Access to Capital is Economic Justice

At the Clinton Global Initiative Annual Gathering in New York City, we announced our Commitment to Action—our Community Credit Lab (CCL) Fund. This $35M Fund invests directly in Black and Indigenous leaders, communities, emergent economic models and practices—from land trusts to cooperatives and community-owned real estate—to advance racial and economic equity. 

This couldn’t come at a more critical moment. In a time of backlash, fear, and confusion, we believe it’s important to double down on equity and justice, and collaborate with other organizations to push the vision of an equitable economy forward. 

The Problem We’re Solving

Throughout our nation’s history, access to capital has enabled long term wealth building and upheld the promise of prosperity.

Long before the creation of advanced banking systems in the early 1800s, the accumulation of wealth has always been a matter of ownership. When banking systems were created, slavery was still legal and Indigenous Peoples were being colonized. Despite being kept from accruing wealth, Black Americans were an asset class which grew to four million enslaved people valued at over $3 billion, and Indigenous lands were parceled, commoditized, and stolen away and are today valued at an estimated $23 trillion.

The deliberate exclusion of Black and Indigenous communities from access to capital lasted for centuries. From redlining to subprime lending, the targeted exclusion upheld by financial institutions touched nearly every point of entry to financial freedom and economic opportunity. Though Black and Indigenous communities have since received greater access to wealth building opportunities, the cards are still stacked against them. Before we can begin to improve financial outcomes for Black and Indigenous communities—and ensure the depository system is equitable and sustainable—trust must be restored.

The upswell of racial equity efforts over the past 60 years is evidence that shared power is still possible. But unless we reimagine these systems rooted in exclusion, Black and Indigenous people will not get the access to capital or resources that they deserve or that they need to build wealth for themselves, their families, and their communities.

How We’re Doing Things Differently

This is why Common Future and the CCL Fund have made a commitment to making strategic investments and putting capital and resources towards racial and economic justice. Within our investment work, Common Future affirms that racial economic justice looks like increased access to capital, guaranteed affordability of capital being accessed, and a promise of building power, choice, and ownership for these communities. 

Access to Capital

Not only do Black and Indigenous communities face discrimination when applying for loans, but they are communities that are traditionally under- or un-banked. In fact, Native households account for the highest unbanked percentage. Further, banks have steered away from placing branches in Black neighborhoods and on Tribal Lands. Access to capital means putting capital into the hands of trusted partners whether through our intermediated investments or through our lending partnerships. 

Common Future directly invests money into organizations who have cultivated trustful relationships with Black and Indigenous communities. By investing in community rooted organizations Common Future ensures that communities with little to no access to capital have dedicated pools of capital. Access to capital not only means getting more capital into communities, it means expanding the sector's definition and notions around risk and return. We work with partners who want to lend to people who have traditionally been barred from getting loans due to low or absent credit or lack of collateral. We design our underwriting criteria based on relationships and character rather than credit and we don’t require collateral. 

Affordability of Capital

Moving capital into communities will only create gains if it is the right capital—the kinds of capital that will ensure a community can build wealth and prosper. As an organization actively working to repair harm caused in the financial system, we co-design our lending terms (interest rates, deferral periods, loan duration, repayment structures, etc.) with our lending partners, and potential borrowers. As an intermediary, we have capitalized our fund in a way where we can prioritize moving affordable capital into communities. We believe that our interest rates should fall between 0-3%—because we believe that in order to build wealth in communities that have faced enormous extraction and been systematically denied opportunity, you cannot continue to extract wealth from those communities through high interest rates. We believe that our capital should enable more profits to stay within communities of color. Black and Indigenous communities should be able to reap the profits of their small businesses, agricultural projects, creative endeavors, cooperatives etc. rather than have to repay high interest rates to lenders.

Building Power, Choice, and Ownership 

Decision making power over how capital is invested into communities has traditionally been opaque, lacked significant input from community members, and has limited benefits to the people living in those communities.

In mainstream financial institutions, loan officers or credit committees (often far removed from communities) reserve the right to tell a borrower whether they are worthy of capital or not based on traditionally racist and discriminatory practices. Underwriting criteria and process usually include heavy amounts of bias and objective measures of risk. These practices have become commonplace in our financial system. Oftentimes, lenders are removed from or lack understanding of cultural or community contexts.

At Common Future we believe that decisions should lay in the hands of community rooted organizations who have built trusting relationships with their borrowers or communities served. Within our lending partnerships, our partners maintain the power, choice, and ownership over who receives what loan while we support originating and servicing the loans. This decentralized approach empowers communities with the lived experience to deploy capital how they see fit. Furthermore, many of our Intermediate Investments and Lending Partners have built democratic decision making by shifting power to community advisory groups or councils of people representative of the communities they serve. 

What You Can Do

Through this, we are able to support and respect communities’ autonomy and agency to self determine their economic futures. But we can’t do this alone. Investing in and uplifting new economic models requires community and a shared vision of shared power. We invite you to join us in this work by learning more about the CCL Fund and connecting with us to build this new economy together.