We have 18 months to get it done.
We are in a once in 100 years opportunity to move the needle on economic justice over the next 18 months. That was the assessment of David Erickson, Senior Vice President and Head of Outreach and Education at the Federal Reserve Bank of New York, as he convened a gathering of funds, practitioners, corporations, and CDFI’s at the old but elegant offices of the Federal Reserve in the financial district of Manhattan this week.
That’s the window that the Biden administration has to get massive amounts of money out the door and on the ground, working in under-resourced neighborhoods, before the next presidential election.
So the main question is important: what are the partnerships that can make that happen in the short amount of time we have. There has not been an administration with this strong of a dedication to funneling massive funding to help create wealth for the people in the zip codes where people are poorer and sicker since Franklin Roosevelt in the 1930’s.
Research has shown that your zip code is a greater determiner of your chances for health and wealth than your DNA code, so the new emphasis in the field of community economic development is on helping neighborhoods thrive and overcoming the structural barriers that keep that from happening.
A big picture goal was to link Community Development Finance Institutions (CDFI’s) who get government money through the Community Reinvestment Act and other public sources with impact investors who seek positive impact along with financial return. We have to find ways these two groups could partner to handle the influx of new government funds through co-investing. The two groups do not have much history of that collaboration, and it is made harder now, with currently high interest rates offering a totally safe 4.5 % plus return on money market funds when the CDFI’s are offering a 5% return to investors in exchange for knowing that concessionary financial strategies will let the CDFI’s lend to marginalized communities that banks don’t reach. That was a problem no one had a solution for.
Representatives from corporations like Pay Pal were also on the dais, and they are just learning how to funnel one part of their money to CDFI’s, while CDFI’s are learning how to talk to the treasury officers at corporations, so there was room for optimism on that front.
A third emphasis was on what’s called “absorptive capacity”: where can the money go quickly with some hope that there is capacity to use it wisely and well. The model group that was asked to come up with a plan to get that new money into neighborhoods was Purpose Built, a strong network of neighborhoods being revitalized, (or, in some cases “vitalized” for the first time) that operates in 26 cities.