An agreement between a coalition of community organisations and US bank Fifth Third has resulted in a commitment of $30 billion for low-income communities across five years. The plan covers financing for small business lending, community development lending and mortgages, as well as philanthropic donations. So far, Fifth Third says it is on course to deliver its commitments, which are guided by the principles of the 1977 Community Investment Act.
Results & Impact
Fifth Third says it has already met $7.88 billion of the plan. That includes $1.96 billion in small business lending, $2.64 billion in community development lending, and $3.26 billion in home mortgages. That financing has gone towards 17,000 home purchase loans, totalling $1.9 billion, and 12,500 refinance loans, as well as home improvement loans. The Bank placed the number of loans to low- and middle-income households to 23,791.
Fifth Third Bank, National Community Reinvestment Coalition
The agreement emerged from negotiations between Fifth Third bank and the National Community Investment Coalition, a group of community bodies, government agencies and NGOs advocating for investment in marginalised communities. It was finalised in a collaborative process and guided by the principles of the Community Investment Act, legislation created in 1977.
General public, low-income people
Cost & Value
Fifth Third Bank has pledged to commit $30 billion in lending, philanthropy and finance over five years.
Running since 2016
A deal with community organisations and government bodies has committed the USA’s Fifth Third Bank to a $30 billion program of funding for low-income communities across 10 states.
The Community Development Plan, released in 2016, is an agreement that binds the bank to a program of social investment until 2020. The deal is between Fifth Third and the National Community Reinvestment Coalition, a group of 145 organisations including municipal agencies like Dayton’s Human Relations Council and the City of Cleveland’s Department for Community Development.
The plan requires the bank to lend to small businesses and invest in community development and microlending, with a special focus on low- and middle-income households, and small businesses. The bank has committed to funding $11 billion in mortgage lending to low- and moderate-income individuals and communities. A further $10 billion will add to lending to businesses with a total annual revenue under $1 million, and $9 billion in development loans and investments.
Areas covered by the money include support for affordable housing, revolving loan funds, community development corporations and financial institutions, pre-development resources, housing rehab loan pools and community land trusts and land banks.
The direction of the agreement is guided by the terms of the Community Reinvestment Act. Passed in 1977 and updated in 2005, this legislation seeks to encourage banks and credit institutions to cater to low- and moderate-income communities.
However, the impact of the Act itself was called into question by the crisis of subprime mortgages in 2007, in which low-income communities and people of colour were hit hardest. These groups have historically faced disproportionate barriers to accessing credit more broadly, making it difficult for them to start businesses, buy homes or create inclusive growth in their own communities. The deal between Fifth Third and community organisations ensures its consistency with the act, and allows it to tap into new markets within a ethical framework.
Fifth Third says it has already met $7.88 billion of the plan. That includes $1.96 billion in small business lending, $2.64 billion in community development lending, and $3.26 billion in home mortgages. That financing has gone towards 17,000 home purchase loans, totalling $1.9 billion, and 12,500 refinance loans, as well as home improvement loans. The Bank placed the number of loans to low and middle income households at 23,791.
An additional $93 million will be contributed toward philanthropic initiatives and at least ten new bank branches will be opened in low- and moderate-income communities and communities of colour. Fifth Third so far says it has committed $19 million in investments as part of this priority.
The agreement applies to Ohio, Illinois, Indiana, Michigan, North Carolina, Florida, Georgia, Tennessee, Pennsylvania, and Kentucky — the ten states where Fifth Third has branches. In Dayton, Ohio, one of the major beneficiaries of the program, the municipality’s Human Relations Council took a leading role in the development of the agreement.
(Picture credit: Flickr/Ohio Redevelopment Project)