How do you support development across the food system in a way that builds community ownership and power for Black, Brown, and Indigenous communities? This is a question that a group of food system activists of color have come together to address. And in so doing we are challenging the community development field to do better—by creating new tools to support truly equitable food-oriented development.
Many large community development financial institutions, credit unions, and foundations present themselves as community-based food financing leaders. Yet, all too often, their investments inadvertently exacerbate inequitable power dynamics in communities, reinforcing existing disparities and underlying health and wealth-building challenges.
Fed up with a system that regularly provides limited, top-down support, a group of BIPOC-led organizations banded together to create the EFOD Collaborative in 2018. EFOD stands for “equitable food-oriented development.” Our mission is to challenge systemic barriers in finance and lead a shift to a community-driven framework for equitable capital. Our steering committee is comprised of leaders from around the US, including the San Francisco Bay Area and Los Angeles, CA; Durham and Henderson, NC; New Orleans, LA; El Paso, TX; and Anthony, NM.
Over the last several years, our group has worked to drive resources to community-based organizations. Many of the folks in this network have been denied capital because traditional CDFIs did not deem their projects “investment ready.” And yet, not only do these groups provide essential healthy food to their communities, but they do so in way that builds on authentic local relationships and creates much-needed community assets. This work is worth supporting. Here are a few examples:
- In East Cleveland, OH, Loiter, a local nonprofit, is revitalizing the city’s historically Black community by building a community-owned business through its acquisition of Wake Robin Foods, a local fermented-food company.
- In California, Oakland Bloom supports poor and working-class immigrant, refugee, and BIPOC chefs to start their own food businesses. Its incubator program and shared commercial kitchen are a critical asset for local food entrepreneurs, who would otherwise be priced out of opportunities due to the high cost of commercial space in the San Francisco Bay Area.
- In Washington, DC, Dreaming Out Loud is rebuilding urban, community-based food systems owned by residents of Wards 7 and 8, historically Black neighborhoods, through its social enterprise aimed at increasing access to healthy food, supporting entrepreneurs and farmers from low-income communities, and creating opportunities for at-risk residents to earn sustainable, family-supporting wages to build generational wealth.
These groups are part of a larger ecosystem of place- and community-rooted organizations that are providing accessible, healthy food to children and families in need. They are also ensuring that small food enterprises in their neighborhoods are supported. And they are working in co-liberation to build structures and systems to support equity and vitality in low-income communities of color.
The identifying characteristics of EFOD-aligned organizations are:
- Equity and Justice First
Equity and justice are part of the mission. This means that the organizations are involved in other organizing, advocacy, or policy work—it’s not just about food.
- Place- and People-Based
Each of the members are embedded in a local or regional network and have a strong identity and history of community work.
- Use Market-Based or Business Strategies
Members in the network are developing new markets and enterprises that generate meaningful economic opportunities.
- Community Leadership Development and Community Organizing
Network members have boards of directors and executive leadership that are representative of the community and who are often people of color. Work is done by and for community members.
- Community Ownership
Network members build community assets, equity, and ownership by employing community-based ownership structures and decision-making processes.
Overcoming the Obstacles in Conventional Community Development
Time and again, despite a track record of successful grassroots food-oriented development in undercapitalized neighborhoods, BIPOC practitioners speak of the difficulties that they face in translating their experience into securing investment that supports their work.
Member organizations, even those with 20-plus years of experience, have been told that their projects and enterprises were “too risky” and have seen finance denied or delayed. Sometimes, they have been made to jump through additional hoops, such as securing philanthropic guarantees, before loans are made available.
Even as CDFIs position themselves as community-based alternatives to banking, they often face pressure to adhere to bank industry norms, which can alienate the BIPOC communities that they aim to serve.
Anthony Chang of Manzanita Capital Collective, and an allied member of the EFOD steering committee, observes that the CDFI movement’s history has influenced these practices. While CDFIs strive to bridge the wealth gap to underserved markets, Chang notes that many CDFIs depend on banks for a considerable share of their capital.
Why? Under federal regulations, banks can often satisfy their Community Reinvestment Act obligations to invest in previously redlined communities by providing below-market capital or donations to CDFIs. The high presence of banks in the industry, which often includes bankers serving on CDFI loan committees, can alter the culture of CDFIs, reinforcing systemic barriers to capital.
Even as CDFIs position themselves as community-based alternatives to banking, they often face pressure to adhere to bank industry norms, which can alienate the BIPOC communities that they aim to serve. As Chang puts it, “CDFIs are still very much shaped by a view of capitalism and don’t consider community ownership as important.”
EFOD Steering Committee member Rudy Espinoza is also executive director of Inclusive Action for the City, a BIPOC-stewarded CDFI in Los Angeles aiming to reshape traditional CDFIs from the inside out. Espinoza agrees that CDFIs often adopt practices rooted in traditional banking. “When you use these tools, and you don’t consider how they should be redefined or revised, then you’re going to replicate the same problems over again.”
Another challenge of conventional community finance is the process of getting funded, which is daunting and time-consuming for grassroots organizations and leaders responding to their communities’ daily needs. EFOD Steering Committee member, Mariela Cedeño, who like Chang is a member of the Manzanita Capital Collective, recalls her experience closing on a loan of nearly $1 million.
“It was a really long process, and a lot of language being used that, even us as a team that had a lot of privilege from academia and professional exposure, still found very foreign.” The focus, she added, was on “self-sufficiency ratios and how they were going to make money on the loan, and so they weren’t working to build terms that work for us. They were working to have us fit into the extractive terms that work for them.” Cedeño adds that “there were a lot of language barriers, and as we got deeper into the process, the process itself felt self-defeating. All the lenders we worked with placed capital preservation as their highest concern.”
Another issue is the long wait time often involved with obtaining funding. “One of the challenges that the community has historically named is the long process of waiting for approval. Because of that long process, other opportunities may have been missed, or maybe there’s a critical need for funding at that moment,” Espinoza said.
At the root of these institutional barriers is a paternalistic tendency among wealth holders and stewards reflecting a fundamental belief that “[communities] don’t know how to control their own resources,” according to Chang. Leaders and organizations that are determined to create pathways towards community agency and self-determination face not only barriers to capital access; the resources they receive often come with obtrusive and onerous strings attached. In Chang’s view, “We have to ask ourselves what kind of capital the community needs, and how can that capital be deployed in ways that are responsive to community, centering the needs of the community, and shaped and governed by the community?”
Building an Alternative Financing Model for Equitable Development
The good news is that not all CDFIs are alike—some support the EFOD approach. A report published by EFOD, Duke University World Food Policy Center, and DAISA Enterprises, titled “How Innovative CDFIs Fund Equitable Food Oriented Development,” describes an alternative model. As author Lianna Gomori-Ruben details, developing place-based practices is critical to overcoming systemic financial barriers.
The report interviewed people at three CDFIs—Inclusive Action for the City, New Hampshire Community Loan Fund, and the Intertribal Agriculture Council—and identified six themes of practice that characterize CDFIs that succeed in supporting equitable food-oriented development:
- Cultivating trust to identify opportunity
This involves CDFIs relying upon their networks to identify borrowers, funders, and technical assistance providers. They recognize the importance of building trust with the communities they serve and prioritize resources towards that end.
- Amassing and deploying flexible capital
This means focusing on amassing flexible sources of capital that can be customized into financial services that meet borrowers’ needs.
- Underwriting with relationships
This requires building relationships with borrowers to mitigate risk. By establishing coaching partnerships, these CDFIs help businesses grow and manage their repayment obligations.
- Designing products and services in a bottom-up fashion
This means assessing businesses individually to identify the most impactful interventions for them rather than applying a one-size-fits-all approach.
- Developing localized expertise
This requires dedicating time and effort to developing extensive expertise regarding the communities they serve.
- Responding to local systemic barriers
This involves identifying the systemic barriers that burden communities and taking action to change them.
It’s not just about having a seat at the table. It’s about building our own tables to design the solutions.“How do you build up CDFI models like Espinoza’s that are actually piloting and helping smaller scale businesses and rooted in community accountability?” asks Camryn Smith, executive director and founding member of Communities In Partnership, a grassroots community organizing and education group based in Old East Durham, NC. “We need to directly support people on the ground, like myself or other people who refuse to displace, materially, poor Black and Brown people.” This alternative model works, says Smith, “because we are refusing to be colonizers in our own Black or Brown embodiment or operationalize on White supremacy.”
Community-Controlled Finance for the Long Haul
Cedeño says that true equity in community finance means being responsive to the communities that CDFIs aim to support and centering frontline BIPOC practitioners. “It’s not just about having a seat at the table. It’s about building our own tables to design the solutions.”
“We believe that if we focus on the most vulnerable entrepreneurs in our communities, the ones who are most impacted, that if we support them, the benefits will trickle up to support other types of entrepreneurs,” added Espinoza. “Our theory of change, if you will, is really focused on supporting Black and Brown entrepreneurs at the bottom.”
In addition to granting funds to allied organizations, the EFOD Collaborative Investment Committee recently voted to partner with Community Credit Lab—now part of Common Future—to scale up investments. With shared principles of leveraging the expertise of community practitioners, deploying capital with terms set in partnership with practitioners, and pairing investments with culturally relevant, practitioner-led technical assistance, a collective model of finance is beginning to emerge.
Other funds that are part of this trend include Native Women Lead and Black Farmer Fund. This emerging network is beginning to fill critical gaps to support community-led projects through mixed capital built by and for the communities served.
Understanding what the community needs, Espinoza notes, requires more than book learning. “There are things that simply can’t be taught,” Espinoza explains. “Our goal is to deploy resources to people who carry with them their personal experiences and cultural understanding of how to work in community with the folks they serve.”
For more information, watch this webinar, titled “Reimagining Alternative Futures: A Look at Community-Controlled Funding in Food Systems and Beyond,” hosted by Equitable Food Oriented Development on November 17, 2022, in Partnership with Duke’s World Food Policy Center and the Food and Farm Communications Fund.
This article originally appeared in the Nonprofit Quarterly. See the original article here.