| | Display: News - Images - Sections This month in Business VisionariesDear Reader,The United States faces many societal challenges as a result of the persistent wealth gap that so often separates the haves and have-nots along racial lines.  CDFIs are a Vital FinancialThere’s a saying that the worst of times reveal one’s true colors. This goes for individuals, but it’s also true of governments and policymakers.  CDFIs Put the ‘S’ in ESGMuch of the conversation and action in the ESG space, to date, has focused on the “E” and “G.” That may be because for many businesses environmental and governance policies have a more straightforward application,...  CDFIs with ESG CredentialsCompanies with environmental, social, and governance (ESG) credentials have been high on the list of merger targets for U.S. special purpose acquisition companies (SPACs). These are a few SPACs that focus on Social Infrastructure and Impact Investing..  The Importance of Homeownership Equality“In terms of lower-income households, non-housing wealth accumulation is at best minor and, for minority families, often negative.” As the study makes clear,...  The Unequal Costs of Black HomeownershipWhen access to homeownership is not evenly distributed between white and Black communities, the gap persists and Black Americans continue playing a game of catch-up.  Modern-Day SegregationHomeownership is considered a key step to building intergenerational wealth. But with a homeownership rate of just 46.4% compared to 75.8% for white families, most Black Americans are held back from achieving that American dream.  Eliminating the Racial Wealth GapFor many, 2020 was a wakeup call, but for millions of Black Americans, structural barriers to prosperity have been a living reality for centuries.  Q&A EXPLORING CDFI’STo take a closer look at the CDFI landscape and what is needed to move the critical concept forward, we have turned to some of the region’s leading experts – in community finance,...  CDFI SURVEYL.A. Times B2B Publishing surveyed over 500 Community Development Financial Institutions (CDFI) and received survey responses from 82 CDFIs located across the country.  The Change Company CDFI, LLCStates / Region of Operations Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Montana,...  Frankenmuth Credit UnionStates / Region of Operations FCU is a state chartered credit union that covers all of Michigan including CDFI census tracts in Michigan..  Beneficial State BankExecutive Director or CEO Randell Leach Address 1438 Webster Street, Suite 300, Oakland, CA 94612 Website beneficialstatebank.com  Legacy Bank & Trust CompanyExecutive Director or CEO John Everett Address 3250 E Sunshine Street, Springfield, MO 65804 Website legacybankandtrust.com  City First Bank, NAExecutive Director or CEO Brian Argrett Address 5055 Wilshire Blvd, Los Angeles, CA 90036 Website cityfirstbank.com  Low Income Investment FundExecutive Director or CEO Daniel Nissenbaum Address 49 Stevenson Street #300 San Francisco, CA 94105 Website liifund.org  Reinvestment FundExecutive Director or CEO Donald Hinkle-Brown Address 1700 Market Street, 19th Floor, Philadelphia, PA 19103 Website reinvestment.com  DreamSpringExecutive Director or CEO Anne Haines Address 2000 Zearing Avenue NW, Albuquerque, NM 87104 Website dreamspring.org  Homewise, Inc.Executive Director or CEO Mike Loftin Address 1301 Siler Rd, Bldg D, Santa Fe, NM 87507 Website homewise.org  Grow America FundExecutive Director or CEO John Palyo Address 1111 Superior Avenue East, Suite 1114 Cleveland, OH 44114 Website ndconline.org  Capital Impact PartnersExecutive Director or CEO Ellis Carr Address 1400 Crystal Drive, Suite 500, Arlington, VA 22202 Website capitalimpact.org  Clearinghouse CDFIExecutive Director or CEO Douglas Bystry Address 23861 El Toro Rd #401, Lake Forest, CA 92360 Website clearinghouseCDFI.com  Century Housing CorporationExecutive Director or CEO Ronald Griffith Address 1000 Corporate Pointe, Culver City, CA 90230 Website century.org  Accion Opportunity FundExecutive Director or CEO Luz Urrutia Address 111 W. St, John Street, #800, San Jose, CA 95113 Website aofund.org  Community Bank of the BayExecutive Director or CEO William Keller Address 180 Grand Avenue, Suite 1550, Oakland, CA 94612 Website bankcbb.com  Housing Trust Silicon ValleyExecutive Director or CEO Noni Ramos Address 75 East Santa Clara Street, Suite 1350, San Jose, CA 95113 Website housingtrustsv.org  Raza Development FundExecutive Director or CEO Tommy Espinoza Address 410 E Southern Ave., Phoenix, AZ 85040 Website razafund.org/phx  BlueHub Capital, Inc.Executive Director or CEO Elyse Cherry Address 10 Malcolm X Blvd, Boston, MA 02119 Website bluehubcapital.org  Camino FinancialExecutive Director or CEO Roxane Herrera Address 309 E 8th St #601, Los Angeles, CA 90014 Website caminofinancial.com  Enterprise Community Loan FundExecutive Director or CEO Lori Chatman Address 11000 Broken Land Pkwy, Ste 700, Columbia, MD 21044 Website enterprisecommunity.org  Native American Bank N.A.Executive Director or CEO Tom Ogaard Address 201 N. Broadway Denver, CO 80203 Website nativeamericanbank.com  More of Page 42 »People TrustExecutive Director or CEO Arlo Washington Address 5300 W. 65th Street Little Rock, AR 72209 Website peopletrustloans.org  Nonprofit Finance FundExecutive Director or CEO Antony Bugg-Levine Address 5 Hanover Square, 9th Floor New York, NY 10004 Website nff.org  More of Page 43 »NDC Community Impact Loan FundExecutive Director or CEO Ann Finnegan Address 1111 Superior Avenue East, Suite114 Cleveland, OH 44114 Website ndconline.org  Mercy Community CapitalExecutive Director or CEO Jason Battista Address 1600 Broadway, Suite 2000 Denver, CO 80202 Website mercyhousing.org  More of Page 44 »ROC USA CapitalExecutive Director or CEO Paul Bradley Address 6 Loudon Road, Suite 501 Concord, NH 03301 Website rocusa.org  Partners For the Common GoodExecutive Director or CEO Jeannine Jacokes Address 1444 I Street, NW, Suite 201 Washington, DC 20005 Website pcgloanfund.org  Leviticus FundExecutive Director or CEO Greg Maher Address 220 White Plains Road, Suite 125, First Floor Tarrytown, NY 10591 Website leviticusfund.org  More of Page 45 »Access Plus CapitalExecutive Director or CEO Tate Hill Address 1025 Fulton St. Second Floor Fresno, CA 93721 Website accesscapitalplus.com  California FarmLinkExecutive Director or CEO Reggie Knox Address 335 Spreckels Drive, Suite F Aptos, CA 95003 Website californiafarmlink.org  PeopleFundExecutive Director or CEO Gustavo Lasala Address 2921 E 17th St, Bldg D Suite 1 Austin, TX 78702 Website peoplefund.org  More of Page 46 »Accompany Capital Inc.Executive Director or CEO Yanki Tshering Address 120 Broadway Ste 230 New York, NY 10271 Website accompanycapital.org  NewWest Community CapitalExecutive Director or CEO Dutch Haarsma Address 950 W. Bannock St., Suite 1100 Boise, ID 83702 Website newwestcapital.org  More of Page 47 »Pacific Community VenturesExecutive Director or CEO Bulbul Gupta Address 1700 Broadway, Suite 300 Oakland, CA 94612 Website pacificcommunityventures.org  The Housing Fund, Inc.Executive Director or CEO Marshall Crawford Address 50 Vantage Way, Suite 201 Nashville, TN 37228 Website thehousingfund.org  Housing Trust Fund Ventura CountyExecutive Director or CEO Linda Braunschweiger Address 360 Mobil Ave, Suite 213 A Camarillo, CA 93010 Website housingtrustfundvc.org  More of Page 48 »HomesFundExecutive Director or CEO Lisa Bloomquist Address 124 E 9th Street Durango, CO 81301 Website homesfund.org  The Genesis FundExecutive Director or CEO Liza Fleming-Ives Address 22 Lincoln St Brunswick, ME 04011 Website genesisfund.org  Main Street LaunchExecutive Director or CEO Jacob Singer Address 2101 Webster Street, Suite 1200 Oakland, CA 94612 Website mainstreetlaunch.org  Working Solutions CDFIExecutive Director or CEO Sara Razavi Address 930 Montgomery Street, Suite 400 San Francisco, CA 94133 Website workingsolutions.org  More of Page 49 »Lakota FundsExecutive Director or CEO Tawney Brunsch Address PO BOX 340, Kyle, SD 57752 Website lakotafunds.org  Baltimore Community LendingExecutive Director or CEO Watchen Bruce Address 875 Hollins Street, Suite 301, Baltimore, MD 21201 Website bclending.org  Akiptan, IncExecutive Director or CEO Skya Ducheneaux Address 412 S Main Street, Suite E, Eagle Butte, SD 57625 Website akiptan.org  More of Page 50 »North Philadelphia FinancialExecutive Director or CEO Reco Owens Address 1300 W. Lehigh Avenue, Suite100 Philadelphia, PA 19132 Website npfp.org  Opportunities Credit UnionExecutive Director or CEO Kate Laud Address 25 Winooski Falls Way, Suite 230 Winooski, VT 05404 Website oppsvt.org  More of Page 51 »Feed the Hunger FundExecutive Director or CEO Patricia Chang Address 100 Montgomery Street, The Presidio San Francisco, CA 94129 Website feed-hunger.com  Inclusive Action for the CityExecutive Director or CEO Rudy Espinoza Address 2900 E. Cesar E. Chavez Avenue Los Angeles, CA 90033 Website inclusiveaction.org  TBL FundExecutive Director or CEO Ravi Malhotra Address 7400 W 14th Ave Lakewood, CO 80214 Website icastusa.org/triple-bottom-linefoundation  Foodshed CapitalExecutive Director or CEO Michael Reilly Address 305 W. Broad Street, Suite #316 Richmond, VA 23220 Website foodcap.org  More of Page 53 »Capital Good FundExecutive Director or CEO Andy Posner Address 333 Smith St Providence, RI 02708 Website capitalgoodfund.org  More of Page 55 »Community First Credit UnionExecutive Director or CEO Scott Johnson Address 1105 N Dutton Ave, Ste A, Santa Rosa, CA 95401 Website comfirstcu.org  CLIMB FundExecutive Director or CEO Cynthia Rourk Address 2 Race Street Charleston, SC 29403 Website climbfund.org  InclusivExecutive Director or CEO Cathie Mahon Address 39 Broadway New York, NY 10006 Website inclusiv.org  More of Page 57 »Indian Land Capital CompanyExecutive Director or CEO Rjay Brunkow Address 151 County Road B2 East Little Canada, MN 55117 Website ilcc.net  LendistryExecutive Director or CEO Everett Sands Address 777 S. Alameda Street 2nd floor, Los Angeles, CA 90021 Website lendistry.com  NHS LendingExecutive Director or CEO Buddy Compher Address 3380 W. Americana Terrace, Suite 120, Boise, ID 83706 Website nhslacounty.org  More of Page 58 »PathStone Enterprise CenterExecutive Director or CEO Javier Zapata Address 400 East Avenue. Rochester, NY 14607 Website theenterprisecenterinc.org  Optus BankExecutive Director or CEO Dominik Mjartan Address 1241 Main Street, Suite 100 Columbia, SC 29201 Website optus.bank  Women’s Economic Ventures (WEV)Executive Director or CEO Kathy Odell Address 21 E Canon Perdido Street, Ste 301 Santa Barbara, CA 93101 Website wevonline.org  More of Page 59 » Loading writers... Loading ads... Loading comments... Q&A EXPLORING CDFI’S ROLE IN CLOSING THE RACIAL WEALTH GAP Douglas J. Bystry President & CEO Clearinghouse CDFI clearinghousecdfi.com
Everett K. Sands Chief Executive Officer Lendistry lendistry.com
Steven Sugarman Founder The Change Company CDFI, LLC changellc.com
To take a closer look at the CDFI landscape and what is needed to get capital into underbanked communities, we have turned to some of the region’s leading experts – in community finance, diversity, equity and inclusion (DEI), and public policy. These leaders answered our questions and shared their insights on the state of CDFIs in 2021 and moving forward.
Q: IS THE GOVERNMENT DOING ENOUGH TO HELP CDFIs SERVE THE UNDERBANKED? A: BYSTRY
Recently, the government has recognizedthe role CDFIs playinfinancial services to low-income communities by increasing funding and support from the Treasury Department. At the same time, bureaucratic delays, outdated regulations, and other processes that slow down the growth of CDFIs have hindered our ability to do more. A: SANDS
The recent activities by the government to add additional capital to the CDFI Fund is positive. There are a couple of additional items which could help further the CDFI Fund’s mission: a) Asking the CDFI Fund to be accountable to whom it awards capital; b) Allowing for larger capital programs (CDFI Bond Fund, NMTC) to be accessible to smaller institutions/encourage collaborations between larger and smaller CDFIs; and c) Increase the funding to CDFIs and make capital allocations permanent. A: SUGARMAN
Sadly, the government can be doing so much more to help non-bank CDFIs. Expanding financial services in minority and underbanked communities requires the inclusion of non-bank CDFIs in government programs. Unfortunately, the government still excludes non-bank CDFIs from many of the most important programs. The vast majority (over 90%) of non-bank community development financial institutions continue to be ineligible to partner with the Federal Reserve, are excluded from the most impactful treasury programs, and are forced into second-class membership at the government-sponsored enterprises who are supposed to provide them and their communities access to capital. It is time for the federal government to truly partner with non-bank CDFIs who serve the underbanked and communities ignored by traditional banks. This would involve the full deployment of budgeted and funded programs, like the CDFI Bond Guarantee Fund, and equal membership rights to bank members at the federal home loan banks. As a case in point, non-bank CDFIs were not approved as PPP lenders for months and the underbanked borrowers they serve were forced to wait for relief during COVID.
CLOSING THE RACIAL WEALTH GAP TODAY COULD ADD $5 TRILLION OF ADDITIONAL GDP OVER THE NEXT FIVE YEARS. AND IF WE ARE SERIOUS ABOUT CLOSING THIS GAP, CDFIs AND THE ACCESS THEY PROVIDE TO HOMEOWNERSHIP NEED TO BE AT THE TOP OF THE LIST. — SUGARMAN Today, the Small Business Administration still refuses to issue non-bank SBA preferred lender licenses to non-bank CDFIs, instead keeping in place a “moratorium” on such licensing opportunities. The racial wealth gap is larger today than it was when The Fair Housing Act of 1968 was signed into law more than a half century ago. We hope that the government will revisit its current approach to non-bank community development lenders and include them as a core part of the solution. Q: WHAT NEW GOVERNMENT POLICY WOULD YOU LIKE TO SEE IMPLEMENTED TO HELP THE UNDERBANKED? A: SANDS
Coordination between the FHFA and CDFI Fund. FHFA, which oversees the Federal Home Loan Bank (FHLB), does not allow CDFIs to pledge all of the assets it allows banks to pledge (for example small business loans). Capital from the CDFI Fund could be leveraged to provide guarantees/credit enhancements to the FHLB, which would allow additional capital to flow to CDFIs and consequently underserved communities. A: SUGARMAN
The most important policy change that could be made would be for the Federal Housing Finance Authority to ensure CDFIs are provided equal access to the Federal Home Loan Banking system as promised by the Obama Administration when it signed HERA into law. It is sad that almost a decade later most FHLB Banks still lend less than 0.01% of their capital to finance the liquidity of CDFI members. This is not due to credit quality or economic considerations, but an old school regulatory view (initially implemented as part of regulatory redlining during the Jim Crow era) that when the government helps to finance CDFI loans to minority and loan income communities they are taking on heightened reputation and credit risk. In short, if the FHLB system does not lend to CDFIs, it will never have the reputation risk of seeking to collect from CDFIs. Meanwhile, the minority borrowers served by CDFIs are the hardest hit. A: BYSTRY
Payday lending is out of control, targeting and then harming low-income areas. These bad actors must be reined in. Additionally, Credit Unions should have CRA obligations, just like banks. Q: HAVE YOU BEEN ABLE TO RAISE CAPITAL FROM BOTH REGULATED COMPANIES (E.G., BANKS AND INSURANCE) AND UNREGULATED COMPANIES (E.G., CORPORATIONS AND ASSET MANAGERS) WHO ARE ESG-FOCUSED? A: SUGARMAN
Yes, we have been able to raise capital from both. Netflix invested $10 million in The Change Company’s initiative as part of their $100-million Black Economic Initiative. This year, we have also raised $250 million from a consortium of 85 high-quality insurance companies, asset managers, banks, and ESG investors. Frankly, the only entities that we have had trouble partnering with are government agencies purportedly set up to help CDFIs and underbanked borrowers.
WE HAVE 22 CONSECUTIVE YEARS OF PROFITABILITY PAYING A CONSISTENT DIVIDEND, YET WE STILL STRUGGLE TO ATTRACT CAPITAL TO GROW AND ENTER NEW MARKETS. — BYSTRY A: BYSTRY
We raise capital from banks, which have done more than their fair share. Insurance companies could do much more to support CDFIs. Unregulated companies and other ESG funds have done very little in this field and are using investment screens to promote ESG, rather than supporting CDFIs that are truly making impactful loans and investments benefiting low-income communities. A: SANDS
We have notraised capital from insurance companies, corporations and/or ESG-focused asset managers. We have raised capital from banks. Q: WHAT IS THE BIGGEST CHALLENGE YOU FACE SERVING THE UNDERBANKED? A: BYSTRY
Attracting equity capital continues to be our biggest challenge and restraint. We have 22 consecutive years of profitability paying a consistent dividend, yet we still struggle to attract capital to grow and enter new markets. A: SANDS
Raising the capital needed to provide scalable impact. A: SUGARMAN
Racial inequities, which are pervasive throughout the financial services industry, are far and away the greatest challenge. Fixing the old-school banker mindset that minority lending is higher-risk lending requires a structural change in the mindset of those at all levels in the financial services sector. We recently spoke to a private equity investor who said his firm avoids involvement with CDFIs because “if something goes wrong with the loans, there is a huge reputational risk” – that is the very definition of denying people access to capital for non-economic reasons. This systemic racism results in a wealth gap that does real and measurable damage to our entire economy. According to a recent study by the Federal Reserve Bank of San Francisco, if racial wealth gaps had been closed 20 years ago, U.S. GDP could have benefitted by an estimated $16 trillion. Closing the racial wealth gap today could add $5 trillion of additional GDP over the next five years. And if we are serious about closing this gap, CDFIs and the access they provide to homeownership need to be at the top of the list. Q: WHERE IS THE MOST NEED FOR INCREASED SUPPORT TO SERVE THE UNDERBANKED AND WHAT NEEDS TO BE DONE NOW? A: SANDS
More responsible/patient capital is needed for allowable scalable institutions like Lendistry the opportunity to provide access to capital to underserved communities.
CAPITAL FROM THE CDFI FUND COULD BE LEVERAGED TO PROVIDE GUARANTEES/CREDIT ENHANCEMENTS TO THE FHLB, WHICH WOULD ALLOW ADDITIONAL CAPITAL TO FLOW TO CDFIS AND CONSEQUENTLY UNDERSERVED COMMUNITIES. — SANDS A: SUGARMAN
The unequal cost of homeownership for Black, Latino,and low-income communities is one of the persistent problems faced by the underbanked. When access to homeownership is not evenly distributed, the racial wealth gap grows and Black, Latino, and low-income communities continue to fall farther and farther behind. While a lot of systemic changes are going to be necessary to addressthatproblem, one near-term solution is to support the expansion of CDFIs, making access to them more widely available and providing them the necessary capital to grow their operational footprint. According to an MIT study, The Unequal Costs of Black Homeownership, the average Black family spends over $67,000 more than the average white family for the same home loan in America (interest and fees), and this is exactly the type of structural economic inequality that we seek to change. CDFIs like ours can provide home loans with fair and responsible terms to Black, Latino, and low-income communities saving tens of thousands of families, literally billions of dollars over the lives of their loans. A: BYSTRY
Big companies and governmental institutions. Insurance companies and other corporations could serve the underbanked by supporting CDFIs. The CDFI Fund should cut out obsolete rules to allow for CDFIs to grow and increase our market share of making loans in lowincome communities. FHFA and Federal Home Loan Bank need to make sure CDFIs are represented on governing boards and in setting policies that impact how capital is made available to low-income populations. |