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Funding For Racial Equity: How Stronger Partnerships Can Increase the Impact of Local, Grassroot Organizations

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. This is part one of a three-part blog series amplifying the experiences of our members and their relationship with private funders since 2020.

The Importance of Grassroots Organizations

Grassroots organizations are often seen as trusted actors well-positioned to tackle a community’s most pressing racial inequities. These groups leverage their close proximity to the underserved to create and distribute resources that are aligned to community needs and effective in facilitating progress. 

Yet such groups are routinely overlooked by large institutions in their efforts to foster economic justice. When funders do not include these organizations within their investment portfolios, it widens the chasm of disparity and slows progress. 

The recent increase in private funding going towards local communities, however, presents an opportunity to reimagine the kinds of organizations worth investing in. One such noteworthy group is NCRC member organization the Voice of Calvary Ministries (VOCM). VOCM is a community development organization in Mississippi that is expanding affordable housing through down payment assistance, revitalization projects and other social services. Their work is essential to advancing racial equity and reducing racial wealth disparities through homeownership. 

Expanded Capacity, Limited Capital

Since 1975, VOCM has used their convening power to serve the most vulnerable families and youth. They have recently adopted an asset-based approach to wealth-building that has placed many residents in stable housing and connected consumers with banking services, thus stabilizing communities most in need. The success of VOCM in acquiring public funds to support their mission is a testament to their impact in the communities they serve. The organization is expanding its portfolio with redevelopment projects that seek to catalyze economic growth in low-income communities as well as new housing development for veterans and other residents. 

Scaling this work is not without its challenges. Private capital earmarked for racial equity has not been forthcoming, despite VOCM’s track record of successfully deploying more limited public dollars. For example, the organization has emphasized a need for low-interest loans and grant funds to cover their housing rehabilitation projects and down-payment assistance programs. VOCM has primarily relied on the U.S. Department of Housing and Urban Development (HUD) and the City of Jackson for funding. Government and philanthropic dollars are the most common funding source – and, in many cases, the only source – at a nonprofit’s disposal. A larger role in private funding could shield grassroots organizations from overreliance on volatile, competitive public funding. 

The work that we do cannot be successfully done without the collective shifts in the mindset of the clients we serve; and cannot be accomplished in a one-year funding cycle.

When grassroots organizations struggle to access corporate funding, the problem is often rooted in capacity constraints: Small, community organizations are not able to get on private investors’ radar in the first place. In order to approach a banking institution, community development organizations must create a strategic plan that outlines how they will utilize the funding. However, such organizations may lack the technical expertise required to formulate detailed goals. 

VOCM President and CEO Margaret Johnson believes that by partnering with other local organizations, gaps in capacity can be filled.

“With the level of support needed by marginalized people and communities, one organization cannot meet all of the needs alone,” Johnson said. “We are always in search of strong partnerships and collaborations to get the work done!”

However, the onus should not solely be on organizations like VOCM to reach out to corporations for racial equity funding. Corporations should make efforts to connect with smaller, local organizations that are making a direct impact in their communities. Community development financial institutions have acted as an intermediary, receiving funding from large banks, which is then given as low-interest loans and grants to individuals, businesses, and nonprofits in underserved communities. For VOCM, some CDFIs have not responded to their request for assistance. 

Impactful Work, Limited Alignment

Organizations like VOCM are rich in historical knowledge that is key to maximizing impact. Their work reflects a holistic approach to economic mobility for individuals and families that extends beyond what is normally defined as “racial equity” work. VOCM’s Johnson told us she sees a lack of understanding between corporations and grassroots organizations in how they define “racial equity” work. For VOCM, “racial equity” is making homes affordable through down payment assistance. It is stabilizing underserved communities by upgrading homes and raising appraisal values. In a broader sense, it is about correcting historic wrongs. 

Funding for long-term impacts cannot be defined by the number served; but by how many lives were positively impacted.

Private institutions have developed their own framework of racial equity and economic mobility through internal research acumen and selective community buy-in. Their models can therefore be more numerically-focused rather than justice-oriented and their engagement processes exclusionary. There still exists a gap in knowledge of how racial equity manifests in housing and community development, which is leading corporations to neglect the work of organizations like VOCM and miss an opportunity to maximize the impact of their giving. VOCM sought out funding from a pair of major, recently-launched grantmaking programs supporting racial equity by private partners but to no avail. A priority from corporations for the “flashy” racial equity work may be a reason for this, but Johnson has also seen a mindset shift in how impact is defined and funding is structured for long-term change.   

“The work that we do cannot be successfully done without the collective shifts in the mindset of the clients we serve; and cannot be accomplished in a one-year funding cycle,” Johnson said. “Our deep dive work seeks to get to the roots of problems, address those, and move forward with renewed senses of power, confidence and determination. Funding for long-term impacts cannot be defined by the number served; but by how many lives were positively impacted.” 

VOCM and similar organizations face a host of limitations in acquiring adequate resources to deliver quality products and services in their community. Their challenges can inform solutions that help advance racial equity, reduce the capacity limitations of smaller grassroots organizations, and strengthen their relationship with large banking institutions. Corporations must form deep partnerships with the communities in which they are investing. Deeper partnerships should breed innovation in public/private capital solutions that leverage existing public funding of small organizations. All partnerships must be rooted in a shared understanding of racial equity and private partners must center their work around the emphasized, informed and championed equity priorities and goals of the community.  

 

Manan Shah is the Racial Economic Equity Coordinator at NCRC.

Photo by Clay Banks on Unsplash

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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