When I started my community investing career in the early 1990s, I learned about a new kind of mission-driven non-profit dedicated to delivering affordable and accessible financial services in lower-income communities – Community Development Financial Institutions or CDFIs. I, like many of my peers at the time, wondered why banks would invest in scaling up other financial institutions that could become competitors. But looking around at the industry, one thing became clear: CDFIs do more than provide capital, they level the playing field for communities and populations at risk of being left behind – especially communities of color.
So, we began to invest in and partner with CDFIs to combine our scale and resources. With their local market expertise, community knowledge and trusted relationships, we quickly realized we could serve communities in more effective and enduring ways than a bank of any size could do on its own.
Since then, CDFIs have rapidly expanded, and there are now more than 1,100 CDFIs across the U.S. In the last five years alone, Citi and the Citi Foundation have provided $173 million in capital and $79 million in philanthropic funding to more than 80 CDFIs across the country in support of their small business and community development efforts.
This year, the disproportionate economic impacts of the pandemic on communities of color, coupled with longstanding racial inequity, reinforced the need for financial institutions of all sizes to work together to support our communities. Using a portion of initial net profits donated by Citi through its participation in the U.S. Small Business Administration's Paycheck Protection Program, the Citi Foundation is deploying $15 million in unrestricted funding to 30 CDFIs across the U.S. These organizations are each receiving $500,000 in unrestricted funding to support small businesses owned by people of color and economically vulnerable households impacted by COVID-19.
Organizations include Raza Development Fund, which is shifting from a real estate focus to more directly support local businesses most impacted by the pandemic across Arizona and California – and LiftFund, a statewide microlender in Texas and neighboring states, and Chicago Community Loan Fund, which provides capital to minority-led small businesses that are impacted by the current health crisis. Lakota Funds is another grantee, and is one of the only financial institutions providing business loans on the Pine Ridge Reservation in South Dakota.
Organizations like these play an integral part in Citi and Citi Foundation's more than $100 million in COVID-19 community relief and economic recovery efforts. They are core partners in our $1 billion in strategic commitments to help close the racial wealth gap and increase economic mobility in the U.S. Through our longstanding partnership with CDFIs, we're helping Black-owned businesses like Robles Concrete Design get the financing they need to grow, create jobs and build wealth.
Now isn't the time to step back and focus only on what we can do alone. It's the time to step up and collaborate. CDFIs matter now, more than ever, to ensure that even the most affected businesses and communities can stabilize and thrive. They are the original social entrepreneurs – developing and implementing community-level solutions that help take businesses and communities from surviving, to thriving.