Since the murder of George Floyd, businesses and private foundations have endorsed a new era of community development funding with a strong focus on racial equity, according to a new report from the Urban Institute.
“This heinous act, and other violence against people of color, catalyzed a moment of judgment and highlighted the deep and enduring racial inequalities that are evident in communities across the United States,” the report said.
The report adds, “In the wake of the racial protests of 2020, business and philanthropic America have signaled a new level of responsibility and a new sense of urgency to fill the gaps” in the allocation of community investments.
The report cites a May 2021 study by consulting firm McKinsey & Company which found that the nation’s 1,000 largest corporations had committed $ 200 billion to racial equity since the George Floyd protests began. These funds, pledged mainly by financial institutions, were intended for “affordable housing, loans to low- and middle-income communities and minority communities, and community development,” the report says.
The Urban report also cites the research organization Candid, which has identified $ 12.7 billion in philanthropic funding since 2020 for racial equity, including grants from private foundations, granting of grants to businesses, employee matching donations, employee volunteer services and product donations.
“Overall, this concentration of grants, loans, expanded access to banking and credit, targeted procurement spending, growth capital and impact investing – all racially focused – could generate more positive outcomes for communities of color if deployed effectively, ”the Urban Institute report states.
The report offers recommendations on how governments, businesses and donors can most effectively address entrenched inequalities in community investment, including:
- Create incentives to reduce the cost of borrowing while reducing costs for lenders.
- Pay more attention to the needs of communities who may lack organized advocacy infrastructure.
- Expand 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 create meaningful and lasting impact,” the report says.