities. And our name is one word because being Black and a woman cannot be de-linked. And on a lighter note, as I started BlackFem after working as a trader on Wall Street, I thought: BlackRock, BlackStone, BlackFem—it somehow fits with financial institutions.

Mehta: Are you ever asked: “Why Black girls and women and no one else?”

McKenzie: Ha! Yes. But here’s the thing: we work with everybody. We just disaggregate the impact data so we’re making sure that we’re helping Black women and girls. That’s the difference. I remember reading the Combahee River Collective Statement my senior year in college—it essentially says that Black feminism is the way that we’re going to solve social problems. Why? Because if we liberate those situated at the bottom of the sociopolitical and economic totem pole, we liberate everybody.

Mehta: Your first organizational partners were schools—and now, BlackFem partners with 20 school districts in 38 cities. What does your curriculum look like?

McKenzie: So financial trauma is perpetrated mainly through four systems: education, policy making, culture, and family. You are right that I started BlackFem really focusing on the education systems, particularly K-12, because we know that early intervention works from a social change perspective—plus, the younger you start, the less traumatized people become because of our economic system. They may be exposed to the trauma that their parents or elders may have experienced, but the actual hold on how financial trauma has become embodied in their financial behavior is much less. For these reasons, we started going into some of the most under-resourced and ignored school districts, implementing our wealth justice framework five days a week as a core subject, pre-K through high school. We developed family programming and trained schools on how to stop perpetrating trauma through their curricular frameworks.

Mehta: Now you work with institutions ranging from financial institutions, higher education institutions, local state and federal governments, policy making institutions, research institutions. What do they want help with?

McKenzie: New partners usually come with some version of: “We have a hunch that this funding process or this grant making process, or our business model might be contributing to the wealth gap or might be contributing to the financial traumatization of this or that population.” They want guidance on what to do to roll back the harmful effect and create a net positive for the communities they care about. I focus on: How does oppression get embedded in business models and institutional frameworks? And how can we weed it out and do some of the systemic or institutional transformation that’s necessary so that effect no longer happens?

As my research gained visibility, a few cities reached out, saying, “We have residents who are probably experiencing financial trauma for X, Y, Z reasons. We’d like to use your framework to close the wealth gap.” Policy is of course one of the major drivers of financial trauma, because it codifies damaging economic imperatives. So, mayors and state officials are now reaching out saying, “Okay, how can we develop an entire infrastructure that I agree with? We’ll do direct services to our target population, which is important, but limited in impact if we don’t also change other factors.” And they’re right. You need the direct impact with the target constituency. That’s the healing work. And you also need the systems to change to remove the conditions that are holding problems in place.

Mehta: Are you working with financial institutions and other companies that have made public commitments to addressing the wealth gap?

McKenzie: Yes, that’s been the largest part of my work in 2021—a result of the economic devastation of the pandemic, coupled with the racial reckoning that we’ve been having. Businesses are starting to understand that yes, we can make these commitments, but these commitments could ultimately be canceled out if we don’t change our business model and institutional frameworks. VC funds have asked me to audit their funding processes because they’re interested in, for example, funding founders of color. But they don’t yet see that their due diligence processes could actually be a form of financial traumatization. Not intended, but ultimately the effect.

Mehta: Some areas you’re excited about?

McKenzie: I’m working on two new studies this year. The first, just published, explores financial trauma and the early postpartum period among new moms. The second looks at the context of entrepreneurship, particularly the fundraising the investment process that can invert entrepreneurship as a vehicle for material wealth generation in the case of under-represented and minority founders. I’ll be sharing insights from this over the next months to show how financial trauma is relevant to investors’ social impact goals and an entrepreneur’s wealth-building capability.

Mehta: Chloe, what do you hope changes in, say, a year, or casting further out, a decade?

McKenzie: In the near term, I want to see the lens of wealth justice be adopted and applied widely. Because if we don’t place financial trauma in context when we’re talking about systemic reforms, we will never have rigorous enough solutions to make a real difference. Further out: being incredibly optimistic on this beautiful day, I’m going to hope that we will see a closed wealth gap–especially for Black girls and women. Coming back to the Combahee River Collective, which is required reading for my team, by the way, that will mean liberation for all people.

This interview was condensed by Ashoka.

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