How a Credit Union Is Building a New Vision of Financial Justice

IN THE 1960s, Louise Morphis stored her money in a neighbor’s garage in the small town of Bynum, N.C. The rural Southern town’s white-run banks refused to serve the Black community, so the neighbor, vice principal of the local Black public school, housed a credit union in his garage through the 1990s.

“Some people go to the bank, some people have to go to the garage,” Morphis’ grandson, William J. “Bill” Bynum, told Sojourners. Those early memories of economic injustice stayed with Bynum, who was born in East Harlem and moved with his family when he was age 5 back to Bynum—“an old mill town actually named after my ancestors who had once worked there as slaves,” Bynum told the Delta Business Journal last fall.

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In 1995, Bill Bynum helped found his own version of the “garage bank” his grandmother used. That seedling project, begun in the tithing room of a church in Jackson, Miss., became Hope Credit Union. Today, Hope has 23 branches and has generated more than $3.6 billion in financing in the Mississippi Delta region and across the Deep South.

Hope found its purpose in places where—as in Bynum’s hometown—entrenched generational poverty can be traced back to slavery. “If you look at a map of the country prior to the Civil War, and where slavery was concentrated, and a map today of where you have the worst job conditions, housing conditions, education outcomes, health outcomes, and where you have the fewest banks and the most payday lenders, they’re the same,” said Bynum, who serves as CEO of Hope Credit Union. “There’s a legacy of underinvestment and—no other way to describe it—institutional discrimination that limits opportunity.”

Hope was first a stand-alone credit union and then a combination credit union, loan fund, and policy arm. Today, it’s also a Community Development Financial Institution (CDFI), a federal designation for financial organizations working to expand economic opportunity in low-income and underserved communities. As of 2020, of Hope’s more than 36,000 member households, 46 percent were previously unbanked or underbanked, which meant they lacked access to or formal relationships with traditional banking services. Twenty-eight percent of members have an annual income of less than $19,000, and about 81 percent of members across five states—Alabama, Arkansas, Louisiana, Mississippi, and Tennessee—are Black, Hispanic, or Latino.

Bynum’s latest innovation is convincing people who hold capital outside the region to deposit part of it with the credit union, thus expanding the credit union’s ability to finance small businesses, housing, and health care in underbanked communities. These investments are called “transformational deposits.” As of November 2021, Hope had secured more than $115 million from 350 businesses and individuals.

An infusion of funds

NETFLIX WAS ONE of the first corporations to put its money into an account with Hope—$10 million of it. PayPal also deposited $10 million. Both were among the many major corporations that made promises to redistribute or invest capital, resources, and land to Black-owned businesses and organizations following the murder of George Floyd and subsequent protests. According to The Washington Post, the 50 biggest public companies in the U.S. and their foundations committed at least $49.5 billion to addressing racial inequality in 2020. More than $45 billion went to things such as loans and investments, rather than direct grants (a move criticized by some activists and academics for keeping money in the hands of the corporations in a way that could ultimately be profitable for those corporations). A portion of those investments—$54 million—went to Hope.

“The movement for Black lives has really reshaped a lot of the conversation happening around reparations in this country,” said Kate Poole, a co-founder of Chordata Capital, an anti-capitalist wealth management firm that works with wealthy people to redirect their investments and financial giving toward organizations aligned with racial and economic justice. Chordata Capital currently has more than $80 million dollars in asset management with more than 30 clients. “They’re trying to figure out, what does this commitment to racial justice look like? If I’m committed to reparations, what should be happening with my giving? What should be happening with my investing?” Poole said.

With a population of about 1,600, Itta Bena, Miss., is an example of how these deposits can change a local economy. The town is more than 92 percent Black, according to census data, with a median household income of $17,210. Itta Bena doesn’t have much capital. Hope is the only banking institution in town. Local deposits in Hope would be able to support just 12 home mortgages or two small business loans, Hope estimates. But with deposits imported from wealthy corporations in Silicon Valley or Wall Street, the credit union’s capacity to make loans—and the community’s capacity to own homes, start businesses, create jobs, and create opportunity—has been magnified.

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Financial freedom—owning a business, owning a car, owning a home—often translates into social freedom for people who have faced severe oppression. Self-determination and economic opportunity, Bynum believes, are key steps to freedom for historically underserved communities. Hope sees its work in direct lineage with the civil rights movement, especially the turn toward economic justice embodied in Martin Luther King Jr.’s latter years. “The theology of [King’s] life really emphasized economic opportunity and making sure that people had the ability, the resources to support their families and contribute to their economy, and a financial institution that supported that was essential,” Bynum said.

‘Those often preyed upon’

BYNUM AND THE pastor of Anderson United Methodist Church, where Hope began, originally conceived of Hope as a credit union that would serve people traditional banks didn’t—whether because there were no banks in town or because they didn’t qualify for services at the banks that did exist. These were people often preyed upon by payday lenders, check cashers, and pawn shops in the neighborhoods near the church. In a credit union, members pool their money together into a financial cooperative. Unlike traditional banks, they are member-owned and not-for-profit.

Every Sunday morning, Bynum said, the pastor invited people to “go out to the vestibule to open their account. It was a priority for the congregation.” Eventually, the deposits numbered so many, and the need grew so large, that Hope expanded. The first expansion, in 2000, was with several groups of pastors and faith-based leaders around Jackson—including the Amos Network, Fellowship of Hope Ministries, and the 100 Concerned Clergy—who encouraged their communities to invest in Hope. The rapid growth moved Hope out of the church tithing closet and into a storefront in Jackson near several social welfare organizations, putting it in the vicinity of the communities it hoped to serve.

In 2001, Hope joined the Enterprise Corporation of the Delta (ECD), where Bynum ran the loan fund. ECD was originally reliant on philanthropic grants, and Bynum had been recruited from his work in North Carolina to oversee the project. But by 2001, ECD was running out of philanthropic money, which was even more scarce than it is today, and Hope lacked the infrastructure to meet the needs. So, ECD became Hope’s sponsor, combining the resources of the credit union with the infrastructure of the loan fund.

Hope’s role became even more vital during the months after Hurricane Katrina, when many Black and poor people were left behind by government relief efforts. Working alongside local organizations, foundations, and the utility company, Hope stepped up to fill the gap—opening accounts, making loans to thousands of home and small business owners, and drawing attention to recovery policy that disproportionately affected Black residents. Years later, during the Great Recession when many traditional banks closed, Hope didn’t. Instead, Hope grew from seven to 30 branches in the decade following the recession, though some branches have since closed amid the pandemic. All the while, Hope pushed for policies that allowed federal funds to go to Community Development Financial Institutions rather than to bailing out the banks.

Hope’s growth has often come in the form of acquiring other credit unions and moving into towns when banks close. “They’ve been very masterful at keeping a policy arm strong, keeping a strong communications front, while anchoring around the old financial institution [of] a credit union,” said Lisa Mensah, president and CEO of the Opportunity Finance Network and former undersecretary of agriculture for rural development in the Obama administration, who was one of Hope’s early grant officers. “It’s been wise growth—bold growth, but wise.”

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The COVID-19 pandemic has been no different. In addition to launching its transformational deposits program, Hope worked to make sure federal aid made it to the small business owners it serves. The first push was to help Black-owned and women-owned small businesses access Paycheck Protection Program (PPP) loans initially gobbled up by businesses that had relationships with big banks who had the resources to push applications through more quickly. At the onset of the pandemic, Black-owned businesses were closing at nearly twice the rate of white-owned ones. Hope’s policy arm successfully pushed for policy changes—including setting aside the first two days of the 2021 round of PPP funding for community lenders and earmarking funds for disadvantaged businesses that made PPP loans more accessible to smaller banks and thus to more minority-owned small businesses. Nearly 2,700 small businesses, more than two-thirds of them Black- and women-owned, were kept from closing due to Hope’s work.

Shifting wealth and power

THE MOVEMENT OF money into Hope in recent months is part of a larger trend of wealthy people and corporations moving their money to Black-led financial institutions and organizations. Some see this work as reparative. Others view it as a redistribution in service of economic justice—a new vision of an economic structure that provides opportunity for everyone.

“I don’t think that investments are reparations. But I do think that investments can be reparative,” said Chordata Capital’s Poole. “We’re looking at shifting wealth and power by investing in the solidarity economy, investing in economic infrastructure that is redistributing the capital and the money and also the decision-making power over that capital.” Chordata Capital’s clients have $11.7 million in investments with Hope, and Chordata Capital also directs investments to organizations such as the Ujima Fund in Boston, a democratic, place-based investment fund that supports small business, real estate, and infrastructure projects in the city’s working-class communities of color.

Poole feels her work with Chordata Capital is intertwined with her Judaism, especially because 2022 is part of a shmita —a sabbatical year—which happens every seventh year on the Jewish calendar. Historically during sabbatical years, Jews forgave debts, freed slaves, and let the land rest. “That seven-year cycle was included to interrupt wealth accumulation, interrupt this dividing and sharp binary between the rich and the poor, and to create this process where communities could experiment with how to allocate land, wealth, and power,” Poole said. “As I’m doing this work of dismantling capitalism and building the solidarity economy, it helps me tie my economic organizing into this historic tradition of redistribution.”

There are also organizations working to redistribute wealth not in the form of investments, but with grants. Liberated Capital, an initiative of the Decolonizing Wealth Project founded by author and activist Edgar Villanueva, takes money donated by people with wealth and uses it to make open-ended grants to Black-, Indigenous-, and people of color-led organizations working toward justice. This work is explicitly reparative, said Will Cordery, a senior adviser to the project. Its donors are people trying to address the extractive origins of their wealth and return it back to communities from which wealth has historically been extracted.

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“We’re asking folks with wealth to trust the process, to give up power and control of those resources and to trust those who are most centered in the communities in which the money will be returned to actually know where those funds need to go,” Cordery said. Liberated Capital has worked with organizations across the country in Black, Native, and Latino/a communities, including the Federation of Southern Cooperatives/Land Assistance Fund and the Hopi Foundation. Its initiatives include funding for direct cash assistance programs. “Everything this country has been going through in the past five, six, seven years has pushed people to reimagine and say, we have to do something different,” Cordery said.

The new economy

ONE QUESTION AT the forefront of those involved in economic justice and redistribution efforts is how to work within existing financial structures to create a new, more equitable economy. There are many different visions of what a new economy could look like, some more radical than others. But they all involve a vision of redistributing resources to repair historical wrongs and make economic opportunity—and economic freedom—more widely available.

To Bynum, a just society would be a fundamentally democratic one where everyone votes and where banks are universally owned and land more equitably distributed. “Systems often limit that opportunity,” Bynum said. “The imbalance of ownership and assets is a real barrier to mutual prosperity.”

But if redistributive efforts within capitalist structures are to fundamentally change those structures rather than reinforce existing inequities, there must be some sort of shared vision, Cordery said. “If we have this North Star and have pushed ourselves to imagine something different, we can then be clearer in our purpose and understanding of how we move through the systems that we have now in order to fundamentally overturn them.”

Poole and the clients of Chordata Capital are working toward a “solidarity economy,” a concept that gained traction in the 1990s following social movements in Colombia, Chile, and France calling for participatory democracy, economic sustainability, cooperative structures, and public ownership. In a local or regional solidarity economy, the idea is that capital and community structures are controlled by the community—like the Ujima Fund’s democratic method of investing, or Hope’s model of mutual ownership and mutual control.

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But if change is to occur, it will require a huge infusion of wealth into places like the Delta and into rural communities, Indigenous communities, and communities of color nationwide from which wealth has been extracted. “Our work is missionary in many ways,” Bynum said. “When I think of reparations, I think of repairing damage or repairing past wrongs. Places like the Delta have had wealth extracted and not been allowed to accumulate and grow for centuries. Importing deposits back into the Delta is a form of reparations.”

In December, Hope received $88 million from the federal government’s $8.7 billion Emergency Capital Investment Program—one of the largest community finance development programs in U.S. history. It’s also the largest investment Hope has ever received. “There are trillions of dollars going into the economy that can be so important in transforming communities—or they can widen the gaps,” Bynum said. Sustained by long-term investments from people inside and outside the communities it serves, Hope’s work moving forward is not just ensuring the gap doesn’t widen but closing it altogether.