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News September 14, 2022

Just Due: Access to Capital Markets for HBCUs

Topic CDFIs
Geography Georgia

Reinvestment Fund has commissioned Brookings Metro to write a report entitled A Call To Action for HBCU Investment. Authors Dr. Andre Perry and Anthony Barr write, “In response to 2020’s racial awakenings, philanthropic organizations and wealthy donors collectively pledged billions in donations to historically Black colleges and universities (HBCUs). While such philanthropy is welcome, it is not sufficient to fix the systemic issues HBCUs wrestle with, which derive from a lack of access to capital markets. HBCUs need routine access to investment capital from a range of sources, including traditional banks, community development financial institutions (CDFIs), philanthropy, and other trusted, mission-driven partners that will enable long-term planning for institutional development and expansion.”

Founded in response to America’s extreme segregationist education practices, HBCUs have always been beacons of the arts, politics, innovation and civic engagement for Black communities. Today, just over 100 HBCUs remain in operation, and Georgia is home to 10 of these institutions, with 6 of them located right here in Atlanta. These institutions are incredibly diverse in a number of ways, including scale, academic strengths and leadership styles. What is true about all of them is their value to the Black students and communities they serve, and it’s time for financial institutions to rethink their historical and present-day impact. Unfortunately, HBCUs are often misunderstood as offering inadequate academic training. The truth is: HBCUs absolutely punch above their weight when it comes to academic, professional and economic outcomes for students. For example, while only 3% of all higher educational institutions are HBCUs, their graduates represent 80% of Black judges, 50% of Black lawyers, 50% of Black doctors, 40% of Black engineers, 40% of Black members of congress and 13% of Black CEOs. HBCUs deserve their just due. They are more than enough.

Reinvestment Fund is a national, nonprofit financial institution with a mission to build equitable communities for everyone, and we are committed to learning more about how we can help amplify the impact of these anchor institutions. In 2016, I was Reinvestment Fund’s first Atlanta-based employee and since 2018, Reinvestment Fund has loaned nearly $33 million to HBCUs to support the financial health of these institutions and to fund capital projects. Our very first transaction was to Talladega College in Alabama. Since then, we have provided capital to Fisk University in Tennessee, Allen University in South Carolina and Edward Waters University in Florida. Real estate assets and campus grounds are critical foundations to any higher education institution’s business model. If they aren’t cared for then it can spell trouble for the overall health of the institution by crippling its ability to operate, attract or maintain students and faculty. One of our HBCU borrowers recently shared that “Reinvestment Fund’s ability to underwrite credit with a different lens made a difference because, frankly, many of our institutions would not qualify for financing under the traditional lens that commercial banks look through.” We take tremendous pride in the partnerships we are building with HBCUs.

We have since developed a broader strategy around this work and are energized by the opportunities in this sector and seek to help HBCUs get the resources they need and deserve to thrive. Our goal is to model business practices and develop a community of practice to help HBCUs address what UNCF’s president Dr. Michael Lomax refers to as “The HBCU Paradox,” or the phenomenon of schools being underserved and discounted by philanthropy, government and other stakeholders including government funders and private lenders.

Our investment goes beyond just deploying debt. We’ve just launched a $25M HBCU Brilliance Fund to allow us to incubate new ideas and support the schools through the following:

  1. Cross-sector convenings of industry experts and stakeholders, including HBCU presidents, national financial institutions (including CDFIs), researchers, and other key thought leaders, to identify best practices that increase HBCU access to capital markets
  2. Affordable, flexible, mission-driven debt capital, designed to meet the schools’ real estate development needs.
  3. Capacity-Building resources on financing and capital improvements for school leaders looking to transform their campuses and communities.
  4. A research and public policy framework to advocate for equitable access to capital for HBCUs.

A Call To Action for HBCU Investment is a culmination of a series of cross-sector convenings held by Reinvestment Fund in February 2022. The first-of-its-kind convenings brought together a multidisciplinary gathering of attendees representing 17 different organizations including banks, Community Development Financial Institutions (CDFIs), foundations, researchers, and HBCU leaders for a series of conversations on the ways systemic racism has stifled HBCU growth and how the financial and philanthropic sectors can support these learning institutions. Facilitated by Dr. Andre Perry, these convenings were organized in response to the three major categories of challenges and opportunities for HBCUs: access to capital, telling the true HBCU story and HBCU capacity building. An attendee of the convening shared that “There’s a real opportunity to have large institutions challenge systemic racism through challenging the constructs of how we finance HBCUs”. These convenings produced the following call to action, developed to increase HBCUs’ community development capacity:

  1. Build trust and familiarity between CDFIs and HBCUs.
  2. Devise a strong, HBCU-backed theory of change and power.
  3. Translate social and knowledge capital into collateral for capital markets.
  4. Collaborate across sectors in response to the challenges and opportunities for HBCUs.
  5. Develop revenue support for students from external projects and development.
  6. Combine balance sheets to lend to a pool of HBCUs versus individual HBCUs.

Another attendee of our cross-sector convening noted, “When you invest in HBCUs, you’re investing in the future of the community and creating economic commerce- it’s a circular and compounding impact”. Reinvestment Fund certainly agrees and hopes that A Call To Action for HBCU Investment will encourage financial institutions and others to join us to support HBCUs.

To learn more about Reinvestment Fund’s work in this space, please visit our HBCU web page or feel free to contact me via email at

Originally published in the Saporta Report, September 12, 2022

Photo: Edward Waters University- Student Center Ribbon Ceremony, 2022

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