Since the killing of George Floyd, corporations and private foundations have been underwriting a new era of community-development finance with a strong racial-equity focus, according to a new report from the Urban Institute.
“This heinous act, and other violence against people of color, catalyzed a moment of reckoning and highlighted the deep and enduring racial inequities that manifest in communities across the U.S.,” the report states.
The report adds, “In the wake of 2020’s racial protests, corporate and philanthropic America have signaled a new level of responsibility and a new sense of urgency for closing gaps” in the distribution of community investments.
The report cites a May 2021 study by the McKinsey & Company consulting firm that found the nation’s 1,000 largest corporations have committed $200 billion to racial equity since the George Floyd protests erupted. Those funds, pledged mostly by financial institutions, were directed to “affordable housing, lending in low- and middle-income and minority communities, and community development,” the report states.
Urban’s report also cites the research organization Candid, which identified $12.7 billion in philanthropic funding since 2020 for racial equity, including private foundation grants, corporate grant making, employee matching gifts, employee volunteer services, and donations of products.
“Taken together, this concentration of grants, lending, expanded access to banking and credit, targeted procurement spending, growth capital, and impact investments — all focused on racial equity — could generate more positive outcomes for communities of color if deployed effectively,” the report by the Urban Institute states.
The report offers recommendations for how governments, corporations, and grant makers can most effectively undo entrenched inequities in community investment, including:
- Creating incentives to lower the cost of borrowing while reducing lender costs.
- Paying more attention to the needs of communities that may lack organized advocacy infrastructure.
- Expanding access to affordable insurance for low-cost housing.
“A more strategic alignment of funding sources with community needs and more sustainable and scalable resources are essential to creating meaningful and lasting impact,” the report states.
