After serving for two years as under secretary of agriculture for rural development in the Obama administration, Lisa Mensah joined Opportunity Finance Network, a leading network of community development financial institutions, as president and CEO in March 2017. In November, with a $100 million investment from Twitter, OFN announced the launch of the Finance Justice Fund, a socially responsible investment fund aimed at raising $1 billion in grant capital to address racial injustice and persistent poverty in the United States.
PND asked Mensah about the initial response to the fund, the impact of COVID-19 on the efforts of community development financial institutions, and the persistent lack of investment in rural communities.
Philanthropy News Digest: What kind of response to the Finance Justice Fund have you gotten from corporate and philanthropic investors since the fund's launch in November? And are you on track to meet your fundraising goal?
Lisa Mensah: It's been wonderful to see the strong interest from both corporations and philanthropies in the work we're doing to finance justice. OFN is in discussion with potential new Finance Justice Fund investors; some of them are new to the CDFI industry and some are longtime partners. All understand that now is the moment to invest in Black and minority communities — the nationwide call for economic justice is louder and stronger than ever. We have a path to meeting our $1 billion goal and expect to announce new investment partners in the first quarter of 2021.
PND: What was the genesis of the fund? Was it in the works before COVID-19 was declared a public health emergency and nationwide racial justice protests erupted after the killing of George Floyd last spring, or was it created in response to those twin crises?
LM: Justice takes money, and CDFIs exist to finance justice. Our field started as a small grassroots movement to counter discrimination in banking and investing — the earliest CDFIs were created to provide financial services and support to people that banks wouldn't or couldn't serve. We've grown into a $222 billion industry that works to address longstanding disinvestment, the racial wealth gap, and persistent poverty by investing in people and communities left behind by mainstream finance. So the roots of the fund are really in our industry's history and unique role as community lenders.
For years, OFN has been advocating for more public- and private-sector investment in communities underserved by mainstream finance. Since I joined OFN in 2017, we've been listening to our CDFIs and exploring new programs that would help the industry go bigger and bring new partners to our work. Then 2020 happened.
The overlap of a pandemic-related economic crisis that disproportionally hurt low-income and minority communities and widespread calls for social justice put CDFIs front and center as a way to address both. The forces of 2020 — and interest from new corporate partners like Twitter — accelerated our plans.
The Finance Justice Fund is just one result. In March 2020, OFN also welcomed Google as a partner: With OFN as the intermediary, the company is investing $170 million from its corporate treasury and $10 million from its philanthropic arm into CDFIs to help minority and women-owned small businesses. This mix of debt and grant capital is the type of investment we need to scale.
PND: How has COVID-19 impacted OFN's and member CDFIs' programs and priorities? Are there lessons learned that might be applicable to the broader nonprofit sector?
LM: The communities CDFIs serve are the communities that have been hurt most by the economic and health impacts of the pandemic, and so they have been very busy.
From the very beginning of the crisis, OFN — the organization of thirty-five staff members and the network of more than three hundred CDFIs — understood the threat facing our communities and borrowers. In response, our member CDFIs have established new ways of providing services and support to borrowers. They have been proactive about easing the economic disruption for America's smallest, most vulnerable businesses, nonprofits, and homeowners, making loan accommodations, and standing up new loan programs. Many CDFIs have also helped small businesses adjust their business models to meet the new realities of stay-at-home mandates and changes in customer behavior. Our response from the beginning was focused on survival and recovery for our communities.
One lesson for our industry and the broader nonprofit sector is that recovery from a major crisis demands partnerships, and that when those partnerships are strong we can move America forward. The last ten months have seen new partnerships with philanthropy, impact investors, corporations, and government. Never again should the CDFI field think of itself as insignificant. We must see ourselves as essential partners to the big work of having an economy that works for all.
PND: The phrases "racial injustice" and "communities with high rates of poverty and disinvestment" are more often associated with urban, rather than rural, areas. What's behind that disconnect, and what are the implications — for rural communities in general, and for BIPOC residents of those communities in particular?
LM: The truth is that racial injustice and high rates of poverty and disinvestment exist in both urban and rural areas. Persistent poverty in America — extreme poverty rates of more than 20 percent for more than thirty years — exists in more than ten thousand census tracts, roughly 14 percent of all U.S. neighborhoods. It has a strong hold in many rural communities: 19 percent of areas characterized by persistent poverty are rural, and millions of rural people live in persistent poverty. We also don't hear much about the racial diversity that exists in rural America. We don't think of Native communities or Black communities or Latino communities when we think about rural America, but these are vibrant and important populations in rural America.
I've focused on rural development for much of my professional life. One of the key questions is how to alleviate and begin to reverse the economic distress that has been driven by the systemic loss or contraction of major sectors of the economy such as agriculture, forestry, mining, and manufacturing. The community developer's challenge is to find ways to create wealth and livelihoods by reinvigorating local economies and connecting to larger urban/regional markets. CDFIs do this but also retain a racial equity lens and are willing to make loans to the communities and people who have too often been ignored. This is true in both rural and urban areas.
And, of course, rural and minority communities live under the double-edged sword of poverty and racism — they've suffered the most historically and suffer the most from crises like COVID-19, climate change, and economic upheaval.
PND: Your career has spanned the private, public, and social sectors, and you've led collaborative efforts across all three sectors. What has been your North Star in your work over the years? And what are your hopes for the incoming Biden administration with respect to policies that support racial and economic justice?
LM: Economic justice has been my North Star — for me, that means fighting for financial capital to reach all people and communities. Financial capital is the fuel that drives economic opportunity, and I'm on a lifelong journey to help make sure that the allocation of capital is inclusive.
I have many hopes for the Biden administration. It is exciting to see the administration embrace a goal of advancing racial equity and then to define this goal as spurring investment in small business opportunities, investing in homeownership and access to affordable housing for Black, Brown, and Native families, and ensuring that racial equity is considered in federal procurement and federal investments in infrastructure, clean energy, and agriculture. These are all policies to which CDFIs have much to contribute.
CDFIs understand that government policies helped create the racial wealth gap and government policies must help end it. In the last week of 2020, Congress passed a historic government investment in CDFIs as part of the most recent COVID relief bill: $12 billion for CDFIs and minority depository institutions (MDIs). This is a giant step forward for our industry and the communities we serve. But injustice is persistent and tenacious, and we won't undo it with one bold step.
So, I'm considering that federal investment as a down payment, and I hope we can build on it in the months and years to come.
— Kyoko Uchida