What’s It Like To Be A Woman of Color Managing Her First Impact Fund? An Olamina Fund Interview with Leslie Lindo and Kim Pate Pt. 1
Women of Color (WoC) are the fastest-growing demographic in the United States, currently representing 20.3% of the population, up from 16% in 2010. We continue to play a critical role in shaping and moving our economy forward, holding strong purchasing power. Yet, women of color are significantly underrepresented in asset management, with less than 3% in fund manager roles. We also hold various perspectives that have largely been ignored or minimized.
At Candide Group, the Registered Investment Advisory where I work, we strongly believe in the transformative leadership of women of color. In 2019, we launched the Olamina Fund. It’s an impact-oriented debt fund focused on women-and BIPOC-led private debt providers, led by two women of color and designed with a Community Advisory Board also composed of WoC. We intentionally focus our investments on diverse founders, especially passionate Women of Color who have diverse viewpoints and rich first-hand experiences. We invest our resources in cultivating resilient relationships, and we often support Women of Color as first-time fund managers, who in the field typically face significant barriers to accessing capital. Together, we move catalytic capital to women- and BIPOC-led funds, entrepreneurs, and small businesses in rural America, the Deep South, and Indian country.
Currently, we are investing in two recently launched funds led by women of color in Indian Country and Rural America: NDN Fund in Rapid City, South Dakota, and Fresno Area Hispanic Foundation in Fresno, California. Both funds are led by seasoned professionals who possess key skill sets to help manage impactful and resilient funds — skillsets such as:
- deep knowledge of financial systems,
- extended experience working in and with BIPOC communities,
- understanding the importance of providing flexible and affordable capital to small businesses,
- designing innovative investment strategies that contribute to closing the racial wealth divide,
- successfully raising millions of dollars.
For this piece, I wanted to go deeper into our relationship with our partner Kim Pate, the Managing Director of NDN Fund, and my colleague Leslie Lindo, the Managing Director of the Olamina Fund, to better understand how their personal stories connect to this work and what fueled them to use finance and investments as tools for shifting power and driving long-lasting investments in BIPOC communities. We discussed the unique challenges they have faced as first-time women fund managers of color, their experiences, and what inspires them as leaders paving the way for other Women of Color in the industry.
These responses have been lightly edited for clarity and space. They will be presented across two pieces, with the second to be published shortly after this one. Note: If you’d like to discuss your challenges and experiences as a WoC first-time fund manager, please contact me at Leticia@CandideGroup.com and my colleague Starkey Baker, who supported this piece, at Starkey@CandideGroup.com. We’d love to meet!
Leticia Corona: What led you to this work? Did you imagine using investment and finance to generate social, racial, and economic justice?
Kim Pate: I have always been drawn to closing the racial wealth divide, first in school and then in my career. I imagined using investment and finance to generate social, racial, and economic justice because I was part of the early Community Development Financial Institution (CDFI) movement in the late 1990s and early 2000s. I knew that I would remain in the growing field of CDFIs, and specialize in minority CDFIs, given my background as a Black & Indigenous woman.
Leslie Lindo: As a Black, Asian, and Indigenous woman, I found myself activated by justice issues at a very early age, focusing on environmental, animal, and women’s rights initiatives. As a teenager, I started paying attention to economic disparities along racial lines. I was inspired by my father’s work to build wealth in Black communities across the U.S. through shared ownership.
I first tuned into the role of finance and investment when I co-launched an incubator program to activate vacant lots and buildings with community-centered real estate development projects and businesses that were determined and designed by community members. Getting funding for these projects was challenging, even from “social investors” and mission-aligned financial institutions, as they were deemed “risky” investments.
I joined the Business Alliance for Local Living Economies (BALLE). I was part of its transition to Common Future, to be in the position to shift the flow of capital into disinvested communities. After years of bringing together investors, funders, and community leaders to reimagine the role of capital, I had my first opportunity to direct investments myself when I joined Candide Group to co-lead the buildout of the Olamina Fund.
Leticia Corona: Can you describe the debt funds you manage and what makes them catalytic from traditional debt funds? e.g., What is the size of the funds, and how many investments are currently in the portfolio? What is the average loan size, terms, and interest rates? What inspired you or motivated you to lead the funds? Was there a particular capital gap you were trying to close or flow more capital to underinvested women and BIPOC entrepreneurs, organizations, and/or communities?
Kim Pate: We have two different loan programs that differ in size and purpose at NDN Fund. The first of our loan programs is the Social Enterprise & Economic Development for Indigenous Growth (SEEDING) program. SEEDING loans range from $500,000 — $3,000,00, and they are made to Indigenous projects and businesses with pre-development, startup, bridge, and expansion capital. One of the SEEDING loans we made was to Indian Township Enterprises (ITE), a project focusing on social enterprise and regenerative agriculture by bringing eel aquaculture to the US for the first time. By gaining funding, they have been able to ensure the traceability and sustainability of eel aquaculture while also connecting to a historically and culturally significant food source for their tribe and rural Maine. In doing so, they are reducing the use of fossil fuels, as eels typically are shipped to Asia and back to the US, and protecting their 300+ tribal eel harvesters. ITE is just one of the stories of our growing SEEDING loan pool.
The second loan program we offer is our Relief and Resilience Loans. These loans range from $10K-$500K, and we make them to Indigenous small businesses and nonprofits (like the Tzicatl Community Development Corp.) designed to be dynamic and responsive to fund community needs as they arise and enable us to move capital in emergencies. This program was activated as a response to the COVID-19 pandemic, where businesses and nonprofits faced unprecedented challenges in the face of a global pandemic.
Our average interest rate among both of our loan pools is 5%, and our terms vary for each of our loan relatives [the term that NDN Fund uses for partners who would typically be called “borrowers”]. We currently have over $5,000,000 deployed in loan capital to both R&R and SEEDING loan programs across nine loan relatives. All of this is to flow capital to Indigenous people for the benefit of Indigenous people and our sovereignty. Breaking down barriers and offering these programs gets funding into the hands of Indigenous peoples, businesses, and tribes and directly creates resiliency through business and business owner resiliency, housing and job resiliency, climate and social enterprise resiliency, and infrastructure and community development resiliency — all of which are look-fors in our evaluation of the impact that is made through the businesses and projects of our loan relatives.
Leslie Lindo: As of June 2023, Olamina has invested $40.8M into 22 organizations. The average loan size has been $1.7M, at an average rate of 3%. The Fund was launched with the intention of flowing capital to communities that have experienced historic extraction and exclusion from our economy. We found that most disinvested communities were in the Deep South, Indian Country, and Rural America. We knew that if we were to serve these communities, we needed to center their experience — their culture, history, and the path they see toward self-determination and liberation.
It can be challenging to do this work strictly as a debt vehicle and not perpetuate the extractive nature of traditional financial structures. We partnered with investors who prioritized impact over financial returns so that we could offer lower rates on our loans. We’ve provided loans for lengths of up to seven years and up to $4M to support greater stability for the organizations we invest in. We’ve led with an impact analysis in our due diligence process to offset the profiling of financial risk. We haven’t collateralized loans for real estate acquisition and redevelopment to disrupt the legacy of stolen land and property in communities of color.
Most importantly, though, we’ve prioritized people and relationships.
All of our loans have been to BIPOC- and women-led organizations at the time of investment. Beyond representation, we assess the degree to which an organization is trusted and valued by community members and includes them in the design of its products and services. We also spend time in communities to understand the context of the work and evaluate it through the lens of those who stand to benefit from or be harmed by our investment.
Community representation and participation show up in the structure of Olamina as well with the influence of our Community Advisory Board (“CAB”), which is currently 100% women of color. In addition to contributing to the strategic direction of the Fund, all CAB members participate in our credit committee so that they have decision-making authority on all the loans we make. This offers them a level of exposure they might not otherwise have and is one way we are shifting traditional power dynamics within the financial sector.
Leticia Corona: As a first-time fund manager leading new funds, what were the most pressing challenges, surprises, and lessons you encountered in the early stages of development, and has that changed with time?
Kim Pate: Many of the challenges that have arisen have come from the fact that we are trying to decolonize or indigenize a colonial system that has caused harm and continues to harm Indigenous communities and Peoples.
We have learned we must educate our investors about what our Indigenous communities and Peoples need, both in terms of capital and autonomy. Another challenge came with the pandemic when we had to pivot from our business model of financing large-scale efforts towards financing small businesses and nonprofits to prevent their collapse. It was absolutely critical that we kept these organizations viable because they were playing such important roles in Indigenous defense, development, and decolonization. To lose them would have been unthinkable.
We partnered with Oweesta Corporation, the leading Native CDFI intermediary, and other funders, including Olamina, through our Relief and Resilience (R&R) loan program to make capital available quickly. Time was of the essence. We learned that there would be times when NDN Fund will be called upon to perform specialized services that overlap somewhat with our business plans, and we will bring needed value.
Leslie Lindo: When considering this opportunity, I had the option to design and implement a fund as a new initiative with my prior organizations or join Candide to implement a fund that had already been designed. Both options offered an incredible learning opportunity and “step in the door” that was appealing from an entrepreneurial perspective. While my business acumen, social movement experience, and professional network provided a solid foundation to do this work, I did not have a background in finance. I opted to join Candide because, with the intention for Olamina to be a home for developing fund managers of color, there were members on the team who could mentor me and prepare me to take on this new role, such as Lynne Hoey and Aner Ben-Ami.
When I joined Olamina, the legal structure, impact thesis, and funding were already solidified. My initial focus was identifying investment opportunities, underwriting loans, and forming the Community Advisory Board. Business development and governance structures were already strengths of mine — I had to learn the technical skill of underwriting. With that learning curve behind me, I moved into the Managing Director role. Fund administration was the next challenge to overcome. Having multiple service providers made me the liaison and translator between them, which also meant that I had to have a firm handle on all the Fund financials.
The amount of time that went into this administrative effort was the most surprising aspect of my role. It impacted my ability to focus on portfolio development, relationship management, and mentorship. After navigating this situation for a year, I found a service provider who could manage all aspects of fund administration. Partnering with this provider allowed us to streamline our processes and close five loans in three months to achieve a full allocation of the $40M Fund I.
The goal for the first phase of the fund was capital preservation, and our revenue model was dependent on interest income, so that dictated how we evaluated risk and prescribed covenant requirements. What I found most challenging philosophically was how to align those criteria with our mission and values.
For example, 80% of the Native CDFIs I researched did not meet the minimum asset threshold, and others did not have a minimum of three years in operations or the absorptive capacity for the $1M minimum investment into a CDFI. We would need a new approach to better serve our mission. What we shifted over time was considering an organization’s growth strategy and fundraising goals as a factor in the minimum asset threshold, a fund leader’s years of experience as a factor in the minimum years in operation, and an investment below $1M as an entry point to building a long term relationship that may include future investments.
I am also surprised by the relics of a system we’re seeking to change that we maintain without interrogation, such as quarterly reporting. While we try to mirror our covenants to those of other investors to minimize the burden on our loan clients, we have expected to make standard requirements as a matter of business without question.
As we’ve begun to view it, though, quarterly reporting contributes to short-term thinking and valuation. It is not a relevant stability indicator for some of the organizations in our portfolio. Where appropriate, we’ve extended the reporting period and used reports as a learning tool rather than a performance measure. We have also found that this frequency of reporting to our investors leaves little time to connect with our loan clients beyond matters of measurement. We have opened a conversation with our investors to consider an alternative practice, such as one in-depth annual report and one condensed mid-year update.
Leticia Corona: What innovative financial tools (e.g., integrated capital) or investment strategies (e.g., impact investing) are you applying that have allowed you to be creative and pushed you to rethink your approach to investing?
Kim Pate: Our approach to integrated capital is another part of the lending process that has been Indigenized through “braided capital.”
Braided capital is a tool. We offer our loan relatives as much support as we can through their business/project development and implementation. To break it down, braided capital refers to our R&R and SEEDING loan programs, power building, and grant funding through NDN Foundation or external sources of grant funding that partner with NDN Fund to serve a loan relative.
At times, a loan relative may have an idea that is not quite ready for fully being funded, so power building comes in, which looks like connecting our potential loan relatives with third parties or using our own people power to assist with things like website development and business plans. In other instances, a grant may be better suited for a project or business that comes in looking for lending, so they get referred to NDN Foundation and may receive a loan later down the road. All of this is to say that our braided capital weaves in people and resources from across the NDN Collective ecosystem and the relationships we have to support the businesses/projects of Indigenous people and tribes, centering a holistic approach to implementing integrated capital through an Indigenous lens.
The investment strategies we use start at our initial eligibility screening. From the beginning of a loan inquiry, our eligibility screening is modified to include questions about intended outcomes for the community and how those outcomes will be measured. This approach is just one part of the process that shows how invested we are in ensuring that the loans made are to serve the community — and there’s a level of accountability to that intention by asking how these impacts will be measured. This method centers on supporting loan relatives while looking for effects in our core areas of focus: renewable energy, development and housing, infrastructure, social enterprise, and regenerative agriculture.
Leslie Lindo: Olamina has been one of the early investors in several organizations to unlock additional capital from other investors who have been reluctant to be first-in. We have also been one of a few to provide unrestricted loans to many of the CDFIs in our portfolio, allowing them to serve a broader constituency and provide more flexible capital to their borrowers.
Some of the loans that I think are most impactful in our portfolio are the bridge loans at a low to no interest rate. These loans provide immediate funding to organizations implementing capital campaigns to fund their initiatives fully. They can move the work forward, often securing sites and/or staving off inflationary costs, while they close on grant commitments and other funding sources.
We also have another loan in our portfolio to an emerging fund that has up to two years to begin making interest payments to allow for the time it needs to become cash flow positive. We have only been able to fund these loans later in our initial investment period due to the blended interest income across our portfolio. As we consider the next phase of the Fund, these types of loans will challenge us to rethink our revenue model.
We’ve published the second half of the interview! It is available here.
NDN Fund is a Member of the Candide Group portfolio. You can view our past year of recommendations as a Registered Investment Advisor & accompanying disclosures here: h//buff.ly/3HwxNMO
