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Learning to Change: Reflections of the CDFI Racial Equity Collaborative on Education

Jointly written by Catherine Dun Rappaport (BlueHub Capital); Olivia Rebenal (Capital Impact Partners); Alexis Dishman (IFF); Eliisa Frazier and Tsegaye Yilma Dessalegn (LIIF); Sybil I. St. Hilaire (LISC);  Sooyoung Hwang (Nonprofit Finance Fund); Molly Melloh and Khaliff Davis (Reinvestment Fund); and Brittany Bennett (Self-Help)

This article was originally published by Opportunity Finance Network.

In recent years, Community Development Financial Institutions (CDFIs) and similar mission-oriented financial services organizations have begun to elevate the importance of explicitly addressing racial equity in lending, investing and operational practices. While this goal remains urgent, it is also a challenge to determine precisely how to incorporate or operationalize racial equity into our varied work. How do CDFIs incorporate an explicit racial equity perspective into their lending? What work do we need to do as institutions and individuals to genuinely build that racial equity perspective? And how might we collaborate across our industry to successfully achieve that goal?

In 2018, a group of eight CDFIs — BlueHub Capital, Capital Impact Partners, IFF, Nonprofit Finance Fund, LISC, Low Income Investment Fund, Reinvestment Fund, and Self-Help — formed the CDFI Racial Equity Collaborative on Education to try to answer these questions with a focus on education lending. In this blog, Collaborative members share the lessons we are learning and the challenges we face as we try to center our work around racial equity principles. While we don’t have all the answers, we hope that our experiences will be useful to other organizations as they commit to racial equity.

Background on the Collaborative

The CDFI Racial Equity Collaborative on Education was inspired by Self-Help’s work with the educational equity nonprofit, Village of Wisdom (VOW), exploring ways to assess a school’s performance from a racial equity perspective. The Collaborative sought to assess the effects of a school’s curriculum, culture, or discipline practices on the sense of belonging and positive racial identity development for students of color – key factors in long-term health and success. We hired VOW, Discriminology (a tech-based educational equity platform), and we are (working to extend anti-racist education), to develop an assessment tool, the Racial Equity Matrix (REM), that could be used during the loan underwriting process. After piloting the REM with existing school borrowers, the Collaborative is now working to adapt our learning from the process and bring the racial equity perspective to our lending in education. (An overview of the REM is linked here. The full tool is owned and currently being adapted by Village of Wisdom).

The harmful effects of the COVID-19 pandemic on Black and Brown communities, the recent murders of Black men and women, and the continued brutalization and harassment of Black and Brown people at the hands of the police, all reinforce the need for our ongoing commitment to equity and anti-racism. Not only is that commitment important for CDFIs and schools, but also for every institution and system that form the fabric of our society and cause people of color, particularly Black, Brown, and Indigenous people, to be disproportionately impacted by social ills in the United States. Moving toward anti-racism seems daunting when we are faced with the ubiquity of structural racism in education, housing, health care, law enforcement, and beyond; but when we listen to those most affected, work together, and focus on our spheres of influence, we can achieve change. We hope the Collaborative inspires others to join us in the pursuit of more just and equitable communities.

Challenges & Lessons Learned

  1. Shared language is critical. Establishing a common understanding of key equity concepts such as systemic, structural, and institutional racism, and white supremacist culture is critical to making our collaboration a success. Early on, we realized not all collaborative members had the same understanding or language to describe the racial inequities we were trying to evaluate. After a year of working together, we could no longer ignore those differences. Without shared language, were we limited not only in our ability to apply these concepts to an evaluation of a school’s equity practices, but also in our ability to live out our equity values as a group and to effectively communicate with one another about difficult topics. We engaged Crossroads Antiracism Organizing & Training to lead us in a four-part webinar series to level-set our knowledge, an experience that has enriched our collaboration and will inform the next phase of our work.
  2. Group trust and commitment is foundational to success. Talking about race and racism is deeply emotional and personal, and therefore requires trust among participants and a willingness to show up regularly and participate fully. Given that we represent CDFIs that frequently compete for business, it has been important that we set that competition aside and develop an honest and transparent dialogue, focusing on our shared goal. Over time, and with facilitation from our partners, Collaborative members have displayed a willingness to be vulnerable, and we have opened up about our respective CDFIs’ challenges with pursuing racial equity work, all of which have created strong trust to support our continued work together.
  3. Be prepared to bring the personal into the professional. Racial equity work requires that we let go of the false dichotomy between our personal and professional selves, because dismantling institutional racism cannot happen without sharing our histories—both personal and collective. After all, institutions are made up of people, whose decisions and perspectives are formed by diverse backgrounds and unique experiences. We must first engage hearts and minds with the emotional baggage of racism in our country and its effects—individual and collective—before we can begin to articulate a shared path to evolving the systems in which we work. For many of us in the Collaborative, it was a shift in mindset to share and welcome personal stories into the very fabric of our professional lives, which we’ve been able to do after building trust.
  4. Be prepared to address our own institutional power, privilege, and shortcomings. When asking schools to reflect on their commitment to racial equity, it is incumbent upon those asking the questions and wielding the power to reflect on our own commitment, and diligently address our shortcomings to create space for honest conversations about racial equity. Working just outside the margins of conventional finance, CDFIs have sought to change the relationships between financial services and communities of color. For most CDFIs, changing the behavior of wealth holders is central to our purpose, often serving as advocates for our borrowers and investees. However, it is important to recognize that there is structural and permanent tension between the non-conforming, empowering, labor-intensive character of community development financing and the push for efficiency, standardization, and the inherent structural bias of the capital CDFIs attract to do our work. Many of the interactions between CDFIs and borrowers are shaped largely by the influence of traditional financial markets and reflect underlying, often hidden structures, that shape actions and create disparate outcomes even in the absence of racist behaviors. Through deliberate racial equity training, the Collaborative has sought to understand those hidden structures influencing our behavior and acknowledge the physical, social, and cultural power we hold in relation to the schools we finance. Working with the Racial Equity Matrix forces the Collaborative to reckon with our relative privilege and better understand the inequitable structures influencing the disparate outcomes for students of color and the role we play in perpetuating these structures. The REM functions dually as a way to reimagine our role and to encourage inquiry and practices that support racial equity at schools.
  5. Don’t let the perfect be the enemy of the good. While driving to achieve a tangible outcome that is concrete and scalable is a worthy goal, it should not dictate the pace of the work, which can require time and space in order to create long-lasting change. We recognized that there is no blueprint for lenders working to advance equity conversations and measures with schools – that we are effectively building the plane while flying it. Even so, many months into this work we felt the pressure to have something to show for our efforts– a measurable change within our organizations or a tool that could be widely deployed. Ultimately, we know that racial equity work cannot be rushed. Therefore, we have adopted a learning mindset. We are not afraid to make mistakes and  recognize  that the value is in the process, not just a measurable output. This mindset eschews the harmful hallmarks of white supremacy culture that prizes output over process and quantity over quality. Lasting organizational culture change is a long-term goal and one that requires many normalizing conversations and collective efforts over time.
  6. And, don’t let the enormity of the goal preclude engagement and action. Every day, we are faced with the seemingly intractable nature of systemic racism, and the work of transforming systems can feel overwhelming and insurmountable. But, we cannot let that feeling deter us from engagement. There is a recognized tension between business models necessarily driven by financial sustainability and risk management, and racial equity goals. Still, we commit to grappling with this tension and striving for equity-based business decisions, even while the larger industry may limit how far we can go. It may be challenging to create space and budget time for equity efforts, like adding another layer of questions to an often-lengthy underwriting process. However, these are important first steps toward ensuring a racial equity perspective is embedded in all of our day-to-day work. Alone we can’t transform the financial system or even the CDFI field, but we can be on the leading edge that pushes toward that transformation, beginning with our collaboration on education work.
  7. Consult the experts. We don’t know what we don’t know. As CDFIs focused on investing capital to create communities of opportunity, we are neither education systems nor racial equity experts, which is why our partnership with the consultants in creating a research-based tool was so important. VOW, we are, and Discriminology brought necessary practical experience and scholarship to the work. Furthermore, selecting Black-led organizations as consultants allowed for deep partnership and provided a necessary perspective on educational equity.
  8. Working collaboratively and focusing on a single sector provides a strong launch point for broader racial equity work. Working together enables us to learn from efforts within each of our organizations and bring shared lessons back to influence internal equity practices. Focusing narrowly on our education lending allows us to dive deeply into questions that can be broadly applied beyond that sector. Many of us have found that working with this group has influenced our organizational goals, and all of us are currently engaged in one or more of the following racial equity initiatives in our respective CDFIs:
    -Establishing partnerships with developers, community-based organizations, and borrowers led by and/or serving communities of color
    -Adopting lending practices guided by an assessment of how likely a loan is to generate positive impacts in communities of color
    -Disaggregating impact data by race and economic measures
    -Establishing an innovation and learning model to continuously improve
    -Expanding staff trainings on diversity, equity, and inclusion and revising hiring and retention practices to reflect these values
  9. Conversations about equity can deepen relationships and open up other avenues of understanding with our school partners. A critical step in shaping the REM was the process of each CDFI piloting the tool through conversations with school borrowers. We approached these dialogues from a learning mindset to encourage transparency and acknowledge the power dynamic between lender and borrower. We discovered that these equity-focused conversations led to both deeper working relationships and a deeper understanding of what “quality” education looks like. Many schools are engaging in equity work and were excited to share their experiences. Some of the discussions prompted schools to consider ways to expand and deepen that racial equity work, and inspired action from school leadership. Other schools were looking to learn from peers and asked for additional resources. Ultimately, this process helped us reframe the REM questions around the field of work and start to expand our role as both financial and thought partners and connectors for our borrowers.
  10. Qualitative measures on racial equity are hard to extract, but they can lead to more precision in evaluating impact. While quantitative data on race and demographics of students and staff are relatively easy to collect, the more nuanced and qualitative information around culturally relevant practices, restorative approaches to justice, student voice, and staff understanding of implicit bias are harder to measure. At the same time, it’s qualitative information that helps lenders understand what  they are looking for when observing classrooms and speaking with school leadership, and it helps us bring a racial equity perspective to underwriting and look for opportunities to help schools connect with resources and one another. Knowledge sharing is a key component of culture change.


As CDFI lenders endeavoring to advance racial equity and dismantle the systemic and structural racism that continues to result in harmful and negative outcomes for people of color, we often find ourselves faced with a paradox: how can we dismantle systemic racism and become truly anti-racist in our practice while working within the very system we are trying to transform? How do we leverage the resources of our institutions to advance racial equity, while also recognizing and acknowledging the limitations of that work due to centuries of U.S. policies that have actively produced inequities?

CDFIs play an intermediary role directing capital to where it is needed, and in that respect we are both a step removed from the communities we touch—we are not educators, developers, or healthcare providers—and also close enough to the communities to use our power and resources to have an impact. Likewise, while we may be limited in our ability to transform the larger system that harms the communities we are trying to impact, we still must look for opportunities to push against those limitations, by asking ourselves who we are harming and who we are benefitting with our work. This is a difficult paradox to grapple with, but one that we cannot shy away from.

Therefore, our collaborative will continue to work with the Racial Equity Matrix, adapting it for use in underwriting, partnering with school borrowers on achieving equity goals, and facilitating the sharing of racial equity resources among schools. And as the COVID-19 pandemic continues to damage communities of color, and as protests against police brutality and calls for law enforcement reform continue to advance the Black Lives Matter movement, we will think about what this means for the children and the schools that we support with our lending. Together we will continue to undertake the work of building our racial equity perspective, learning and understanding the history that has brought us to where we are today, and interrogating our own institutional practices to identify opportunities where we can transform our work for greater racial equity.

The CDFI Racial Equity Collaborative on Education is a learning community of CDFIs focused on racial equity in education. We share ideas, information, and resources to help members assess borrowers’ commitment to racial equity, and the impact of school practices on students, families, and staff of color. We center race in our work because of the history of race-based oppression and injustice that created opportunity gaps in education, as well as the other sectors in which CDFIs operate. For this reason, we aim to influence others in our respective CDFIs and in the industry to develop race-conscious product development, implementation, and impact measurement. Current CDFI members: Blue Hub, Capital Impact Partners, IFF, Nonprofit Finance Fund, LISC, Low Income Investment Fund, Reinvestment Fund and Self-Help.

Racial Equity