Leading Capital Experiments to Build Powerful Changes

Cristina Diaz Borda: Hi, Sandhya. It has been a while. You joined Common Future in September of 2022, almost a year ago now, when Common Future acquired Community Credit Lab. And now you're one of our co-CEOs, which is incredible. For the audience listening today, they'd love to hear a little bit about what that transition has been like that very full year, and just how you're feeling as one of Common Future’s co-CEOs today.

Sandhya Nakhasi: Thank you for that question, Cristina, the last year has been a wild ride! First, I am just so thankful to have so many people, colleagues, [and] partners who have and continue to support, advise, and champion—not only me, but also—Community Credit Lab (CCL), and Common Future in ways that I could have never imagined. Without their cosigning and partnership, our work—our collective work—to change systems is impossible. When I think about this transition, amidst the backdrop of what is happening in our society today, to our planet, [and] in our communities, I feel that more than ever, joining forces together Common Future and CCL was the right decision. What we can do together as organizations is stronger than trying to build independently, and the ability for us to intermediate a wide range of solutions to tackle our inequitable economic systems is increased. I'm really, really thankful to be a part of this transition, and [I] can't wait to see what we build together.

Cristina: When we were announcing the transition from our previous model to this co-CEO leadership model with Jess and Jennifer, you said that “Common Future has and will continue to build the blueprints for investing catalytic capital into community-led solutions that build power and ownership in place.” I think folks might love to hear a little bit about how your journey through the investment world prepared you for this moment, and about what you're most excited about when you think about the combined power of Common Future and CCL—which have launched some pretty exciting projects in the past.

Sandhya: Thanks for that question. I started out my career in the more traditional financial institution space and over time explored different financial institution models, like community development, financial institutions—or CDFIs—and alternative financial institutions and solutions in the FinTech space. For me, these past experiences actually uncovered the many harmful practices that take place and traditional approaches to lending that perpetuate racial and social inequities that we see in the United States today.

What I saw was when it comes to accessing affordable credit, the traditional risk and credit frameworks we use to evaluate people and businesses really miss the opportunity to build from a place of relationship and support, and actually fail to equitably share the wealth of our resources. At the same time, these traditional approaches to lending were being replicated in different contexts and expecting different results, but still creating barriers and further exacerbating inequality.

Something really needed to change in our approach to lending. That's what led me to Community Credit Lab (CCL). During my time at CCL, we uncovered that it was possible for us to break away from the traditional way of lending—to co-create decentralized lending solutions that are affordable, that are accessible, and let us shift power to those who know their communities best. One of those really important partners we did this with was Common Future, as you mentioned. To me, Common Future represents an open canvas, a community of leaders, and a platform that reimagines what's possible. We can break outside of the traditional norms to redefine the rules of engagement and challenge the way power traditionally moves and holds us back from seating an equitable economy.

With the combination of CCL and Uncharted with Common Future, both acquisitions in the last year, we have more tools by which to activate ourselves in this ecosystem. I'm very energized by how we will use these tools to seed and resource solutions that make an equitable economy possible. In this transition, I feel incredibly lucky to have the wisdom and experience of my co-CEOs Jess and Jennifer, who are leading with me and leading this organization into its next evolution.

Cristina: When we first met, it was 2021, when Common Future worked with CCL, to launch character-based lending. Since then the two organizations have merged, and now you're leading the charge for everything we do together. What has it been like to see that initiative grow and launch from so many angles? And how do you see that holistic view helping shape the future of capital experiments at Common Future?

Sandhya: It's been really rewarding to see the character-based lending pilots grow and launch from many angles—as a design partner, as an implementation partner, as an investor, and as a thought partner. Through this process with our partners, we've also learned how to simplify how to create frameworks for repeatable practices that also allow for flexibility, and really what it means to be patient and to partner alongside our partners not over or under.

In a couple [of] concrete examples of how we're changing and what we're taking away, I can share that we are moving away from raising capital for bespoke projects [and moving] towards centralizing how we raise capital for all of our capital projects. There'll be more to come on this in the coming months. We are reducing the legal agreements to the bare minimum of what is needed to align as partners and as capital providers, and we're also building the work and capacity that's required to maintain partnerships for the long term. These experiments last many years, it's not just a one-year pilot, it takes many years to have that capital return. So, what would it look like for us to build that capacity in-house?

With all [the] things that we do at Common Future, it's about learning and taking those lessons to the next experiment. How can we keep iterating with an eye towards refinement and efficiency, but also expansiveness—refining what we can make possible when we leave behind the structures and practices that don't serve us and our collective quest for an inclusive and equitable economy?

Cristina: What experimental models are there out there that excite you right now? And what changes are you seeing in the economy even today?

Sandhya: My background and my interest [are] mostly in the capital innovation space, so most of the experimental models that I'm following are in that space.

A few pieces that come to mind are first how we value time—time that our borrowers and our potential investees are putting into the diligence process, and how that can be valued in the way that we price our investments—moving away from an extractive model where we expect all of this work to be done upfront by our investors to show us that they're investable—and then still pricing them at a very high rate—because they are “risky”. How do we value time—the time that they're taking to share with us what their organization is [and] time that they are taking away from doing their business to inform us about how we should be investing in their organization? That's one piece—thinking about how we value time in a way that enables borrowers and investees to actually recover capital back into their organization that we've taken out [in the process of diligence].

The second is evaluating safety, security, and happiness as metrics for success for investments. How can we do that? Because that actually is what we're aiming towards—we're aiming towards a society and a community that feels safe, that feels secure, that is happy, that has what it needs—how can our investments show that? I'm interested in following a lot of models that are trying to evaluate that as a part of their success metrics.

The third piece that I'm following is redefining how we name and evaluate risks from the investment process—seeing those as opportunities, or even advantages, and not risks. I'm interested in those types of experimental models that are happening right now.

And then when we think about the economy as a whole, there are actually three big changes that I've seen in my tenure in this role and before that, at Community Credit Lab. One is when we first started and we were raising capital at zero percent interest and putting capital out there at zero percent interest, people would come to me and [say], “This is impossible. Nobody lends at zero percent interest, it's not happening.”

Then during the pandemic, I saw a number of credit unions, CDFIs, and financial institutions actually provide credit to and loans to their customers at zero percent credit. As my colleague Jennifer often shares, challenges to our economy or challenges that we face as a society actually bring about really creative solutions—and it's up to us to then sustain those solutions. We were seeing banks go back to not giving zero percent interest, but we saw it was possible at that moment. How do we capture why it was possible and keep extending that beyond [that moment]?

The other piece around changes to the economy that I'm seeing is this focus on affordability. There was a CDFI that I worked with locally that came to us after many conversations and shared, “The conversations that you were bringing forward about affordability—way before affordability was in the minds and thoughts of many people right now—really made us question how we're providing capital to our BIPOC entrepreneurs.”

They actually implemented a program that was supporting BIPOC entrepreneurs to be able to access capital at a lower rate, because they understood how pricing can inhibit the goal of building wealth for BIPOC communities who have for so long [had] capital extracted from their communities and from themselves.

The third piece that I see is that so many communities are starting their own funds to address specific challenges that their communities are facing. We're seeing an enormous amount of interest, action, motivation, and capital flowing to communities that historically have been not invested in. I'm really excited to see all of these different ways that our communities are thinking about how capital can be allocated and seeing these community members take that power and set up those funds themselves and determine where the capital needs to flow in their communities.

Cristina: Thank you, Sandhya. For our final question, can you describe your vision for an equitable, Common Future?

Sandhya: My vision is that every person and community has the power to determine their own collective future and that they have the resources to make that a reality. There's space for every single one of us to dream and build on our own time—not at a forced or imagined time constraint of another. That we are just so deeply cognizant of our interdependence, and that every action signifies and attempts to honor that interdependence. These are the things that I think about when the work is really hard. I lean into what it would feel like for everyone to have power, everyone to have those resources—having space, having time, not feeling pressured—[and] what it would take for us to recognize our interdependence. [I think about] what that feels like in my body and the boundless energy that it creates as I think those thoughts.

Cristina: Thank you so much, Sandhya.