The Fight Against Predatory Lending Is Picking Up. Which Funders Are on Board?

At the beginning of this month, the Consumer Financial Protection Bureau proposed new rules to rein in predatory lending, targeting payday and car title loans that charge exorbitant interest rates.

The rules had barely been issued when the Center for Responsible Lending stepped forward with a detailed analysis arguing that they didn't go far enough and proposing tougher guidelines to curb abuses that, as CRL has shown, drain $8 billion from people's incomes annually. Last month, CRL had lauded a step by Google to stop accepting ads for payday loans, calling the move "as unprecedented as it is significant."

These two recent developments show there's a lot happening around predatory lending right now—and CRL is right at the center of the action. In turn, this influential policy shop has some deep-pocketed friends. Just recently, the W.K. Kellogg Foundation announced a grant to CRL to the tune of $900,000 over three years.

These funds are intended to help state-level stakeholders to end abusive lending practices, allowing more asset building and wealth creation in the communities that need it most. The grant applies to work in Maine, Oregon, Michigan, and North Carolina.

As many of our readers know, Kellogg is a pack leader when it comes to anti-poverty funding. Its focus on family financial security embraces a broad range of initiatives, such as its support for microfinance, social mobility via asset-building, solutions to debt, and policy research. In the responsible lending space, Kellogg has granted significant sums to the Southwest Housing Solutions Corporation, and the Inspire Community Development Federal Credit Union.


The Center for Responsible Lending has an interesting backstory, in terms of funding. CRL started in 2002 as a policy spin-off from Self-Help Federal Credit Union. Under the leadership of Self-Help co-founder Martin Eakes (who remains its CEO), CRL was one of the only policy-focused national organizations monitoring lending practices into and through the 2008 crash.

CRL's creation was bankrolled by Herb and Marion Sandler, who turned to philanthropy in a big way after selling their savings and loan bank, Golden West Financial, to Wachovia. CRL is among several organizations the Sandlers were instrumental in creating, along with the Center for American Progress and ProPublica, the investigative reporting outfit. In a discussion with Inside Philanthropy, Sandler revealed his approach to giving with the goal of maximum impact. The success of the Center for Responsible Lending underscores the impressive track record of this philanthropist.

Related:The Sandler Way: Where Big Philanthropy Meets the Art of Common Sense

One thing about the organizations the Sandlers helped create is that all have gone on to greatly diversify their funding base, bringing in new backers over time and reducing their reliance on Sandler Foundation grants.

CRL is a great example. Kellogg is a newcomer to a coterie of big name funders like Ford (Martin Eakes is a trustee there), Annie E. Casey, Heron, the California Community Foundation, Pew Charitable Trusts, the Open Society Foundations, and the Silicon Valley Community Foundation.

The last funder on that list has put a lot of weight behind financial inclusion, lately. In fact, as we've reported, SVCF has made predatory lending an important focus of its discretionary grantmaking, focusing on combating this problem in California. In 2015, the foundation made $760,000 in grants in this space. 

Meanwhile, other local funders are in the predatory lending fight, too. The New York Community Trust made grants in this area last year and the San Francisco Foundation has also targeted predatory lending.