A collective of eight CDFIs is putting racial equity at the forefront of education lending.
From fiery debate over critical race theory to heated school board meetings and the uncertainty of schooling in a deadly pandemic, the issue of education is at the center of public discourse. Recently, amid growing social unrest, eight CDFIs have partnered to make racial equity in education a top priority.
The CDFI Racial Equity Collaborative on Education, led by the Self-Help Credit Union, was originally founded in 2018 and began rolling out resources to help lenders assess schools’ commitments to fair practices the following year. The CDFIs, which include the Reinvestment Fund, the Low-Income Investment Fund and the IFF, have pledged to concentrate lending, primarily for facility improvements, to public and charter K-12 schools. 12th graders who showcase practices and outcomes that improve racial equity in their schools. It is still early in the initiative, but CDFIs and some school principals are encouraged by the collaborative energy of the program and the progress made so far.
For some CDFIs and educators, the initiative could not be more urgent. As with almost every aspect of American life, the pandemic has exposed the disparity of resources between schools made up of different races and classes – and it’s high time, they say, to reimagine public education and schools, especially when it comes to race.
One of the recipients of a loan through members of the collaboration is The RISE Schools, a network of charter schools in the Atlanta metro area. Their sizable $4.8 million loan in the spring of this year will help them expand school facilities for existing students and “struggling students,” says RISE executive director Dr. Davion Lewis. The investment, he says, “is going to be a game-changer for us.”
In education, systematic racism can manifest itself in undue or excessive disciplinary practices for black and brown students compared to their white peers or excessive dropout rates, notes Khaliff Davis, senior director, Southeast at Reinvestment Fund, headquartered in Philadelphia.
“School discipline is a hot topic in education,” Davis says. “Research shows that students of color are more likely to be (more) disciplined in school than their white peers. We think holistically about the whole child – do schools implement practices that are not punitive and excessive? What training do they provide to staff to ensure that discipline is restorative and not harmful? »
But figuring out how to measure a concept as broad as racial equity to make sound lending decisions is a challenge. CDFIs, well, had to go to school and learn from educational counselors Village of Wisdom, a non-profit educational association, we are (working to expand anti-racism education) and a technology-based educational equity platform Discriminology. These consultants have developed REM – Racial Equity Matrix – a tool outlining 10 qualitative data points or indicators designed to, according to Davis, “developing a framework to assess schools’ commitments to creating equitable learning environments.”
REM essentially attempts to codify practices around which CDFIs can debate and formulate underwriting policies when considering school loans. REM includes topics such as parent engagement, teacher and student recruitment, and culturally relevant curricula, which REM’s website describes as providing material “to celebrate and affirm the intellectual contributions of people of color”.
“It’s not meant to be punitive” to schools, said Jenny Boyts, director of social services at IFF, a Chicago-based CDFI. “In all of our decisions, we strive to invest in transformational projects, and in the school space, these indicators help us define what transformation looks like.”
Dr. Lewis believes his seven-year-old school checks most of the boxes that constitute a transformational investment and is true to the spirit and policies of the racial equity initiative.
“I don’t know how you can increase racial equity in education unless you support schools like ours,” he says.
RISE Schools teaches over 800 students in elementary and middle schools and is looking to add a secondary school. The Reinvestment Fund, one of two CDFIs in the collaboration that provided the $4.8 million, could also contribute to this expansion. “Both parties are hopeful that the partnership will continue,” admits Dr. Lewis.
The Reinvestment Fund, which has invested over $500 million to K-12 schools over the past two decades, is already embedding a racial equity lens across its lending portfolio, a practice that IFF’s Boyts is also working towards.
Essentially, the collaboration formed a high-powered task force to try to create a socially relevant formula for school funding that not only produces positive marks for students and communities, but also for CDFI wallets.
“Over the past two years, we have created a safe space to talk and discuss how to apply racial equity in lending,” says Chelsey Hurt, charter school program associate in Durham, Carolina. North, Self-Help Credit Union. “We are still in the learning phase.”
This story is part of our series, CDFI Futures, which explores the community development finance industry through the lens of equity, public policy and inclusive community development. The series is generously supported by Partners for the Common Good. Sign up for PCG’s CapNexus newsletter at capnexus.org.
Christopher C. Williams is a New Jersey-based freelance financial writer. He worked for many years with Dow Jones Newswires and Barron’s Financial Weekly and contributed to publications such as The Wall Street Journal, New York Times and Essence magazine. It focuses on the intersection of business, economic equity, and racial justice.