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Featured: Impact Voices
Five ways that lenders can interrupt racism and provide restorative-justice capital in our communities. Can community development financial institutions be anti-racist? Many CDFIs, with their mission of expanding economic opportunity, have provided a financial lifeline to communities of color that have faced generations of discrimination. But despite good intentions, some practices of CDFIs can perpetuate racial inequity. “CDFIs exist in the larger world of this financial institutional system” with tools and practices that conspire against people of color, writes Joe Neri of IFF, a Chicago-based CDFI that finances schools, health centers, grocery stores, housing and other community real estate. For example: lending based on appraisals that have devalued property in Black communities (see, “Hacking community lending to interrupt racial bias in ‘appraised value’”), and risk-based underwriting that assigns higher rates to vulnerable borrowers. “Being anti-racist means taking an intentionally active role,” says Neri. “Our task is to always ask: Why isn’t there equity here, in this place, in this sector, with this product or service?”
- Be non-extractive. Neri advises CDFIs to interrogate their practices, products and services with an equity lens. For example, many CDFIs charge non-refundable loan application fees. “If the application fee is small, why bother?” asks Neri. “If it is large, then…