The African American Alliance of CDFI CEOs (“The Alliance”), and Pacific Community Ventures (“PCV”) announced today they entered a partnership to recenter Civil Rights within the CDFI industry and elevate industry practice, through policy changes, to ensure CDFIs work toward racial equity and economic justice with greater intentionality, transparency, and accountability to their communities, meeting the mission for which our industry was born to address out of the Civil Rights movement.
At large, the CDFI industry has fallen short of serving their founding purpose of closing systemic gaps in capital access for Black and Brown communities because their lending strategies are too closely tied to SBA guidelines or the financial incentives of their investors and traditional bank funders – for example, most Black entrepreneurs have credit scores, or collateral, below SBA and bank minimum requirements. These entrepreneurs often turn to CDFIs to serve their capital needs: Nearly two-thirds of borrowers of CDFIs that serve small businesses are people of color. But with just over 70% of CDFIs reporting serving people of color, we still have a long way to go.
“We see an urgent need within the CDFI industry, where CDFIs are uniquely positioned to break down barriers and capital access for BIPOC communities. Our partnership with PCV will help us to change the odds and outcomes for these communities by building greater accountability and greater impact where it is needed,” said Lenwood V. Long, Sr, President / CEO of The Alliance.
With the support of a grant from the Tipping Point Fund on Impact Investing, PCV formalized a year-long partnership with the Alliance to develop an agenda centering Civil Rights within the CDFI industry. Both organizations will collaborate by building a coalition of community investing stakeholders committed to advancing policies that recenter racial justice within the CDFI industry, as well as advance a set of policy priorities that reform the CDFI Fund and rethink industry practices.
PCV and the Alliance will hold a series of roundtables this year that bring together government officials, CDFI leaders, and industry thought leaders to discuss how we can better center racial justice within the mission of the CDFI industry, and to draft research and policy proposals out of those conversations. The first roundtable will be held on April 5, 2022 and will focus on updating the Community Reinvestment Act to better serve BIPOC communities. The 1977 Community Reinvestment Act (CRA) is the landmark law designed to encourage lending to lower-income borrowers and to end redlining.
“We need to take this opportunity to break with the past and create systems that meet business owners of color where they are – and that’s exactly what Pacific Community Ventures is committed to working with The Alliance as we move toward restorative capital that empowers small businesses and creates good jobs with dignity across America, with missions firmly rooted in the Civil Rights movement that gave birth to CDFIs in the first place,” said Bulbul Gupta, President & CEO of Pacific Community Ventures.
About The African American Alliance of CDFI CEOs
The African American Alliance of CDFI CEOs (The Alliance) is a coalition of 58 CEOs of Black-led Community Development Financial Institutions (CDFIs), comprising loan funds, credit unions, venture capital firms, and non-profit developers. Since 2018, The Alliance has represented all 50 states and the District of Columbia. As a result, members are uniquely positioned to address issues related to housing and access to capital for African American populations and communities. Learn more about the Alliance and initiatives at http://www.aaacdfi.org.
About Pacific Community Ventures
Pacific Community Ventures supports small business owners and their communities in the fight for economic, racial, and gender justice. We work side-by-side with growing small business leaders and solopreneurs through our integrated model: combining impact-first Restorative Capital and Pro Bono Business Advising with our Good Jobs Innovation Lab that propels thriving communities with equitable jobs. Pacific Community Ventures is a 501c3 nonprofit impact investor and community development financial institution (CDFI).