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Q&A: How to Put Racial Equity at the Heart of Community Development

“Progress is not all smooth.”

By Hadassah Patterson 

Many organizations are quick to claim they value diversity and inclusion in the wake of stark social justice incidents experienced in 2020. In fact, according to consulting company McKinsey &Co., U.S. companies spend at least $8 billion a year on diversity training. However, most efforts stop far short of becoming an anti-racism organization. The leaders of San Francisco-based Low Income Investment Fund (LIIF) announced in September that they intended to do just that. This commitment launched with a $5 billion plan, spanning over four years, to advance racial equity. 

LIIF began in 1984 as a community development organization to address low-income housing needs. They are now a national nonprofit community development financial institution that has invested nearly $3 billion in communities. LIIF Director of Racial Equity and Impact Lending Eliisa Frazier and Chief Strategy Officer and Senior Vice President Lucy Arellano Baglieri shared how they’re adapting LIIF’s vision to serve in an anti-racism capacity.

What initially prompted the focus on anti-racism? 

Lucy Arellano Baglieri (LAB): Deep inequity persists for people of color, particularly Black and Latino people. We have different history in the country, but similar current conditions in terms of strength and outcomes, particularly during the pandemic. We were thinking, what do we really need to focus on—given our strengths—to have a deeper impact? We landed on creating community opportunity equity and well-being—with the focus of affordable housing, early care and education. Given that we're a large financier, we look at the system where capital flows and how we can influence that to be more equitable.

One element of your vision is shifting how we think about “high-opportunity areas.” Can you share what you mean by that?

LAB: In the news or community development fields we hear about ‘high-opportunity areas’ and providing lower-income families opportunities to go into these areas. While we still think that’s an important strategy, what if all communities were high-opportunity areas, right? Then everyone has a choice in terms of where they want to live, and communities that have unique assets, histories, and cultures remain intact, but we can fill the gap with something that might be missing. We can preserve existing communities and their essence, but ensure they have access.

This piece is really personal for me. Prior to coming here, I worked in San Francisco’s Mission district, a very vibrant Latino community. We saw families having these opportunities to move into ‘high opportunity areas’ and declining to, because it would require them to uproot their lives and cultural connection. The trade off wasn't worth it for them. We need to provide opportunities for choice. For myself, I am an immigrant from Mexico and navigated similar systems and inequities.

So you’re listening to what people in the communities really want and need.

LAB: Exactly. There is a difference in choice and then true choice. If you are given a choice between two terrible options, that is not really a choice, right? I don’t want to move my family to a community where we feel like outsiders, frankly.z

Understandably. So how do you start to institutionalize anti-racism as an organization?

LAB: First and foremost it was codifying (policy), and that moved into accountability. So it was important to diversify perspectives—of our executive community, our board. We have a committee that is diverse racially and with different identities, from different departments, roles and levels of responsibility. 

Also, a lot of our staff are passionate and committed in a way that only comes through diverse lived experience. … When LIIF doubled down on this direction a few years ago, the organization worked with RaceForward and Crossroads Antiracism Organizing and Training for baseline training. We revisit the racial equity framework, the shared language. The term ‘white supremacy’ is used often, but can mean different things to people. So we focused on ensuring we stay together on that.

Then there is the fact that progress is not all smooth, right? When we're talking about race, privilege, and who has historically benefited and been excluded, that can be quite triggering for people. We all show up because we have a commitment to advancing equality in community development. Sometimes people feel it's moving too quickly; sometimes people feel it's not quickly enough. So it's a unique situation where we are navigating individual journeys as well and it requires a multifaceted approach. 

How do you reflect this commitment through your partnerships?

LAB: We understand our role as an intermediary. We're not necessarily touching communities directly in the way a developer or service provider might. We're an organization that has offices in different markets, so we're continuously going deeper with networks or organizations in communities, but also led by and representative of those communities.

If there's not enough representation, we can be a conduit by using our platform. What national network, maybe affinity-based network, can we humbly look to forge a partnership with rather than attempting to insert ourselves into those spaces? 

Your impact evaluation framework is central to this vision. Can you share how it works??

Eliisa Frazier: The impact framework will enable lenders to assess the potential impact of lending opportunities with a focus on racial equity. This is a tool lenders can use as they go about business development — seeking out borrowers, finding loan opportunities. That impact framework will guide decisions that impact racial equity at the forefront. We are working on reassessing our risk-evaluation as well.

How are you holding yourself accountable? 

LAB: We have engaged our board to codify this, both by recruiting diverse lived experience, and how they partner with us on accountability. We also have an external commitment to driving $5 billion over the next decade to advance racial equity, and we'll report our progress. Even when we may miss the mark, we still want to be transparent and pivot if that happens.

This conversation was edited for clarity and brevity. It’s part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is developed in partnership with Next City.