Community Credit Lab
CCL Viewpoint: Building Systemic Capacity
Updated: Nov 22, 2021
Community Credit Lab’s mission is to enable regenerative lending programs at the direction of partners that represent communities facing barriers in the financial system. We partner with community-led organizations to design and implement affordable and accessible lending programs that center the lived experiences of their communities. These services enable those who have been historically discriminated against by the traditional financial system - predominantly communities of color - to access credit in ways that can ultimately lead to personal, community, and generational prosperity.
As our second fiscal year comes near to a close in September, we took a moment to reflect on two key aspects of our strategy: Capacity Building & Systems Change.
At CCL, we think about our capacity building activities in three ways:
1. Internal Capacity Building
Whether it’s with respect to hiring, choosing our loan management software, improving our compliance, or sharing ideas and articles internally, we think about how to build our capacity to support our Lending Partners and the communities they serve on a daily basis. In every interaction we have with our Lending Partners, they teach us how to show up effectively for them and their communities. And we seek to share these learnings across our team so we can internalize feedback and improve our work going forwards. We also appreciate and continue to learn from our Board, our Advisors, our funders and our investors through various interactions and open discussions. Each interaction is an opportunity for us to learn and improve how we show up in this work together and how we can accomplish shared goals in support of our Lending Partners and their communities.
2. Lending Partner Capacity Building
We design our lending products at the direction of community-based organizations and business service organizations that know the needs and goals of their communities best and represent them directly. We work with our Lending Partners to co-develop capacity to design, lead, and support people in their communities effectively and direct credit as another tool in their toolkit of support services. Our Lending Partners are aware of how problematic credit has been for their communities (if people are able to access credit at all), and we prepare and support our Lending Partners to lead lending programs that center the people they serve with affordable loans designed to support people and small businesses in their communities to achieve their goals on their terms. Our partners have varying degrees experience in lending and, regardless of past experience, we support them to build a clear understanding of what it takes to design and lead affordable community lending programs for their communities. This often includes multiple workshops and discussions with their management teams, CCL training videos and materials, CCL templates, and ongoing engagements with regular coaching to ensure mutual success as we facilitate credit together.
Through this process, we always learn from the experience as well -- there is a constant, mutual exchange of knowledge and expertise as we engage with our Lending Partners and we continue to recognize that capacity building is a two-way street. We recognize that our partners’ expertise working and designing for the people they serve is a key pillar to our collective work, and we learn from them during each engagement.
3. Ecosystem Capacity Building
At CCL, we see one half of our role as designing and facilitating affordable lending programs and the other half as sharing research, data, and learnings transparently so the wider ecosystem can benefit and improve. We know our work is not done in a silo, and we seek to coordinate and communicate strategically with our network to move forward together. In practice, this means that we engage in strategic conversations, share research, blogs, case studies and articles, and facilitate quarterly discussions to build the capacity of the wider ecosystem around impact investing, community investment, and affordable lending that seeks to achieve equitable outcomes. We have received positive feedback from corporates and institutional funders (foundations and family offices) that our work continues to inform national giving strategies, investment policies, and ongoing, collective advocacy efforts. We see this work as essential to achieving larger, collective goals related to systemic change within the financial system.
At CCL we think about Systems Change in two ways:
1. Historical Context & Filling Gaps
Before launching our first lending program, CCL engaged in six months of research on the credit and impact investing landscape to build off our team's personal experiences of over 15+ years in Impact Investing, Lending, & Nonprofit Management work. We developed a deep understanding of the fact that payday lenders, credit cards, and online lenders are the most accessible credit options, whose primary objectives are often to extract from institutionally oppressed communities. These products are expensive, inequitable, and effectively prey on communities already experiencing poverty, financial instability, and discrimination.
As part of this research phase, we evaluated the Credit Landscape using an "SAT Analysis" approach that combined assessment of upstream and downstream Structural, Attitudinal and Transactional components of the current financial system:
We also learned that Community Development Financial Institutions, Credit Unions, Community Banks and the “big” banks are increasingly more affordable than the above options, but often less accessible due to crossover from historical credit evaluation practices and pricing methodologies. Based on this, we learned from our conversations that there is a gap in options that are both meaningfully accessible and affordable for communities to access credit on their own terms, at the direction of partners who know them best.
In the ecosystem landscape of lending intermediaries, CCL seeks to fill a portion of this gap by facilitating access to affordable credit at the direction of Lending Partners who represent the communities they serve. We provide an alternative to the aforementioned options by lending at affordable rates of interest (0% to prime interest rates) and centering our Lending Partners and their communities in all aspects of our lending programs, from design to implementation and beyond. We seek to build systems that support communities to exercise agency for their self-determination and build personal and collective wealth on their terms.
2. Determining CCL’s Role as a Systemic Organization
At Community Credit Lab, our goal is to fill gaps and showcase what’s possible in community lending. We do this by building and supporting lending programs that are rooted in relationship and trust and by using a decentralized model to facilitate access to affordable credit. By showing what’s possible in practice, our hope is that others learn from our Lending Partners and CCL's efforts as we continue our working to decentralize Lending Programs using a "Systems-led Leadership Model" that combines efforts to be a "Gap Filler" and "Sharer".
At this stage, we continue to see our role as being a "Gap Filler" and "Sharer", while also thinking more about how we can potentially increase our efforts to become an "Educator" as we continue to learn from our Lending Partners and programs. We don't currently see our role as being a "Convener," as many of our partners do this well already, although we do seek to build connectivity on an ongoing basis between organizations and people we interact with.
Specifically, we see our role as a facilitator of patient, long-term capital that meets the needs of Lending Partners and their communities. For all of us to benefit and thrive in healthy communities together, we believe that it's necessary to reframe our expectation of what it means to invest in our communities. At CCL, we center the benefits of the entire community rather than the accumulation of wealth for a few, and design for those we support first and foremost (i.e. borrowers and Lending Partners).
Additionally, we recognize that credit is just one tool that can be used to address inequities in vastly complex and interconnected systems; with this knowledge, we acknowledge systemic complexity and continue to highlight other tools that our Lending Partners are using to support communities to achieve their goals. A few examples of interconnectedness of services across sectors from our Lending Partners are:
Ada Developers Academy provided childcare for their students' families during the pandemic to help students stay in the program;
Food Innovation Network supported early stage food business entrepreneurs to find personal and business financial support during the pandemic;
Our upcoming commercial Lending Partners (MORTAR, ConnectUP!, & Native Women Lead) offer 1-1 business support/guidance and a close network for entrepreneurs to rely on for advice.
As our Lending Partners continue to supplement their work by designing for their communities, we recognize that we don’t have all the answers. In this process, we also continue to question how we can better become a systemic organization by recognizing that every interaction we have, both internally and externally, is an opportunity to effect systemic change.
Moving forward on our journey with a growing team and growing network of Lending Partners, we seek to remember the goals of systemic change*:
1) Healthier Systems (not "mission accomplished" or scale for the sake of scale)
2) Seeing Patterns, Not Problems (blur vision to see consistencies in behaviors)
3) Adaptation to Fill Gaps (lean into failure, not just success)
4) Unlock change by supporting systems to change themselves (communication and collaboration are key)
And we continue to ask three systems-level questions on an ongoing basis:
1) How does the environment within which we work operate as a complex system?
2) How can CCL and our Lending Partners continue to engage the system in order to have highly leveraged impact?
3) How will CCL test assumptions and hypotheses to learn and adapt effectively alongside our Lending Partners?
We’re excited to continue exploring these questions and more during our next fiscal year beginning in October - stay tuned for updates!
Thanks to Cami Aurioles for support drafting a portion of this content based on CCL's materials for various grant applications. Learn more about Cami's work here.
*Credit to Daniela Papi Thornton for her leadership around the above frameworks, principles and questions that relate to systems-led leadership. Learn more about Daniela's work here.