How the Silicon Valley Community Foundation is Fighting Predatory Lending

Silicon Valley Community Foundation sees itself as a catalyst for change and a leader in the community foundation sector, and for good reason. It gives out more grants than any other community foundation in the United States. With more than $6 billion in assets, this philanthropic powerhouse can push hard on new initiatives and set high standards for the rest of the community foundations in the country to aspire to.

One funding area where SVCF is aiming these efforts is curbing predatory lending, as part of its broader strategy of promoting economic security. SVCF understands that usurious wealth-stripping practices can keep low-income households from ever building assets and getting ahead. You can't build eocnomic security when you're in the red thanks to outrageous interest charges. 

A foundation research paper on asset building outlines a multipronged grantmaking strategy to target this problem that includes both hands-on work to increase financial literacy and advocacy work to better regulate payday lending. 

Of course, these are familiar ideas long embraced by the asset building community. SVCF is working to push the ball forward by translating that agenda to geographically focused grantmaking. 

Last fall, SVCF called for grant proposals for work that draws attention to the problem of payday lending, but also advocated for "changes in municipal laws to inhibit new payday lending establishments in local jurisdictions." 

The importance that SVCF places on predatory lending is evidenced by its recent $2.3 million in grants to local organizations, $767,000 of which went to seven nonprofit organizations for work on this issue.

The Law Foundation of Silicon Valley, for example, will receive $237,000 to support the Coalition Against Payday Predators, a collaborative working to limit payday lending in Santa Clara County and provide better alternatives for consumers. Community Legal Services in East Palo Alto will get $55,000 to "reduce the negative impact of payday lending in southern San Mateo County" through community education and also to support implementation of "tough new Consumer Financial Protection Bureau rules at the federal level." Likewise, a national group, the Center for Responsible Lending, got $100,000 to push for stronger regulation of payday lending in both Sacremento and Washington. 

As inequality has received more attention in the national policy conversation, and with the rising salience of racial inequality, more funders have approached the stubborn racial wealth gap in America by fighting predatory lending and helping low-income community members develop financial skills. SVCF's recent grantmaking is a great example of a foundation that's is not afraid to invest in policy advocacy on this issue, even as it seeks to educate people and change behavior at the community level.