In 2022, White residents of Cincinnati, Ohio had a median net worth of $77,820. That same figure for Black residents was just $4,559. Local government officials wanted to understand how they could help Black Cincinnatians build their wealth through ownership of assets.

Could they help buy homes? Start businesses? Begin saving and investing for retirement?

After talking to more than 1,000 residents, dozens of nonprofits and experts, city officials identified one major hurdle in addressing its racial wealth gap: medical debt. Too many Cincinnatians were struggling to build wealth because they were stuck paying medical bills. In response, the city of Cincinnati decided to allocate $1.5 million to forgive $100 million in medical debt, working with the nonprofit Undue (formerly RIP Medical Debt). It’s a decision they likely wouldn’t have made if they hadn’t listened to their residents. (The Citizen launched a similar effort with Undue in 2020 that eliminated $5 million in debt for indigent Philadelphians.)

Cinnicinati’s racial wealth gap isn’t unique. In 2022, the difference in total wealth between the median White U.S. household and the median Black U.S. household was $240,120. Medical debt is partially to blame. But many families struggle with different and additional financial issues — including predatory lending, a lack of protections — alongside the legacy of decades of discriminatory policies.

A national nonprofit is working to change that. The CityStart initiative, a program launched by the national nonprofit Cities for Financial Empowerment Fund (CFE Fund), gave Cincinnati a grant for its medical debt relief program. Now the initiative is helping cities develop targeted plans to close racial wealth gaps.

“Understanding the role that cities can play in racial wealth equity really pushes you to explore the dynamics of wealth and how they’ve shaped the lives of Black residents,” says Sol Vilera Ramos, a manager with CFE Fund.

Philly, where the racial wealth gap is wider than it was in the 1960s, is among the CFE Fund’s next cohort of cities. In April, the city received a $75,000 grant to explore what issues might be perpetuating its racial wealth gap — and to develop solutions to solve it.

Launching CityStart

The CityStart initiative is Philly’s latest partnership with the CFE Fund. In 2013, the fund worked with the City on Financial Empowerment Centers to provide free financial counseling to low-income residents. Later, the City and the fund launched the Philadelphia Bank On coalition and the city’s Consumer Financial Protection Task Force.

CFE’s CityStart began in 2018, six years after the nonprofit’s launch at the New York Stock Exchange, with a group of 10 cities. At the time, it was meant to help cities assess what challenges their residents were facing when it came to building wealth and financial empowerment, including banking access, asset building, consumer financial protections, counseling and education.

To put it simply, this is how it works: Cities ask residents about their needs and build a blueprint of tangible steps to address those issues. In Columbus, Ohio that meant identifying opportunities to financially support women via financial navigators and empowerment centers; in Jackson, Tennessee, it led to a three-part plan that included establishing financial empowerment centers, building consumer financial protections and increasing financial literacy to address issues with predatory lending.

For many families, homeownership plays a critical role in helping build wealth, yet a 2020 Pew Charitable Trust report found 46 percent of Black households are cost-burdened, which is defined as spending more than 30 percent of income on housing costs. 

In 2021, the CFE Fund received nearly $19 million from Bloomberg Philanthropies’ Greenwood Initiative to continue its CityStart work — with a new focus on reducing racial wealth gaps for Black residents. Cincinnati, Mobile, Alabama, and South Bend, Indiana became the first cohort under this new focus in 2022. A second cohort of eight cities began last year.

“Through CityStart, we’re really working with city governments to understand the challenges and opportunities that they have in building resident wealth and specifically Black residents’ wealth,” Vilera Ramos says.

Will Hall, deputy executive director for policy and programs for Philadelphia’s Office of Community Empowerment and Opportunity, has worked on initiatives with the CFE Fund. He’s seen how Black Philadelphians have fewer opportunities to grow and build wealth because of systemic discrimination, how they are often the target of predatory lending and other financial practices that strip wealth.

He believes CFE Fund’s CityStart initiative can address some of those issues. “We knew they were a great partner,” Hall says. “[And] we were seeing this racial wealth gap, that exists in a lot of places, but certainly exists in Philadelphia. We thought it was a great opportunity to build on the infrastructure [we already have] and to have a plan for … [continued] financial empowerment work.”

Building a blueprint

During CityStart’s learning phase, cities and the CFE Fund identify and analyze common challenges to financial empowerment. City leaders interview residents and identify problems, look at local wealth data and examine how historic policies like redlining have created systemic barriers to building wealth for Black residents. Then, they create a public-facing blueprint with concrete steps the city can take to address those challenges. The whole process takes 18 months.

“We help our city and have a bunch of community conversations with residents, with community leaders, with organizations,” Vilera Ramos says. “The learning phase is really exciting because each city gets to dig a little bit deeper in understanding what has been done already, what are the opportunities that they have.”

Right now, Philly is in the first stage of the grant process. The first working group meeting took place in June 2024; they are now gearing up for stakeholder engagement: interviewing community members, activists and others.

Hall envisions the process will include door-to-door engagement and community meetings to connect with residents. He notes that Mayor Cherelle Parker’s proposed five-year budget includes funding for “beefed up community outreach capacity” for the Office of Community Empowerment and Opportunity that could help with these efforts. People who are interested in getting involved with the efforts can reach out to Hall via email.

“I hope that we engage enough of the community and enough of the stakeholders in Philadelphia to build momentum to ensure not only that we’ve identified the right focus for the plan, but also that the community [and] the City … are all pulling as much as possible in the same direction to actually see outcomes,” Hall says.

“Understanding the role that cities can play in racial wealth equity really pushes you to explore the dynamics of wealth and how they’ve shaped the lives of Black residents.” — Sol Vilera Ramos

The City is looking forward to exploring the relationship between wealth and housing costs. For many families, homeownership plays a critical role in helping build wealth, yet a 2020 Pew Charitable Trust report found 46 percent of Black households are cost-burdened, which is defined as spending more than 30 percent of income on housing costs. When MV Realty, a Florida-based real estate company accused of using predatory and deceptive lending practices, came to Philadelphia in 2020, they seemed to prey on Black homeowners. Sixty-nine percent of its mortgages were on Black-owned homes by the end of 2022, when then-Attorney General Josh Shapiro filed a lawsuit against them.

“These are the types of things that we want to focus on,” Hall says. “We also want to focus on credit access and to talk about vehicles to wealth growth.”

They’re also considering similar work in other cities, including the Boston Builds Credit initiative, which has helped over 17,000 Boston residents engage in credit building activities since it was launched in 2017.

“That was a large citywide initiative that had not only city government but also local stakeholders really committed to making that initiative successful,” Hall says. “And [they’re] actually seeing those successful outcomes in credit score or growth among Bostonians. I would want something similar for Philadelphia.”

Looking for ideas we should steal

Collaborating with and learning from other cities’ success is built into the CityStart ethos. City officials work with peers from the other municipalities in their cohorts to consider what challenges they face and how they might be similar to others’. “So much of this work is about identifying intentional steps, and part of that is looking at what’s already been done,” Vilera Ramos says.

Philly’s cohort is Chicago, Buffalo, Indianapolis and Little Rock. Leaders from each of the cities met in New York for the first time in April, where they were able to discuss why they applied and what they hope to get out of the program.

Hall already sees some similarities between the problems Chicago and Buffalo face and the issues here in Philly. Chicago has similar challenges with entrenched poverty and neighborhood segregation. Buffalo has a history of dividing communities with physical infrastructure, similar to what Philly has seen with the Vine Street Expressway and I-95.

When they meet again in September after the stakeholder engagement process has begun, Hall expects the cohort will share lessons — steal one another’s ideas, you might say.

“If we go through our stakeholder engagements, there’s going to be a definite Venn diagram overlap of reasons why we are where we are that are shared among some of these cities,” Hall says. “Out of that is going to grow opportunities to learn from each other and see the opportunities we might not otherwise have seen.”

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