Funding For Racial Equity: Accelerate Private Investment In Underserved Rural Areas


Following the murder of George Floyd, the Black Lives Matter movement demanded concrete change from our political and economic institutions. Two years later, the National Community Reinvestment Coalition is evaluating the impact of banking institutions’ racial equity commitments and amplifying the experiences of our members in their relationship with private funders.

This is part two of a three-part blog series amplifying the experiences of our members and their relationship with private funders since 2020. Read Part 1 here.

Leaders of many local, grassroots organizations in rural towns have not experienced the impact of national racial equity commitments made by major banking institutions. They believe that these banks have instead concentrated their investments in large cities across the country. Across NCRC’s membership, several rural grassroots organizations have expressed a need for private funding, which can expand their capacity to pursue their racial equity priorities. 

One such organization is Piedmont Housing Alliance (PHA), a community housing development organization whose mission is “to create affordable housing opportunities and foster community through education, lending and equitable development.” PHA’s service areas include the city of Charlottesville, Virginia, and its surrounding rural counties of Albemarle, Green, Fluvanna, Louisa and Nelson. The core focus of PHA’s work is housing development and redevelopment, with additional services in HUD-approved, one-on-one housing counseling. PHA also operates as a Community Development Financial Institution (CDFI), providing down payment assistance to first-time home buyers.

NCRC interviewed PHA’s Executive Director, Sunshine Mathon, and Director of Justice, Equity and Inclusion, Melody Jackson, to discuss how major banking institutions can better align their investments with the work of rural grassroots organizations.

The Importance of Racial Equity Investing in Small, Rural Towns

PHA is firmly committed to disrupting institutional practices that have prevented BIPOC Americans (Black, indigenous and people of color) from building wealth in the Charlottesville region and throughout the nation. They believe that structural change, particularly in the housing and community development field, occurs in the long-term and across generations. In order to fulfill their racial equity goals, PHA, like other local, grassroots organizations in rural areas, require investment and partnership from large banks. 

For example, PHA’s housing work attempts to remedy Charlottesville’s history of gentrification and displacement. Charlottesville was among a plethora of towns and cities in the US that underwent “urban renewal” projects during the 1960s. These government-sponsored projects often resulted in the razing of predominantly Black neighborhoods, such as Vinegar Hill in Charlottesville where hundreds of Black residents lost their homes, their businesses and their generational wealth. These tragedies fundamentally dismantled the Black middle class in the region, constraining generations of opportunity.  

We’re not trying to reinvent the wheel, we are taking that wheel that is already being used in this funding opportunity space and bringing it over to where we already are.” — Melody Jackson

Centuries of forced displacement and exclusion of people of color has contributed to today’s racial wealth divide. PHA’s service area offers particularly stark examples of this nationwide problem. The rate of Black homeownership in Charlottesville is 24%, dramatically lower than the 73% national average for White households. PHA aims to right this wrong by opening doors to homeownership for BIPOC communities. Charlottesville’s current affordable housing crisis disproportionately affects poor, BIPOC communities, according to Sunshine. 

While Charlottesville is a prominent place in the minds of Virginians, as home to one of the state’s largest universities, it is also a fairly small town: Roughly 50,000 people live there year-round. The enduring legacy of racism in Charlottesville which Sunshine described should make the town and communities like it a natural venue for major banks to support racial equity work. But major banks have thus far tended to focus mostly on large cities such as the ones where they are headquartered. These institutions should include rural grassroots organizations like PHA in their investment portfolios and become more intentional about investing in long-term racial equity work across all parts of the country. 

“The kind of change we’re talking about– true systemic change– is generational,” Sunshine said.” It’s not a year from now, it’s not two years from now. A funder [needs to be] willing to invest in the conceptual framework, the long-term reparative perspective.”

How can major banking institutions strengthen their relationship with organizations like PHA? Sunshine and Melody believe it starts with cultivating awareness of the impact local grassroots organizations have on achieving racial equity in the community development space. For instance, they emphasize that an investment in organizations like PHA is also an investment in minority and women-owned businesses, as many grassroots nonprofits provide underserved entrepreneurs with increased access to capital and technical assistance. In a larger sense, they want large banks to know that investing in these organizations is also a concrete path to wealth creation for people of color.

Private Investors’ Approach to Impact Can Be Exclusionary for Rural Organizations 

An important question in this conversation is: Why have major banking institutions neglected to invest in rural grassroots organizations like PHA? Sunshine and Melody believe that private funders choose to invest more in large organizations because they have demonstrated a more comprehensive track record. For example, a large organization in a metropolitan area may be able to substantially assist more people than a smaller organization in a rural area. This is because large organizations have more funding available at their disposal to expand their capacity and impact a greater number of people.

“The kind of change we’re talking about– true systemic change– is generational. It’s not a year from now, it’s not two years from now. A funder [needs to be] willing to invest in the conceptual framework, the long-term reparative perspective.” — Sunshine Mathon

This becomes a challenge for small grassroots organizations that want to scale the impact of their racial equity work. There is not only a lack of capacity in measuring organizational impact but also the lack of private investment to support capacity building, leaving organizations like PHA off the radar of large banks. Sunshine describes this as a “Catch 22”: 

“We’ve seen a decline in deploying resources [for down payment assistance] as the gap widens between what they [BIPOC homeowners] can afford and the availability of housing stock. We’re trying to get more resources [from private investors] so we can close that gap, but we can’t get those resources until we show that we’re deploying resources as evidence.”

This Catch 22 could result in a cycle of divestment for PHA and similar organizations, making it even more difficult for low-income people of color to purchase a home and build wealth. To fill in gaps in capacity, PHA has had to form partnerships with other grassroots organizations in the area, which can also help to increase the visibility of their impact.

Sunshine and Melody recommended that large banks should establish a set of shared, quantitative metrics to evaluate the long-term impact of local grassroots organizations. These metrics should include not just immediate, programmatic participation but also the impact on wealth and community economic growth. This would allow them to better understand the value of PHA and other organizations serving rural and semi-rural areas. For instance, a traditional measure to track long-term progress is the rate of BIPOC homeownership overtime as a result of  down-payment assistance provided to BIPOC households. Sunshine and Melody understand, however, that structural change is difficult to measure, but creating shared metrics can be a solid first step towards aligning corporate racial equity investments with the racial equity work of local grassroots organizations. 

Sunshine and Melody also recommended that private investors set aside a portion of their racial equity investments for rural grassroots organizations, similar to how the federal government specifically awards contracts to small disadvantaged businesses. These investments, however, should be focused on capacity-building, so that organizations like PHA can develop the infrastructure necessary to carry out their racial equity priorities.

“What is in place for us to be included? Let’s look to the procurement space,” Melody said. “We’re not trying to reinvent the wheel, we are taking that wheel that is already being used in this funding opportunity space and bringing it over to where we already are.”


Manan Shah is Racial Economic Equity Coordinator at NCRC.

Photo via aelin.elliott on Flickr

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