Originally published by The African American Alliance of CDFI CEOs
The Alliance announced the launch of its Black Renaissance Fund, a $125 million fund providing patient capital to Black-led Community Development Financial Institutions (CDFls) and helping stabilize the operating support needs of the Alliance. An early $12.5M investment from Bank of America marks the launch of the Fund that will support racial equality and economic opportunity by investing in Black communities.
CDFIs empower populations underserved by traditional lenders by providing more flexible lending solutions and allocating time to provide technical assistance to borrowers. Despite their critical services, Black-led CDFIs experience inequitable access to capital, capacity-building resources and technical assistance. For example, one study showed that from 2014 to 2017, the assets of White-led CDFIs grew by $21.8 billion, while the assets of minority-led CDFIs grew by just $682.5 million.
The Black Renaissance Fund will create a pathway for Black communities to equally benefit from the CDFI industry’s expansion by providing below market interest rate loans to the Alliance’s CDFI members. The capital will allow CDFI members to strengthen their balance sheets, build loan capacity and generate more revenue through interest income. In turn, the CDFI members can provide more affordable capital to the Black communities they serve, and ultimately lead to an increase in businesses served and funded, affordable housing units made available, community facilities developed and high-quality jobs created.