By Masouda Omar, Head of Small Business & Community Development Credit – Lending Operation
As a Community Development Financial Institution (CDFI), Capital Impact Partners has played a part in both upholding and dismantling systemic racial bias in the credit system.
Since our inception, we have served sectors, industries, and borrowers not served by the traditional financial system.
Like many CDFIs, Capital Impact provides more flexibility than traditional lenders in some key areas like loan-to-value limits and financial covenants that borrowers must meet.
However, our credit guidelines – the policies that guide our loan structures and lending decisions – are built on the traditional approach to credit that has deep roots in a financial system that intentionally excluded people of color for much of its history. Often, our lending team seeks one or several “exceptions” to our credit guidelines to accommodate the diverse needs of our diverse borrowers.
Creating flexible financing is both a mindset and an approach. To do so, we need input from our clients and communities to rethink and reshape our products and requirements. When done correctly, this approach gears us away from the extractive patterns of traditional financing and closer to confirming that when people are given the opportunity to succeed, their communities, local residents, and our country thrive.
At Momentus Capital, we envision a future where everyone has the capital and opportunities they deserve – especially those who have been excluded from both for so long.
Our President and CEO Ellis Carr reflected on the contrast between Independence Day celebrations and a set of Supreme Court decisions that challenged promises about democracy, opportunity, and the pursuit of happiness.
His reflections tackle a few areas:
How promises about democracy, opportunity, and the pursuit of happiness have been shaken;
How these decisions will have negative consequences on fellow citizens who have faced long decades of discrimination; and
Momentus’ commitment to continue to speak and work in support of underestimated communities.
Community Development Financial Institutions (CDFIs) were born out of the civil rights movement to ensure that nonprofits and businesses — particularly those in communities of color and communities with lower incomes — have equitable access to loans. Yet, CDFIs are part of a financial system embedded with discriminatory lending practices which need to collectively be addressed in order to fully achieve the intended goal of equalizing access to financial resources for all people.
In line with this commitment, and in recognition of discriminatory lending practices identified within CDFIs, Capital Impact Partners collaborated with Nonprofit Finance Fund (NFF) to identify and address policies and practices that contribute to it. We conducted research to understand how some local and national CDFIs have successfully taken steps to address inequity within their own lending practices.
Learn more about the partnership and read the full report here.
Affordable housing development firms led by people of color – both nonprofit and for-profit – are highly underrepresented in the housing industry, yet are a critical resource for strengthening the housing development ecosystem as a whole and expanding the supply of homes that are affordable. Currently, people of color are estimated to make up less than 5% of the developers in the country.
To support the growth of and opportunities for developers of color in the Washington metro area, as well as increasing the amount of affordable housing regionally, Capital Impact Partners partnered with Amazon to create our Housing Equity Accelerator Fellowship (HEAF). The fellowship provides training, mentorship, and grant capital to support wealth building for developers and their firms, and community building through increased affordable housing.
One of our HEAF participants is Ronette “Ronnie” Slamin, founder of Embolden Real Estate. In this blog profile by HAND, she discusses her journey to becoming a real estate developer, how she views real estate development as a tool to address infrastructure issues, and being intentional about creating space for women and people of color.
At Momentus Capital, we believe that residents from all walks of life should have equitable access to the things that contribute to their health and wealth. This is especially vital for underestimated communities that often have a harder time accessing resources like good jobs, affordable housing, accessible health care, and more. When these things are present in communities, local and global economies become more prosperous and resilient.
Our CEO Ellis Carr recently spoke about building community resilience at the Yale School of Management (SOM)’s Economic Development Symposium. This annual student-run conference brings together senior thought leaders, practitioners, and investors from academia, government, NGOs, and the private sector to discuss the latest issues in economic development.
His speech tackled a few areas:
The history of law and policies that have deliberately excluded communities of color;
Where we stand today in terms of health and wealth disparities, despite signs of progress; and
A vision for the future including things that the public sector, private sector, and individuals can do together to support the growth of healthy, inclusive, equitable, and resilient communities.
It’s Black History Month! This month, we will celebrate by illuminating the social and economic experiences that shape the lives of African American communities. We also wanted to take a moment to share the history of Black History Month and the theme for this year.
Did you know that Black History is a tradition that started in the Jim Crow era and was officially recognized in 1976 as part of the nation’s bicentennial celebrations? It aims to honor the contributions that African Americans have made and to acknowledge their sacrifices. Each year, the Association for the Study of African American Life and History (ASALH) chooses a different theme, with this year’s theme focusing on “Black Resistance.”
2022 is a special year for us at Capital Impact Partners as it marks our 40th anniversary. Four decades of leaning into helping people build communities of opportunity and developing pathways to success.
And while this is an exciting time for us as we embark on a new strategy under Momentus Capital, it is equally important to remember our roots as a champion for the cooperative movement.
During the 1963 March on Washington for Freedom and Jobs, attendees peacefully and constructively protested for the end of systemic barriers and racial segregation. These barriers kept members of disinvested communities from good-paying jobs or from owning businesses wherever they chose, which would allow them to share in the prosperity that others experienced.
In August, our President and CEO Ellis Carr participated in “Catalyze,” a podcast of the Greater Washington Partnership. “Catalyze” brings together leaders from Baltimore to Richmond who are working to make this the most inclusive growth region in the country. It features leaders from across the Capital Region in conversation about how business is taking a stand to catalyze solutions to close the racial equity gap.
There was considerable evidence, even before the COVID-19 pandemic began, that the United States was marking levels of income and wealth inequality unseen for a century, all during the longest economic expansion in modern history. The stark economic inequalities that individuals and families in our nation are experiencing have been exposed and exacerbated by the pandemic.
The persistence and depth of income and wealth inequality have prompted serious national reflection on the fairness and sustainability of our current policies and systems.