Our History

Activest’s work started in 2015, following Michael Brown’s death in Ferguson, Missouri. We began our research on the racial- justice implications of the credit rating agencies’ downgrading of Ferguson’s bonds. We found that the city wouldn’t be able to pay for the mounting class-action lawsuits and also cover its existing operating costs and debt service due to the police department’s violent military-style response to protestors and, the ensuring reforms required by the Department of Justice’s consent decree with the Ferguson police, while covering its existing operating costs and debt service. We knew there were other Fergusons out there, and that the market could be wielded as a tool to uncover those cities and hold them accountable. This insight became the thesis that grew into Activest.

Advancing Fiscal Justice 

Racial injustice in U.S. cities is built on a long history of troubling financial practices. Municipal budgets often serve as the supply lines to fueling state-sanctioned, taxpayer-funded racial oppression. U.S. cities annually lose $70 billion in corporate tax giveaways, $11 billion from exclusionary school discipline policies, and $2 billion for municipal settlements, while bringing in $7 billion in predatory revenue from excessive fines and fees — all disproportionately harming BIPOC communities. 

Municipal finance experts have demonstrated that a handful of financial indicators can predict over 95% of local government fiscal health, specifically the local economy, tax base, fund balances, debt profile, and pension obligations. Yet absent are local government’s extra-financial and off-balance-sheet policies and practices across core city functions including criminal justice, economic development, public health, education, water, or climate change. 

Rating agencies are just starting to consider how social unrest and economic inequality are indicators of and accelerants to fiscal decline. For example, Moody’s considers climate change as having created the broad based conditions for increased financial risk, while extreme weather events are considered the specific, unpredictable, destabilizing events that actually result in massive losses. Similarly, social and economic equality in cities have created the conditions for increased risk, while police brutality, police settlements and the often ensuring social unrest are the specific, unpredictable, destabilizing, costly events that result from inequality. 

In short, racism is costly and inequity is expensive. Many of the very practices that rating agencies and investors reward actually erode the tax base, lead to fatal police encounters, and are early indicators of city-wide social unrest.