ImpactAlpha, October 26 – Mastercard’s has made a $20 million deposit with Oakland-based CNote to boost the lending power of community development financial institutions, or CDFIs, across the U.S.
The financial services giant’s cash was invested in a CNote “Promise” account and will be deposited in $250,000 slugs across CNote’s network of CDFIs.
CNote has helped retail investors put their savings to work in support of under-served businesses and communities since 2017. It launched Promise earlier this year to make the same opportunity available to accredited investors (see, “Cash is hot: Investors find new options to put deposits to work for community development“).
Mastercard’s $20 million is the latest example of a corporate giant investing its cash reserves with organizations on the frontlines of the COVID economic response and recovery. Netflix’s $10 million cash deposit in Jackson, Miss.-based HOPE Credit Union inspired 125 other companies to follow suit, increasing HOPE’s lending power by $25 million. HOPE’s Bill Bynum calls such investments “life-changing capital” (see, “How corporations can make good on their racial equity pledges”). CNote’s Cat Berman calls cash the “low-hanging fruit” of impact investing.
Indeed, a shift of just 1% of the cash held by companies in the S&P 500 could add $20 billion in deposits to Black-owned financial institutions. CDFIs also need of equity deposits to strengthen their balance sheets (see, “Corporate deposits in CDFIs are good. Equity investments would be even better”).
A third of U.S. counties are experiencing high economic vulnerability because of the pandemic; 20% of those are predominantly Black. CNote’s county-by-county map helps investors identify counties facing the greatest need by overlaying economic vulnerability data with Black demographic data.