It is often said that Blacks must practice “group economics” if we are to win the economic war that we find ourselves in.
The term was made famous by Dr. Claude Anderson in his must-read book Powernomics, and it is thrown around a lot in the conscious community.
However, the problem is that most of these people have no idea what group economics is, have never been involved in Black group economics (unless they are giving their money to another group), and are not moving towards strong, financially stable positions themselves.
We all understand that Capitalism is no long-term solution for our people. However, by understanding how Capitalism works and how we can take advantage of it to increase our access to resources, we can develop survival programs that will help us sustain our communities Capitalist nations.
Specifically, there are three ways we can bring Black values to capitalist systems, and that is by forming Black investment groups, Black buyers clubs, and Black savings collectives called susus.
Start Or Join Black Investment Groups
An Investment Group is any number of individuals that pool their money to purchase assets that produce income for all members of the group.
An Investment Group doesn’t have to be limited to investing in stocks, bonds, and mutual funds. Investment groups may also be formed to start a business together or purchase a piece of rental property.
Investment groups help members move from being buyers and consumers to investors capable of producing their own streams of income.
Investment clubs can help you build strong positions in income producing stocks and mutual funds. While bond-centered investment groups exist, we do not recommend them for Black Investment Groups, as the hold times tend to be long and require high capital investment to realize any returns that are worth the wait.
Here is an example of how a real estate investment group would work:
Imagine that you and 5 other community members pool your money to buy a 6 bedroom apartment building. Option one is that you all move into the building so that you no longer have to pay rent to anyone else while building equity in your property.
Option two is that you rent out the bedrooms and distribute the monthly rents to each property owner.
Option three is you do both: move into the building that you have purchased, keep paying rent by depositing the money into a joint account, and purchase another building that you then rent out. With option three, not only are you not paying rent, but you are also earning income (minus property taxes and management costs).
Start Black Buying Clubs
Buying Clubs use group economics to help members tighten up their budgets, increase their buying power, and free up income that members can use to invest.
A buying club is a group of people who pool their money and use their time to find and purchase bulk goods at affordable wholesale prices.
Goods can range from high quality, healthful foods to toilet paper. If you spend $2.95 on toilet paper each week, that adds up to $153 per year. A Buying Club could reduce the price to as low as $0.60 per pack, saving you nearly $122 per year.
Here is another example: Say you currently buy 2 packs of chicken per week at around $6, thus spending $12 per week. If you were able to buy 50 packs of chicken at one time, your cost would be 2.95, saving you 3.05 or $6.10 per week, cutting your food bill for that item in half. But purchasing 50 packs at a time would cost you $147.50 up front.
That’s where a buyers club comes in.
Each member purchases a set share in exchange for the cost benefit. So if there were 5 people in your group, each individual would need to purchase 10 pieces (costing $29.50).
With your food bill now cut in half, the free money can be used to invest or pay down debts and you have also freed up considerable time, since you wont need to shop for chicken at your grocery store.
Buying Clubs must be actively managed by the families involved in the club. To be truly successful, you will need a group of 7 to 10 families or individuals to agree to a set purchasing schedule.
If your group is to be successful, you must also take into account decision-making, membership, who is going to fill what responsibilities, how your items are to be ordered, and the rules (or “By-Laws”) of your group.
Here are 22 questions you should answer before building a Black investment group:
1. Who will participate in the major decision-making?
2. Who will direct the group during the decision-making process?
3. When or will the group be able to re-visit their decisions or renew their agreements?
4. What happens if some members strongly feel the wrong decision has been made?
5. Who is eligible for membership?
6. What are their responsibilities?
7. Are non-working members allowed? And if so, what is the impact on other members?
8. Should there be membership fees or dues?
9. Should a limit be set on membership?
10. What if a member asked for a leave of absence?
11. Are there any reasons that may cause a member to be asked to leave?
12. Who should have the responsibility or authority to ask a member to leave?
13. How are the jobs assigned?
14. Who will replace a member if they are sick or on vacation?
15. Are the jobs periodically rotated?
16. How does the group ensure job requirements are met?
17. Should each member subscribe to the catalogs or share copies with other members?
18. An overview of the catalog and how to use it should be explained to all members.
19. What is the order schedule?
20. Should the members consider having order meetings?
21. Can members include in their order items for people who are not members?
22. How does the group handle problems such as late orders, late payments and bounced checks?
1. Coordinator/Coordinators – primary responsibility is communication between members, contact person for distributor and general problem solving.
2. Membership Coordinator – keeps handbook up-to-date, orientation for new members, checks in on new members for a few ordering cycles to see if there are questions or problems.
3. Jobs Coordinator – makes sure jobs are filled, keeps track of members’ working hours, and assigns new members jobs.
4. Collator – collates members’ orders into one master order, places order and makes sure split cases are filled.
5. Bookkeeper – collects payments, issues credits, and manages the group’s checking account.
6. Treasurer – works with the bookkeeper on group’s finances.
7. Distribution Coordinator – breaks down order and sorts through members’ orders, organizes and troubleshoots at distribution, checks in order at delivery and calls in credits/missing items.
Get Familiar With The SuSu System
Susu is an indigenous system of group economics that helps members save money, a key to developing a strong financial position.
We have detailed the advantages of SuSu (also known as Sou-Sou) plans in our article, Sou-Sou and the Path to Economic Empowerment. We also offer all subscribers to our email list a free copy of SuSu Economics: The History of Pan-African Trade Commerce, Money, and Wealth.
But if you are still not familiar with the term, a SuSu is where a group of people each pool an equal amount of money for a period time (month, two weeks, etc) and after that time is up, one person in the group gets all that money.
They keep doing this till everyone gets their turn and receives that full lump sum at least once.
This practice is very common in Africa and the Caribbean. a dozen people might contribute $400 each into the pool every month for a year. In the first month, one person gets $4,800. The next month, the next person gets $4,800, and so on. It’s not a pyramid scheme, no one loses as long as everyone’s trustworthy and puts in their share.
At the end of the year, each person has contributed $4,800 and received $4,800. That is an example of a monthly SuSu, but can also be used as a weekly SuSu. For example, 20 people contribute $100 a week. Every week, $2000 is collected and one person takes home all the cash. The rotation ends 20 weeks later after everybody has had a payday.
What You Should Do Next
This article covers the basics of Black group economics that we can immediately apply. Each chapter of the Pan-African Alliance is required to spend a complete month on the subject, and put these teachings into action by forming a SuSu, pooling their resources together to start a business, and by investing in assets.
I hope this article has inspired some new ideas. If it did, leave a comment below or share this article – you could find the future members of your next investment group!