Craft3 has received a $10 million donation from MacKenzie Scott, a philanthropist, author and ex-wife of Amazon owner Jeff Bezos.
The regional lender was among 384 organizations Scott has donated nearly $4.2 billion to over the past four months. Scott, ranked 18th on the Bloomberg Billionaires Index with a net worth of more than $60 billion, has pledged to donate the majority of her wealth. In July, she donated nearly $1.7 billion to 116 nonprofits.
"The pandemic has been a wrecking ball in the lives of Americans already struggling," Scott wrote on Medium about her most recent donations. "Economic losses and health outcomes alike have been worse for women, for people of color and for people living in poverty. Meanwhile, it has substantially increased the wealth of billionaires."
Adam Zimmerman, president and CEO of Craft3, said the gift from Scott is the largest the lender has ever received from a private donor. It brings the lender’s assets under management to $174 million.
“We have an amazing opportunity to then think about how a bluebird gift of this magnitude allows us to accelerate our work,” Zimmerman said.
Craft3 was founded in Ilwaco, Washington, but is now based in Portland, with offices in Astoria and elsewhere in the Pacific Northwest. It has spent the last several years developing a new loan program focused on marginalized groups less able to gather the cash equity necessary for traditional financing or access new markets because of systemic racism, Zimmerman said. The gift from Scott comes just as Craft3 is preparing to debut the new loan in the first quarter of 2021.
“What we are developing is a loan product that takes those things into account, and comes up with other ways to underwrite those businesses and approve them that doesn’t depend on… conventional credit-worthiness measurements,” he said.
“We see regularly communities that are characterized by low-wealth entrepreneurs, or entrepreneurs of color, that have a really hard time getting access to credit across the board. Banks, other lenders… they aren’t racist by intent, necessarily. But the standards they’re using for credit-worthiness do not take into account issues of inequity.”
Scott’s philanthropic team analyzed 6,490 groups to find those with strong leadership, evidence of impact on the community and a focus on communities facing food insecurity, racial inequity, poverty and low access to philanthropic money. The list of potential recipients was whittled to 822 for deeper research before the 384 recipients were chosen.
“Some are filling basic needs: food banks, emergency relief funds, and support services for those most vulnerable,” Scott wrote of the recipients. “Others are addressing long-term systemic inequities that have been deepened by the crisis: debt relief, employment training, credit and financial services for under-resourced communities, education for historically marginalized and underserved people, civil rights advocacy groups, and legal defense funds that take on institutional discrimination.”
Scott has donated to several other community development financial institutions like Craft3 that focus more on community impact and resiliency than traditional banks. Such nonprofit, loan-fund financial institutions have roots in the civil rights movement in the 1960s, Zimmerman said.
“It’s something that Martin Luther King (Jr.) was talking about before he was killed, not just civil rights and injustice when it came to law, but also justice when it came to economic opportunity,” Zimmerman said. “And our forebears, if you will, in the work that we’re doing were organizations that were working on the south side of Chicago with populations of primarily African Americans that were unbanked, that didn’t have access to capital. So there’s a history there with us and other organizations like ours that is linked to issues of economic justice.”