American University is located in upper Northwest DC and shares its neighborhood with members of DC's professional upper middle class. To resist isolation from the rest of the city, the university maintains a focus on internships, community service, and taking advantage of the resources and opportunities that the city has to offer. However, to fully embody our mission to be a "private university with a public responsibility," we must take one step further to support economic justice for every community in DC. Our city is immensely segregated, where communities of color have disproportionately lower incomes. As students at American, we are very concerned about inequality in DC and how we can utilize our privilege to benefit less privileged communities.
What can we do as students to lessen this disparity? Individual students as well as universities and other institutions must start putting money in Community Development Financial Institutions (CDFIs), such as community banks and credit unions, so communities who are underserved by our area's corporate banks can gain access to credit, loans, and the opportunity to provide for their families. As part of the DC community, American University can positively impact these communities by moving some of the cash from our endowment into CDFIs. AU students are campaigning for the university to transfer some of the cash assets from its endowment into CDFIs such as the City First Bank of DC . Totaling $4.3 million dollars, these investments would significantly impact low-income communities of color.
These two maps show which communities in DC are composed of people of color (blue) and which communities are living in poverty (red). They show a strong correlation between the two.
Since 1998, City First Bank has been providing economic opportunities to underserved communities. Their efforts have resulted in 2,000 jobs and more than 1,400 units of low-income housing for these communities. Between 2004 and 2007, City First lent out over $150 million to community members who used the funds for community development projects, such as small businesses, and for achieving personal financial goals. DC residents who enjoy sugary pursuits know of the delicious bakery Cakelove on U Street, but few know that owner Warren Brown was only able to open the bakery with financing by City First.
By investing in CDFIs, American University will be directly contributing to community control of economic resources. Having access to financial services is an effective way for communities to lift themselves out of poverty. Without CDFIs, many vibrant community-owned businesses would go out of business. National chains would move in to fill the void, thus accelerating the gentrification process.
American's deposits would be just as protected in City First as it is in big corporate banks. City First and many other CDFIs are FDIC insured for deposits up to $250,000. The CDARS program of diversifying risk ensures that the government will protect investments of up to $50 million in CDFIs. It's time that American University makes our endowment money work for our communities and engages in direct community investment!
For more information, and to find a local credit union or development bank, try the Coalition of CDFIs, National Federation of Community Development Credit Unions, or the Move Your Money campaign.