A collective of eight CDFIs brings racial justice to the forefront of education lending.
From heated debate over critical race theory to tumultuous school board meetings and the uncertainty of schooling amid a deadly pandemic, the issue of education is at the center of public discourse. Recently, amid rising social unrest, eight CDFIs have come together to make racial equity in education a top priority.
Led by the Self-Help Credit Union, the CDFI Racial Equity Collaborative on Education was originally formed in 2018 and began providing resources to help lenders assess schools’ commitment to equitable practices the following year. The CDFIs, which include the Reinvestment Fund, the Low Income Investment Fund, and the IFF, pledged to focus lending, primarily for facility improvement, to K-12 and charter public schools that demonstrate practices and outcomes that support the improve racial equity in their schools. The initiative is still in its infancy, but the CDFIs and some principals are encouraged by the collaborative energy of the program and the progress made to date.
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 inequality of resources between schools that are composed of different races and classes — and it’s high time, they say, for a redesign of public education and schools, especially in relation to race.
One of the recipients of a loan from members of the cooperative is The RISE Schools, a charter school network in the greater Atlanta area. Their rather sizable $4.8 million loan this spring will help them expand school facilities for existing students and “special ability students,” says Dr. Davion Lewis, CEO of RISE. The investment, he says, “will be a game changer for us.”
In education, systemic racism can manifest itself in inappropriate or excessive disciplinary practices for black and brown students compared to their white peers, or in excessive dropout rates, notes Khaliff Davis, senior director, Southeast at the Philadelphia-headquartered Reinvestment Fund.
“School discipline is a hot topic in education,” says Davis. “Research shows that black students tend to be (more) disciplined in school than white students. We think holistically about the whole child – are schools using practices that are not punitive and excessive? What training do they offer employees to ensure discipline is restorative and not harmful?”
But figuring out how to measure a concept as broad as racial equality to make informed credit decisions is a challenge. Well, the CDFIs had to go to school and learn from educational advisors Village of Wisdom, a non-profit educational institution, we are (We are working to expand anti-racism education) and a technology-based educational equity platform Discriminology. These consultants developed REM – Racial Equity Matrix – a tool that outlines 10 qualitative data points or indicators to according to Davis, “to develop a framework to assess schools’ commitment to creating equitable learning environments.”
SEM essentially seeks to codify practices around which CDFIs can discuss and formulate underwriting policies when appraising school loans. REM includes topics such as parent engagement, teacher and student recruitment, and culturally relevant curriculum, which the REM website describes as providing materials “to celebrate and validate the intellectual contributions of people of color.”
“It’s not meant to be punishment” toward schools, insists Jenny Boyts, director of social services at IFF, a Chicago-based CDFI. “In all our decisions we strive to invest in transformation projects and in schools these indicators help us to define what transformation looks like.”
dr Lewis believes his seven-year school ticks most of the boxes that make for a transformational investment and stays true to the spirit and policies of the Racial Justice Initiative.
“I don’t see how you can improve racial equity in education if you don’t support schools like ours,” he says.
RISE Schools teaches more than 800 students in elementary and middle schools and plans to add a high school. The Reinvestment Fund, one of the two CDFIs in the collaboration that provided the $4.8 million, could also help with this expansion. “Both parties hope that the partnership will continue,” admits Dr. Lewis a.
The reinvestment fund that has more than invested 500 million dollars at K-12 schools for the last two decades, is already incorporating a racial justice lens into its entire loan portfolio, a practice Boyts is also working towards at IFF.
Essentially, the collaboration has formed a high-level study group to attempt to develop a socially relevant school funding formula that will produce not only positive grades for students and communities, but also for CDFIs’ portfolios.
“Over the past two years, we’ve created a safe space to speak and discuss how to apply racial equity in lending,” says Chelsey Hurt, program officer for incubation schools at the Durham, NC-based Self-Help Credit Union. “We are still in the learning phase.”
This story is part of our CDFI Futures series, which examines the community development finance industry through the lenses of justice, public policy and inclusive community development. The series is generously supported by Partners for the Common Good. Subscribe to PCG’s CapNexus newsletter at capnexus.org.
Christopher C. Williams is a New Jersey-based freelance financial writer. He worked for Dow Jones Newswires and Barron’s Financial Weekly for many years and has contributed to publications such as The Wall Street Journal, The New York Times and Essence Magazine. He focuses on the intersection of economics, economic justice, and racial justice.