Intro: Two community investors, two Midwest cities, two approaches to reaching more leaders of color with the financing tools they want

Intro: Two community investors, two Midwest cities, two approaches to reaching more leaders of color with the financing tools they want

By Ellis Carr and Joe Neri

 

It’s no surprise that organizations led by people of color face disparities in financing. But it’s not just traditional banks that are culpable. As leaders of two of the nation’s largest and highest-performing community development financial institutions (CDFIs), we specifically work to reach groups that have been systemically left out of lending opportunities – but our approaches haven’t always been perfect.

Capital Impact Partners analyzed its lending in Detroit, a city where 86% of its residents are people of color, and found that only 9% of the $152 million it lent to developers in the city between 2006 and 2015 went to projects led by minority developers.

IFF, based in Chicago, knew it was providing the majority of its loans to nonprofits working in communities of color, but they didn’t know how they were doing lending to nonprofits led by people of color.

We are working to do better. As both our organizations work on adopting new frameworks focused on racial equity, we are trying to be more intentional about the programs and products we offer to address these kinds of gaps. In a two-part blog post, we will share two approaches that have experienced some early successes:

Part 1: Capital Impact Partners’ Equitable Development Initiative

Part 2: IFF’s Stronger Nonprofits Initiative (coming soon)

Both programs are race-explicit and customized to very specific lending needs – one for developers led by people of color and one for nonprofits led by people of color. Additionally, both offer a three-ingredient program: access to affordable and flexible financing; traditional workshop trainings; and other supports along the continuum of activities CDFIs can offer to facilitate better access to capital.

As always, our hope through this blog is that others may replicate or riff-off of ideas that are working well for us, and/or offer suggestions to us on how we might improve or build upon our initial progress.

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