- Bank of America pledged $25 million to the National Alliance of Latino CDFI Executives (NALCE), and the African American Alliance of CDFI CEOs to support minority-led community development financial institutions in their networks, the banks said Thursday.
- The alliances represent more than 130 CDFIs led by people of color, a cohort with an average asset size dwarfed by that of the average White-led CDFI.
- Lenwood V. Long Sr., CEO of the African American Alliance, said the opportunity “promises a path to larger future investments in developing the pipeline of Latino and African American-Led CDFIs.”
White-led CDFIs hold six times the assets of minority-led CDFIs, and the average asset size of White-led CDFIs is 2½ times greater than minority-led CDFIs, according to a 2017 analysis of CDFI fund activity by the HOPE Policy Institute.
The disparity in 2017 — the year of the most recent report — was starker than in 2014, when White-led CDFIs had 2½ times the assets of minority-led CDFIs and the average asset total of White-led CDFIs was smaller — about three-quarters the average asset size of minority-led CDFIs.
The imbalance stands in sharp contrast to the clients these institutions serve. A 2021 Federal Reserve survey found half of CDFIs serve a client base that is 75% to 100% nonwhite, and about one-quarter of CDFIs serve a 50% to 74% nonwhite audience.
NALCE and the African American Alliance plan to use Bank of America’s investment to grow the capacity of member CDFIs to offer low-cost loans, access to capital and financial counseling services to businesses and individuals in underserved communities.
“CDFIs are one of the most impactful vehicles for equitable economic investment in traditionally underinvested communities, yet the very CDFIs that are most qualified to serve our communities struggle to be equitably capitalized,” said Marla Bilonick, chair of NALCE. “This collaboration demonstrates that opportunities and impact are literally doubled when we work together.”
Bank of America’s more than $2 billion in loans and investments across more than 250 CDFIs nationwide makes it the largest private investor in CDFIs, according to the bank’s press release.
This marks the third minority-serving initiative America’s second-largest bank has launched in recent weeks. Bank of America late last month created a no-down-payment, zero-closing-cost mortgage program for prospective nonwhite homeowners in certain cities and, on the same day, launched a grant program for women and nonwhite business owners seeking commercial real estate.
With these programs, BofA is making good on its $1 billion four-year plan to advance racial equality and economic opportunity, launched in 2020.