Loving our neighbor

Praxis update |

Understanding the reality of low-to-moderate income communities in the age of COVID-19 and Black Lives Matter

The months of March, April and May 2020 will definitely make it into the U.S. history books. The reality that we were in the middle of a growing pandemic slowly dawned on every sector of our society. In the last few months, we have lived through ever increasing restrictions as authorities took bold measures to contain the spread of the virus across the country. Now these same officials are trying to figure out how to safely unwind them with coronavirus still present and active in our communities.

Many of us – particularly knowledge workers – have had our share of inconveniences as we have adapted to this new reality … working from home while managing multiple distractions, not being able to connect with our families, friends and communities like we were used to, figuring out how to explain what improper fractions are to our children, etc., all for the greater good. We have been practically "loving our neighbor" by social distancing and doing our part to "flatten the curve."

But what of those who cannot easily work from home? Whose labor on-site, on the front lines of our economy, helps the rest of us avoid interacting with others? Many of these positions belong to low-to-moderate (LMI) income and communities. And a significant number belong to people of color. In fact, according to the Kaiser Family Foundation, nearly 65% of households living in poverty in America are black, Hispanic or Native American.

Definition of LMI individuals

According to federal Community Reinvestment Act criteria, a low-income person makes 50% or less of the Average Median Income (AMI) of a metropolitan area or census tract, while a moderate-income person makes between 50% and 80% of the AMI. Because the AMI varies from one area to another depending on incomes of the residents, a geographical region can be considered an LMI area if more than half of the people living there meet the definition of low-to-moderate-income.

For example, let us compare two areas in Pennsylvania. In the Kensington Philadelphia neighborhood – where over 62% of the population is of a race other than white – the AMI is $42,035, so a person making $21,018 or less a year would be considered low-income while one making between $21,019 and $36,628 a year would be considered moderate-income. Compare that to wealthier – and much whiter – Souderton, Pennsylvania, where the AMI is $66,667 a year. A person there making $33,334 or less a year would be considered low-income while one making between $33,335 and $53,333 a year would be considered moderate-income.

COVID-19 vulnerability

When more than half of residents of a metropolitan area or census tract are low-to-moderate income, it is considered a low-income area. People in low-income or minority communities are more likely to work in jobs that expose them to the virus e.g., in factories, grocery stores, public transit etc. They are less likely to have paid sick leave, have higher rates of chronic illnesses and are more likely to live in crowded housing. They also have less access to health care, especially routine preventive services.

Emerging research on the effects of COVID-19 is showing that racial and ethnic minorities are being disproportionately affected. In New York City, for example, a study by the Department of Health revealed an overrepresentation of blacks among hospitalized patients. This is also true among COVID-19 deaths for which race and ethnicity data was available; death rates among black/African-Americans (92.3 deaths per 100,000 population) and Hispanics/Latinos (74.3) were substantially higher than that of whites (45.2) or Asians (34.5).

Living a different reality

2019 and the beginning of 2020 was a period of record economic growth for much of America, with both private and public companies doing well and historically low unemployment numbers. The reality for many LMI workers, however, was very different. Many continued to struggle to make ends meet with jobs that don’t provide financial stability or reliable benefits, including health insurance and paid sick leave.

  • According to the 2019 scorecard by prosperitynow.org:
  • Over one in five (22.5%) jobs in the United States are in a low-wage occupation,
  • 40% of households don’t have enough savings to make ends meet for three months if their income is interrupted.
  • 20% of jobs don’t provide a living wage in their local community.
  • 13.2% of all households fall behind on their bills.
  • Almost half (48.1%) of Americans with credit have scores below prime.
  • 20% percent of households have no access to mainstream credit.
  • For more information, click here to read the full report.

These numbers represent tens of millions of workers and households that must rely on low or unreliable wages to get by. Their fragile, day-to-day economic existence can continue for years and, increasingly, even beyond and between generations. And this reality falls disproportionally on communities of color.

Surviving financial shocks for LMI households

COVID-19’s challenges to LMI workers, many of whom are essential to the functioning of our economy, and the related financial shocks are sobering. When an LMI household faces a financial hardship, even something as minor as a car repair or routine medical expense can threaten their economic stability. Because they have less in savings than the general population and often lack of access to affordable credit and health care, such hardships could quickly lead to skipped bills, forgone medical care or even food insecurity and homelessness.

The speed at which COVID-19 has brought much of the economy to a screeching halt has exposed major gaps in how our society is caring for its “essential” LMI households. The government has moved quickly to address some of these gaps through three stimulus packages totaling $2.1 trillion, which is a good start.

While it remains to be seen how effective these short-term measures will be in shoring up various sectors of the economy, much work remains to be done by impact investors, policy makers, advocacy groups, businesses, nonprofits and others in creating innovative solutions so that all workers and households have a chance to not just survive but be resilient, especially in times of stress and insecurity.

What we can do to help

Praxis Mutual Funds® and its parent company, Everence Financial®, have a long history of supporting disadvantaged and underserved communities. For more than two decades, Praxis has channeled nearly 1% of each mutual fund’s assets to community development investments in nonprofits that open doors of economic opportunity to those on the margins. These investments have – and will continue to – address issues of racial economic inequity and had help disadvantaged communities prepare for – and recover from – systemic threats such as COVID-19. Today, partnering with Calvert Impact Capital, one of the nation’s oldest and largest impact investing organizations, Praxis has over $15 million in catalytic capital at work in communities across the U.S. and around the world. Similar deep social impact investments are increasingly available to Everence Asset Management and Everence Foundation clients.

Within the last decade, the Praxis Impact Bond Fund has become a national leader in positive impact bonds, which are market-rate, fixed-income investments that target a particular social or environmental outcome. Today, about one third of this $600+ million fund is being deployed in such investments, with over $80 million focused on assisting vulnerable communities in the U.S. and internationally. These positive impact bonds are also part of the insurance portfolios of Everence Association, which has additionally provided sanctuary loans to churches and related nonprofits in disadvantaged and racially diverse communities through its Church Loan program.

For 25 years, Praxis Mutual Funds has also leveraged its voice and influence as an institutional investor in pursuit of racial justice and equity and in support of low-income communities worldwide. These efforts have included challenging predatory credit card practices during the Great Recession, addressing corporate environmental racism, promoting fair wages and challenging excessive executive compensation, and promoting broad access to health care. More recently, Praxis has helped initiate shareholder responses to the coronavirus pandemic, including a series of engagements with small-cap companies focused on placing “Employees First” in the effort to reopen businesses successfully. It has also championed efforts by the Thirty Percent Coalition, which seeks to promote racial and gender diversity on corporate boards of directors.

Finally, an exciting area of increased engagement with both LMI and racially diverse communities is Everence Federal Credit Union’s growing involvement in direct, community development finance. As part of the launch of the first Everence urban office in an economically disadvantaged, ethnically diverse neighborhood in Philadelphia, the credit union has developed a suite of new products designed to serve the banking needs of LMI individuals, churches and nonprofits in underserved communities. Efforts are underway to launch an Everence nonprofit community development loan fund to further empower efforts to expand access to economic opportunity. This fund will also offer new ways to link Everence and client capital with the needs of racially and financially diverse communities.

These efforts represent just a start in what can be done to help promote equity and opportunity throughout the communities we serve. We can and should do more – and it is a challenge and responsibility we embrace.

Stella Tai


Stella Tai
Stewardship Investing Impact and Analysis Manager

How we invest

We believe you can make a positive difference when your investment decisions are motivated by your faith and values. We call this stewardship investing, our unique approach to socially responsible investing, that seeks to hold companies accountable and invest in a better world.


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