Institutionalizing Racial Equity and Four Principles Guiding our Work

This piece is Part 2 of our racial equity thought piece series. Read Part 1: Meeting Communities Where They Are: Rethinking Risk for Equitable Impact 

In 2021, LIIF entered the year equipped with a new strategic focus and mission that centers racial equity in our work more explicitly than ever. While we’re proud of our decades of poverty alleviation work, to achieve deeper impact we tasked ourselves with being more intentional in centering those historically disenfranchised by community development policy and both intentionally and inadvertently excluded from investments. In our work to advance racial equity, we recognize being afforded safe, quality housing and child care are key social determinants of health that can substantially improve the conditions of people of color and advance communities of opportunity, equity and well-being across the country. 

2020 was a particularly tumultuous and traumatic year, but in 2021, rather than discouraged, LIIF has been emboldened.  

As an organization with an explicit commitment to anti-racism, the pandemic’s outsized impact on communities of color and the national reckoning with anti-Black racism, in particular, have further demanded that we do things differently. 2020 was our year of resolution to leverage LIIF’s platforms and resources in these anti-racism efforts. 2021 has been the beginning of us producing more concrete examples of us doing so, with more to come in the years ahead.  

Our approach to centering racial equity in our lending work grew more intentional as we held every decision and new initiative up to a critical light to determine whether or not it centered people of color – particularly Black and Latino communities facing the most persistent inequities – and whether it built access, transformational outcomes, and power and agency for these and all communities. Not surprisingly, we found we are strong in some areas, but we have plenty of opportunities to grow. We are committed to leaning into these opportunities and to continue using this lens moving forward. 

We are clear that equally important to the work itself is how we advance it – who is at the table as decision-makers, how decisions are made and having a clear way to evaluate our impact.  

To hold ourselves accountable and ask others’ support to do so, we published Deepening our Commitments, which outlines four principles for how we will advance racial equity: 

These commitments have required LIIF to work in more integrated ways across the organization. It has required us to thoughtfully adapt our internal culture and policies to align with and support our intended external impact.  

Each of the four core principles above is exemplified in the following initiatives, developed in partnership across the organization and executed by our dedicated capital, impact and program teams. 

Both within LIIF and externally, we must value lived experience as a unique expertise to guide our work. Far too often, even in well-intentioned community development, people and communities of color are merely served or at best consulted. True racial equity requires us to consistently push to center community voice in shaping our work. No one can solve a challenge better than people living through it, but they may lack the resources, infrastructure or capacity to implement these solutions. LIIF has recognized our ability to contribute these as our value-add as partners and allies.  

In the Coachella Valley located in southern California, LIIF is partnering with Lift to Rise, a community-driven collective of more than 50 local organizations. Lift to Rise collaboratively designed an action plan and regional pledge to expand housing and opportunity in the Valley where 55% of people are rent burdened, with a disproportionate burden on Latinos and agricultural workers who have been at the heart of keeping our economy and livelihood going through the pandemic. To date, LIIF has invested in four developments led by our partner, Coachella Valley Housing Coalition, which will bring more than 400 units of housing to the area for families, farmworkers, seniors and people with special needs or at risk of homelessness earning 30-60% of the area median income.  

Two projects – Oasis Villas and Las Casas – will create or rehabilitate early care and education centers co-located on the same property as new affordable housing. Las Casas includes a 2,450-square-foot child care facility, which provides critical support to mostly farmworker residents who can rely on a safe, affordable place for their children to learn during the workday. 

Lift to Rise’s community-driven framework is informed by residents from all walks of life. From their inception, they have advanced community-identified priorities in order to shift systems towards more transparent, democratic processes and better outcomes for Coachella Valley residents. Many of the staff members and key decision makers are from the Valley and know its challenges and its potential intimately.  

Ultimately, it is this kind of ground-up, adaptable approach that will lead to long-term change. 

Not only are we required to adapt to align ourselves with our principles to advance racial equity, but we must also institutionalize this theory of change to achieve our goals. We’ve determined we do that through our lending, which we recognize as our main engine of impact. Since 1984, we have invested $2.9 billion (and leveraged that nearly 5x) to create or preserve 87,000 homes, 280,000 child care slots and millions of square feet of community facility space for schools, health clinics, community centers and more. 

Our source of influence is clear, but how can we move beyond measuring and reporting outputs toward clearer, more sustainable impact?  

Our answer is to more objectively assess how well our lending improves access, outcomes, and power and agency-building in communities that have been historically and systemically excluded from investment. LIIF is updating our theory of change to enhance the impact of our loans. We are developing tools that will provide a framework for how we make determinations about equitable and impactful investments.  

These tools – starting with the Education Impact Tool – will ensure our conversations with borrowers detail how each project is incorporating a racial equity lens into the planning, leadership, decision-making and features and services provided. Our Education Impact Tool is already shifting how our loan officers interact with the field. As we continue to build on that learning, we’re eager to share our findings with our partners to expand how our sector is approaching the work.   

More and more, our initiatives rely on a diverse coalition of staff voices to guide us. To ensure the success of these initiatives, we must democratize our decision-making process to lift up new voices. We learned this lesson as we created the Black Developer Capital Initiative (BDCI).  

LIIF loan officers have cultivated rich relationships with Black affordable housing developers who shared the obstacles they face when trying to access early stage capital and detailed how common loan terms don’t meet their firms’ needs. A working group collaborated to develop a product that changed LIIF’s credit standards and terms to meet developer needs rather than asking Black developers to fit our mold.  

To fully provide the innovative capital needed to fill this market gap, we leveraged our partnership with our affiliate, the National Affordable Housing Trust (NAHT) to launch the initiative that offers Black affordable housing developers debt and equity capital products for every stage of a development project.  

This is one example of how we are holding ourselves accountable to our mission and addressing the root causes of persistent racial inequities. This process stretched us, forced us to dive into challenging existing practices and is pushing us to standardize new, more equitable workflow and decision-making processes within our organization. LIIF is applying our resources (capital) and skills (fund management) to support a shift in the way community development has traditionally been done, with more examples to come.   

The final principle guiding our anti-racism work is to have a learning mindset and to adapt our strategies based on what we’re learning from our partners, many of whom have been rooted in community building and anti-racism work for decades.  

For example, Lift to Rise has modeled how to intentionally shift power and influence to communities by authentically engaging and inviting residents into places of leadership and decision-making. Lift to Rise is currently building out a “resident leadership table” of individuals impacted by development but not often at decision-making tables. Residents will contribute to co-designing strategies for housing stability and economic opportunity in the region and participate in leadership building trainings so they may continue to drive more of the work. 

Through the BDCI, we are continuously learning from Black developers about the systemic challenges they face, their unique strengths, and capital needs to build targeted affordable housing developments.  

Through our longtime partnership with Purpose Built Communities, we have created a $45 million Accelerator Fund, which provides flexible capital to the network of mixed-use development projects. Each holistic development is driven by a resident-led community quarterback organization working to advance racial equity, economic mobility and improved health outcomes in targeted neighborhoods. 

We are also collaborating with the Stewards of Affordable Housing for the Future (SAHF) network as part of their advisory committee to advance racial equity across their developer partners. This consists of thought partnership, best practice exchange, financing collaboration and professional development initiatives to advance more people of color in our field. 

There is a significant opportunity at this moment to partner with new and existing organizations to advocate for policies and resources that address historical and present discrimination and support the power of Black and Latino people and communities. We leaned into this opportunity with a new administration poised to make historic investments in affordable housing and the civic infrastructure communities need to thrive.  

We continue to work with trusted partners to advocate for modernizing the Community Reinvestment Act (which was created to address racist policies in lending and banking) to explicitly require banks to improve outcomes for people and communities of color and collect comprehensive data disaggregated by race.  

Partnerships take many different forms including power sharing with residents, locally based groups and those with long histories of racial justice movement building; joining resources with those in adjacent industries with complementary goals; and knowledge sharing among peer organizations walking parallel paths. 

We are at an inflection point for community development, and partnerships led by those with lived experience and allies are vital to achieving racial equity. The health and economic impact of the pandemic on people of color and the ongoing incidents of hate crimes and racial profiling continue to underscore the work to be done. We are just as committed to response and recovery as we are to supporting long-term power shifts that reduce the persistent inequities people of color face. 

We must think strategically of what we are doing and will do moving forward that is net new and different to further move the needle. Who is at the decision-making table and the principles of how we advance racial equity will ultimately shape what is built and whether these assets have lasting power to shape and sustain healthy, equitable communities. To achieve racial equity, there must be a permanent shift in how we do things. Capital is a powerful tool for impact, and financial systems have played a large role in perpetuating inequities that most acutely have affected communities of color. LIIF sees opportunity and obligation to leverage our own power to change these dynamics. Year over year, this is what LIIF wants to be tested against. 

LIIF is motivated by the organizing of people and communities of color and allies to continue to harness power and take advantage of new windows of opportunity for deeper, sustainable change. As we centers our focus on Black and Latino communities, we are committed to honoring staff, partners and community members’ lived and practitioner experience and expertise. We will continue to lift up more leaders of color as influencers and decision-makers within our organizations to drive more equitable investment across communities. We look forward to continuing to share and partner with you on our impactful lending and programs and share our successes, challenges, and learnings.