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A Partnership Dedicated to Economic Inclusion: Five Questions for Wells Fargo’s Jenny Flores

LISC and Wells Fargo have worked together for more than three decades to expand economic opportunity for underserved communities, investing more than $1.7 billion in affordable housing, economic development and entrepreneurship--with $182 million invested in the last three years alone. We recently asked Jenny Flores, head of Small Business Growth Philanthropy for the bank, about what drives its community commitments and why CDFIs like LISC are important to its strategy.

LISC: Since the onset of COVID-19, there seems to be a deeper national recognition of the value of economic development, small business stability and quality jobs. What do you think is needed now to support ongoing recovery and sustained small business growth, especially in the midst of economic uncertainty?

Jenny Flores: The massive infusion of capital during the pandemic into the marketplace is quickly being eaten up by inflation and bottlenecks in the supply chain. Rising interest rates are making loans more expensive. But even in uncertain economic times, small businesses have remained resilient and there has been a great growth in new entrepreneurship – especially amongst women and BIPOC communities. In order to support ongoing recovery and sustained growth, small businesses need:

  1. Flexible, affordable capital.
  2. Affordable and comprehensive business insurance to ensure business resilience and continuity in the face of disaster.
  3. Access to high-quality, affordable, and responsible financial services to rebuild savings and improve credit.
  4. Access to financial products and incentives that enable a business to acquire tangible assets; equipment, machinery, commercial property.
  5. Access to expert advice and networks to maximize business potential.

Climate risk is all around us, with violent storms, wild fires, extreme heat and drought conditions impacting global health and well-being. How do climate concerns influence the bank’s community investment strategies?

In 2021, Wells Fargo set a goal of net zero greenhouse gas emissions — including its financed emissions — by 2050. We also joined the Net-Zero Banking Alliance, an industry-led leadership group designed to foster collaboration and support banks in aligning their financing with the goal of achieving net-zero greenhouse gas emissions by mid-century.

As part of its sustainability goals, we also committed to deploy $500 billion in sustainable finance by 2030, including a focus on low-to-moderate income communities where climate change is having and will continue to have disproportionate negative impacts. In August 2022, Wells Fargo announced the issuance of its second Inclusive Communities and Climate Bond, a $2 billion bond that will fund projects and programs supporting housing affordability, economic opportunity, renewable energy, and clean transportation.

To that end, we have partnered with LISC to mobilize the community development sector to address climate risk by expanding capital solutions to vulnerable communities. This year, we provided a $2.5MM grant to LISC and Enterprise Community Partners to publish an authoritative book that offers a roadmap for sustainable finance action in vulnerable communities, in partnership with the Federal Reserve Bank of New York. The book will be help prioritize action in the areas of resiliency, de-carbonization, and a just transition, oriented around practitioners.

Data makes clear that the entire country is facing a crisis-level shortfall in housing affordability, and Wells Fargo is not only a leading lender and investor for both rental and homeownership opportunities but has also invested its philanthropy heavily to address concerns of availability, affordability and racial equity. Why is it important to invest philanthropic dollars during the housing crisis?

Philanthropy can be effective risk capital – investing in new approaches and solutions to test and demonstrate their effectiveness. It can also provide funding with much greater flexibility than government programs. Over the last several years, we have deployed our housing philanthropy to serve both purposes. For example, to help keep people housed during the pandemic and in this incredibly tight housing market, Wells Fargo has provided very flexible funding to housing counseling agencies, legal assistance organizations and other nonprofit housing providers to staff up, support technology needs and enable these organizations to help deploy critical emergency rental and homeownership assistance.

“[CDFIs] are powerful engines of economic mobility, driving affordable capital to underserved communities on the fringe of the financial mainstream.”

Recently, to push for new approaches to address the racial and ethnic homeownership gap, we announced our WORTH (Wealth Opportunities Restored through Homeownership) Initiative, in which LISC is participating in several markets. This effort is providing $60 million ($7.5 million each) to eight market collaboratives across the nation, including a rural-native collaborative to help support 40,000 new homebuyers of color over the next four years.

Rather than prescribing, top down, what strategies to use, this approach supports market-driven strategies determined by a local collaborative of committed stakeholders. Those collaboratives will also work together to leverage each other’s learnings and challenges, and we will share their successes and best practices with communities across the nation.

Why CDFIs? What are the advantages of working with LISC and other organizations that are driven by and responsive to local needs?

Wells Fargo is a long-term supporter of CDFIs like LISC. Since 2011 we have provided more than $2.6 billion in funding to CDFIs across the country.

These institutions are powerful engines of economic mobility, driving affordable capital to underserved communities on the fringe of the financial mainstream. Trusted by and responsive to the needs of low to moderate income and minority communities, they make it possible for individuals to build credit, start or grow their business, and even buy a home. Without them, these communities would fall prey to predatory lenders that lock people into unaffordable wealth stripping loans and limit economic opportunity.

By working in partnership with and supporting CDFIs, we can ensure that underserved communities can access the capital they need. An investment in a CDFI, is an investment in strengthening the communities where we live and work.

Is there a program area Wells Fargo supports through LISC that has special resonance for you, or that you are most interested in personally?

What resonates most for me is the collaboration between Wells Fargo and LISC Los Angeles on the Asset Building for Communities of Color (ABC) program. The program was created to help diverse small business owners across the County of Los Angeles unlock their potential to grow, scale and create jobs, and fuel wealth creation by empowering them to own more of their businesses, such as property and equipment. Core components of the program include:

  • Acquisition capital: 0% interest, forgivable amount up to $500,000 per small business or nonprofit to assist in the purchase of commercial and mixed-use property.
  • Growth capital: up to $250,000 at a 0% interest rate and with longer than usual repayment terms, to help small businesses fill the ‘friends and family’ financing gap and acquire key assets such as equipment and technology.
  • Microloans: low-cost, micro-loans up to $30,000 with interest rates capped at 3% to purchase assets.
  • Grants: up to $5,000 cash grants to help smaller businesses acquire equipment, technology and/or inventory.

I’m proud to say that the $20MM investment we made to start the ABC program with LISC LA is part of our larger $420MM Open for Business Fund. Open for Business Fund grantees are estimated to reach more than 152,000 small business owners and to help protect an estimated 255,000 jobs.