How you can use your finances to help reduce racial inequality 

Written by
Kate Hughes
Insurance expert
28 October 2021
5 min read
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We all know money is powerful stuff. Used well, it not only helps us achieve our own goals, but the effect of our spending, saving and investing decisions can spread out like a powerful wave – one that supports and even sometimes changes the lives of people we may never meet. 

But when its empowering force is prevented from reaching core parts of society equally, we have a problem, a big one that affects all of us. 

Just as the Black Lives Matter movement unified millions of people across the globe, providing a wake-up call for individuals, businesses and governments, official figures here in the UK showed the ethnicity pay gap was as high as 23.8% in some parts of the country. 

At the same time, workers from ethnic minority groups are more likely to experience financial hardship because of the coronavirus pandemic, according to a survey by national poverty charity Turn2us. 

What’s more, these disproportionate job and income losses will have a huge impact on families and children – child poverty is already at an all-time high, with nearly half of black children and close to 60% of Bangladeshi and Pakistani children in poverty. 

According to the Institute for Public Policy Research (IPPR), ethnic minorities are also 50% more likely to be in rented accommodation than the wider population, so will have less financial support from emergency mortgage holidays and are at greater risk of eviction because of rent arrears. 

This is not a new issue 

Long before the pandemic came rolling over the horizon at us, financial security varied wildly, and often along racial lines. 

Just 20% of Black African households owned their own property, for example, compared with 68% of white households. 

New calculations by The People’s Pension reveal that the UK’s overall ethnicity pension gap – the percentage difference in pension income for pensioners who belong to an ethnic minority group compared to pensioners of a White ethnicity – was 24.4% in 2017-18, or £3,350 a year. 

From a gender perspective, the gap is even greater. On average, the gap in pension income between a female pensioner from an ethnic minority group and a male pensioner from white ethnic groups is 51.4%. 

These and other stats tell a story few people were listening to. 

No wonder that even in a country that claims to be proudly multicultural, the risk of poverty among ethnic communities is high. 

Putting your money where your mouth is is important, but donating isn’t the only way of being an ally within communities 

How you can make an impact with your cash 

Putting your money where your mouth is important, but donating isn’t the only way of being an ally within communities. 

Making sure your money, whether that’s spending cash, everyday savings or investments, supports racial equality basically means moving away from simply accepting what you're given. 

Don’t underestimate the power you have simply in asking questions. Remember that if you don’t get the right answers, you can vote with your feet. 

Here are a few other things to consider: 


Flexing our spending muscle in ethnic minority run businesses is a great way to make a difference. If money goes right back into the community, which then creates more jobs, there can be a significant shift in economics. 

Initiatives like Black Pound Day now support the Black economy in the UK by encouraging consumers to seek out and spend with Black-led businesses on the first Saturday of the month 


When it comes to investing, one of the first rules of investing is to diversify. 

Putting your money into a business, or a bunch of businesses, full of people who have the same experiences and backgrounds isn’t going to help to diversify your investment portfolio. 

Talk to an independent financial adviser about the kind of companies you want to prioritise or avoid or do your own research. 

A good place to look is Morningstar's Minority Empowerment Index which highlights companies that stand out for their commitment to diversity and inclusion. 

The index’s selection criteria incorporate factors used by the NAACP, the civil rights organisation, to measure corporations’ commitment to equality in areas like board diversity, discrimination policies and community development programs. 

Companies are assigned a Minority Empowerment Score based on their commitment to racial and ethnic diversity within their workforce, boards, supply chains, and society at large. 

Investors that are looking for geographical diversification should note that these companies are US listed. 

However, as with many companies listed on a major index, they have global revenues, which means that you have exposure to economies across the world – while aligning with your values. 

And don’t forget that the value of investments can go down as well as up, and you could get back less than you paid in, so think carefully before investing and always prepare to invest for the medium to long term (5+ years). 

In business 

Shareholders in companies have a right to attend and ask questions at Annual General Meetings – no matter how much – or little - you've invested. 

A good place to start if you’re keen to drive positive change from the inside is through Share Action, a charity that promotes Responsible Investment and aims to improve corporate behaviour on environmental, social and governance issues. 

Meanwhile, with reporting on the gender pay gap now both widespread and enshrined in law, and the same treatment for the ethnicity pay gap now in the pipeline, there are growing calls for large businesses and government to publish their annual spending with minority businesses. 

Several organisations are pushing hard for a more inclusive culture in the savings and investment industry and among other businesses. For more information, check out the Diversity Project, ShareAction, CityHive, or Diversity UK. 

3 things to do right now...

Check out the Black Pound Day Directory for services near you and share your purchases on social media using the #BlackPoundDay hashtag to support the brands. 

Check Morningstar's Minority Empowerment Index which highlights companies that stand out for their commitment to diversity and inclusion. Don’t consider yourself an investor? Think again: if you have a stocks and shares ISA or any type of pension, that’s exactly what you are. 

If you'd like to support a charity that supports racial equality but are strapped for cash, there are still ways you can donate. Cashback website allows you to donate your earnings to selected charities. 

Please share this with someone who'd benefit from it.

Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.