Reducing inequality in such critical areas as uneven finances and disproportionate conditions remain long-standing issues for many Black Americans.
However, Michael T. Pugh, the newly named CEO of Local Initiatives Support Corp. (LISC), aims to help combat those problems. He told BLACK ENTERPRISE that he is committed to LISC’s mission to close the racial and economic wealth, opportunity, and health gaps.
Pugh plans to pursue this quest when he becomes LISC’s top executive on Oct. 2, 2023. He will start two days after leaving as president and CEO of Carver Bancorp Inc. Carver owns one of the nation’s largest publicly traded, Black-led banks, Carver Federal Savings Bank, with over $720 million in assets.
LISC is one of the country’s largest community development nonprofits. It reports investing almost $30 billion to create 490,000 affordable homes and apartments and develop 81.4 million square feet of retail, community, and educational space. They’ve also helped tens of thousands of people find employment and improve their finances since being founded in 1979.
LISC declared it deployed a record $2.8 billion last year, with Pugh attributing the bulk of the investment to affordable housing. He added that LISC’s small business program supports over 100 business development organizations in American cities, providing direct technical aid to those firms.
He explained that LISC’s small business programs are designed to close the capital gap for Black and minority-owned small businesses. For example, LISC has launched two supplier diversity programs with Abbott Labs and JPMorgan Chase to expand business contracting to Black and minority-owned small businesses. Through these programs, $7.3 million has been invested in 28 businesses so far.
Pugh says LISC has partnered with JPMorgan Chase on the Entrepreneurs of Color Fund (EOCF). “We provide direct investment as well as work with local CDFIs, enabling them to increase their investment in such businesses. Since its inception, EOCF has provided $285 million in lending to minority-owned small businesses.”
LISC shared that Pugh has over 30 years of experience in banking, with a particular focus on expanding access to capital for underserved families, businesses, and communities.
Reflecting on Pugh’s new role, LISC Board Chair Robert E. Rubin stated, “Michael is passionate about extending opportunities to people who have not had the chance to fully participate in the American economy.”
In the first quarter of 2023, Pugh says 75% of LISC’s closed loans—totaling $67 million—went to BIPOC-led organizations and their BIPOC sponsors. When asked how much LISC expects to invest this year, Pugh says LISC does not publicly disclose its investment totals until the year closes.
Still, in the past four years, he informed Black Enterprise there has been record investment, averaging $2.2 billion annually. Historically, most of LISC’s investment is, and continues to be, focused on affordable housing.
“Our investment areas will focus on those that will help close the racial health, wealth, and opportunity gap; support economic recovery in urban and rural communities; and support local strategies that can have a great impact on the communities we work in, including education, safety and health programs, climate resiliency, and workforce and skill-building centers.”
Per MinorityBank.com banking analyst William Michael Cunningham, Pugh moving from Carver to LISC is a good move, providing him with a broader geographical footprint. But Cunningham added the lack of vision concerning the most important issues impacting Blacks, like maternal mortality, exposes a critical fault in the entire community development industry that needs to be recognized.
Cunningham maintains that industry players like LISC must think more expansively about new ways to invest in the Black community, including expanding into international alliances. For example, he says LISC should be considering how to help Black farmers sell their produce to BRICS countries, allowing them to expand their markets and boost revenue.
Simultaneously, Pugh says LISC is focused on empowering underserved communities to face ongoing challenges such as inflation, interest rates, and rising housing costs. LISC is among entities dealing with obstacles like rising interest rates affecting the development of new affordable housing projects.
“We will continue to prioritize softening the blow of these challenges and looking for innovative ways to address these issues.” He added climate change is another urgent, massive concern.
“Every day, we see natural disasters ravaging towns and devastating livelihoods. Black communities are disproportionately impacted by climate change.”
For its part, Pugh states, “LISC already does extensive work in climate resiliency—from offering green jobs training to developing equitable disaster relief efforts to constructing energy-efficient affordable housing— and we will continue to prioritize this as this touches upon all aspects of our work and conditions are likely to worsen in the coming years.”
Check out more details on LISC’s investments here.
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