The Community Foundation for a greater Richmond has a simple mission that guides its every move: bringing people together to transform our community through informed and inspired philanthropy. So far, they’ve made incredible progress.
By centering collaboration, inclusivity, solutions, and its customers, the Foundation has grown to manage approximately 1,300 charitable funds with assets exceeding $750 million. The Foundation partners with six supporting foundations and three regional affiliates to widen its reach and impact. Combined, they have granted over $1.5 billion to thousands of nonprofits.
When we step back and look at our partnership with the Foundation, it doesn’t surprise us that we’ve been collaborating since 2017 – they are the definition of a like-minded partner.
The Evolution of a Partnership
Our relationship began with an impact deposit to support community development lending in the Richmond region. It was then that we saw the immense potential in working together. VCC’s focus areas of affordable housing and job creation are at the heart of what the Foundation aims to address, and we share an innovative approach to our work.
Last year, VCC’s partnership with the Foundation evolved in a big way. Together with their Board of Governors, Foundation leaders decided to make the organization’s first-ever impact investments in Virginia Community Capital. The first $1 million investment was directed to VCC’s Affordable Housing Loan Fund, a fund supporting nonprofit developers in the creation of multi-family affordable housing in the Richmond Region. Statistics around the gaps in housing affordability in the region are stark:
- Over 60,000 low-income cost-burdened or extremely cost-burdened renter households exist.
- Less than 20% of all new rental construction was dedicated to affordable apartments from 2014-2019.
- There’s a current deficit of 20,000 affordable homes for very low-income renters.
- A stunning 31% of renters receive an eviction notice in any given year – 4x the national average.
- Low-income and Black households are more likely to be rent-burdened.
- The region will add 16,000 more very low-income households by 2040 – translating to a need for 10,800 affordable units.
This investment from the Foundation is a significant step toward increased housing affordability in the area, an improvement with a ripple effect resulting in lowered healthcare costs, youth education advantages, more accessible transportation, and more. It is for these reasons that the Foundation identified this issue as a high-impact priority and a focus for a pilot impact investment in a like‐minded organization capable of deploying resources effectively. And, of course, it was a no-brainer for VCC – we’re always open to joining forces with mission-driven organizations like the Foundation to make real impact possible in neighborhoods where the potential is so great.
Doubling Down on Impact
The Foundation’s second impact investment was made in VCC’s Economic Equity fund, a statewide loan fund providing low-cost financing and technical assistance for small business owners who are women and/or Black, Indigenous, or People of Color (BIPOC). This investment, also $1 million, was motivated by a shared goal of supporting women- and BIPOC-led businesses as many are still recovering from the impact of the coronavirus pandemic – while continuing to navigate a lifetime of a widening racial wealth gap.
- During the pandemic, the number of Black-owned businesses reduced by 41%, and women-owned businesses fell by 25%.
- The first round of Paycheck Protection Program (PPP) loans in 2020 only gave relief to employer firms. 95% of Black-owned firms are non-employer businesses.
- More than 30% of Black-owned firms listed credit availability as the primary concern resulting from the pandemic, the highest among any racial and ethnic group. At the time, only 13% of Black-owned firms reported receiving all the financing they sought from PPP, versus 40% of white-owned firms.
- White families hold 8x the wealth of the typical Black family and 5x the wealth of the typical Latinx family.
- The racial wealth gap will cost the U.S. economy $1.5-5 trillion between 2019-2028.
Borrowers can use funds for business acquisitions, debt refinancing, equipment financing, owner-occupied real estate, and working capital lines of credit. So far, VCC has deployed $7.5 million to 31 small businesses across the commonwealth. With help from allies like the Foundation, VCC predicts the fund to expand to $33 million by the end of 2023.
Embracing Growth and Innovation
Impact investing is still a somewhat novel and misunderstood tool for most community foundations in the United States. Perceived impact to grantmaking, hesitation around the shifting of assets, and a lack of ecosystem partners are all barriers to embracing local impact investing strategies. In their case, the Foundation tackled the big questions with intention and a strong dedication to their vision for “a vibrant region where all individuals and families can thrive and prosper.” The result was a noteworthy evolution of a partnership that was already driving major impact – and we’re not done yet.
The Foundation recently rolled out a new opportunity to maximize donor impact by leveraging its partnership with VCC. Another first-of-its-kind move for the organization, the Foundation has offered to direct a portion of its donor-advised funds to VCC via investments in our Local Investment Opportunity Notes, or LIONs. Proceeds from LIONs are used as loan capital for community development loans and small business financing.
We commend the Foundation for its innovative approach to advancing its focus areas of community vibrancy, economic prosperity, educational success, and health and wellness. Together, we’re committed to uncovering and supporting community visions and aspirations that improve the quality of life for our neighbors.