Stacey Abrams’ rising financial wealth sparks fire from right

Comment

Stacey Abrams is known for upending Georgia Republican-dominated politics, her voting rights activism and even writing romance novels under a pseudonym. During the gubernatorial race, the Democrat is emphasizing a different role: a businesswoman.

The former Georgia House Minority Leader has been touting her credentials as a serial entrepreneur who understands the needs of small businesses. This was the subject of her first ad. That featured prominently in her economic speech earlier this month. She paid tribute to the crowd at a recent gathering in suburban Atlanta, saying the fintech company she co-founded in 2010 should be a model for helping small businesses handle cash flow.

As Abrams, 48, seeks to oust incumbent Republican Brian Kemp — a wealthy businessman himself — her entrepreneurial interests are in her campaign and attempts to undercut her playing a growing role among conservatives. Some writers in the right-wing media have targeted her ballooning wealth, as well as the fintech company NOW Corp.

Abrams, who is also a tax attorney, saw her net worth soar from about $109,000 in 2018 when she first ran for governor with Kemp to $3.2 million last year, according to financial disclosures. Much of the growth appears to have come from her growing fame and the impact that has had on her ability to sell books and charge for speaking.

But she also reported that in addition to NOW Corp, she owns at least $5,000 in equity, including a consulting firm and a company that works with the state’s burgeoning film-making industry, among others.

Andra Gillespie, a political scientist at Emory University in Atlanta, said Abrams’ emphasis on her business experience was a way to win over a minority of Georgia voters who had not yet Election to take sides. Governor bids.

“She is working hard to develop a broad base of attraction and has shown that she has been able to demonstrate leadership and management skills,” Gillespie said. “A lot of people thought all she did was serve as a state legislator.”

It also rebuts Camp, 58, who has consistently portrayed himself as a small businessman and a politician second. According to his financial disclosures, the governor’s business interests primarily involve real estate. He lists a net worth of $8.6 million. According to the Real Clear Politics average, Kemp currently leads Abrams in the polls by about 4 percentage points.

The Abrams campaign did not respond to a request for comment on the candidate’s finances and the GOP attack, although it did provide information about NOW Corp.’s business.

Abrams’ finances were also a focus of the 2018 campaign. When she first ran for governor, she owed the IRS $54,000 in 2015 and 2016 back taxes, which she said were related to the cost of caring for ailing parents. That has led Republicans to question her ability to run the country.

That almost certainly hurt her in the election, Gillespie said. Abrams lost the race by 1.4 percentage points or 54,000 votes — the closest any Democrat has come to winning the Georgia governorship in more than 20 years.

“Maybe some people prefer that she cleans their house before running the country,” she said. Abrams’ financial reversal, and her focus on her business expertise in this game, “made the story go away.”

Gillespie predicts that Republicans will now weaponize Abrams’ improved finances as a sign that she is a wealthy national figure out of touch with ordinary Georgia voters. Fox News, the right-wing Beacon of Liberty and a group called StopStacey.org have issued press releases about Abrams’ new $1 million home, and her fortune growth has come under fire. Some Abrams supporters have noted the irony of a party that supports free enterprise and business success criticizing a black woman for her financial success.

Abrams’ growing wealth is largely due to her presence in the national spotlight. For example, her publishing earnings climbed from $173,000 in 2018 to more than $2 million in 2021. While she has previously written romance novels under the pseudonym Selena Montgomery, Abrams has written a mystery novel, a children’s book, a politics book and an inspirational book to follow. As her fame grew, she was named after herself.

Kristen McLean, an analyst at market research firm NPD BookScan, said Abrams’ “solid publishing record in multiple genres and her growing profile on the national stage did nothing, Just increased her audience.”

Her speaking fee income has increased from $254,192 in 2019 to $1.1 million in 2021. Abrams also earned $200,000 to $250,000 a year from the Roosevelt Institute, a liberal New York think tank, for three years starting in 2019. The money goes toward her role as the founder and director of the Southern Economic Development Project, which Abrams created in 2019 to coordinate with organizations that do economic policy work in the South.

But Abrams mentioned the company NOW the most on the campaign trail, under the brand name NOWAccount, as evidence that she knows small businesses. The company is similar to a factoring company that takes loans on unpaid invoices so companies can get paid faster, but it says the difference is that it makes cash easier and cheaper for small businesses. Last year, it raised nearly $40 million in new financing from investors.

Abrams co-founded NOW in 2010 with business partner Laura Hodgson after a joint venture failed after invoices took too long to receive payment. The tightly-held company now has 70 employees and an estimated $8.2 million in annual revenue, according to research firm Growjo.

According to her campaign, Abrams earned $279,940 from NOW Corp. in 2018, is an advisory member of its board of directors, and owns less than 15% of the company.

NOWAccount customers sell some or all of their unpaid invoices to the company and pay a one-time service fee of 3% to 5% depending on the length of the repayment period with the customer. Entrepreneur and factoring veteran Sheila Jordan, who has used NOWAccount for eight years, says they get 95 to 97 percent of what they owe, compared to 80 percent or less that factoring companies typically pay.

NOW’s key innovation is that customers are evaluated less on the creditworthiness of businesses and more on the creditworthiness of the customers they owe them. The invoices it buys are for entities known to pay, including the government and some of Georgia’s top companies.

“Everyone I know in a small business has been burned a lot of times,” says Jordan, who sells training videos for Atlanta-based software firm Knowledge Architects. “With NOWAccount, they used my client’s credit and released me from liability.”

NOW got a boost from the state in its early years, when Abrams was the minority leader in the Georgia House of Representatives. Using a provision in the 2012 Jobs Act, the state Department of Community Affairs under former Republican Gov. Nathan Deere provided credit guarantees that helped persuade the credit union union to join Now.

Those assurances became a minor issue in 2018, when a leading opponent said Abrams should have told Democrats she was doing business with a Republican administration. Peter Schweizer, a senior writer for the right-wing Breitbart News, investigated the matter again this year, saying the media focused too much on her book sales and speaking expenses as sources of Abrams’ wealth — even though both were outlined about Her financial disclosures — and the push from NOW Corp. and its taxpayers wasn’t enough.

Abrams “used her public positions to make millions for companies she partially owned,” Schweitzer wrote on the Government Accountability Institute’s website. Because NOW Corp. is closely held, its finances are unknowable, and Schweitzer offered no evidence of how Abrams would receive special treatment from the Republican administration.

Department of Community Affairs spokesman Justin Vining said the state contract allowing for credit guarantees ended in May 2017. Overall, NOWAccount registered 394 loans and secured $10.3 million from the program, allowing the company to provide funds to customers, he said in an email.

Politically, the Republican dominance at least hints at some dubiousness about getting richer while engaging in politics, even if there is little support, said Charles Bullock, a professor of political science at the University of Georgia. But he said the shift between targeting Abrams for debt and attacking her for doing well was staggering.

“She’s not arguing, Republicans, ‘I know how to run a state because I’ve run a company,'” Bullock said. “She said she didn’t want to be seen as a politician, but someone with real-world experience.”

More stories like this can be found on bloomberg.com

Leave a Comment