Disparate Impact: A Key Fight Over Housing and Finance, and the Funding Behind It

Nonprofits and funders aiming to improve access to housing and financial assets for low-income people are closely watching a showdown in the Supreme Court on "disparate impact."

At issue is the question of whether disparate impact claims can be recognized under the Fair Housing Act (FHA), which bars discrimination in housing. Disparate impact is a way to find liability under the FHA even if a defendant did not have a discriminatory intent, but its actions or policies resulted in a disparate impact of a group protected by the FHA.

Got all that? Good, because the issue is even more complicated, since the stakes go beyond the FHA. As Nikitra Bailey of the Center of Responsible Lending said last week, at a rally in front of the Supreme Court:

Disparate impact is an important tool that policymakers and courts can use to address the well-documented and widespread discrimination that continues to persist in the housing and finance markets; eliminating this tool would be tantamount to turning a blind eye to the unfair treatment that many unfortunately experience.

Few groups have done more than the center to document the pervasive and negative effects of disparate impact, so you can understand why one of its executives was rallying at the Supreme Court. CRL has been tracking this case with concern since it first starting winding its way to the nation's highest court.

The center's work came to our attention recently because we profiled Herb Sandler, the retired banking entrepreneur who, along with his wife Marion, bankrolled CRL's founding. The Sandler Foundation remains a major backer of CRL, so that's one funder who has a dog in the disparate impact fight.

Who are some others? Well, since its inception in 2002, the Center for Responsible Lending has done an impressive job of looking beyond its initial sugar daddy to secure the support of a range of backers.

Among the big names making large grants to the center over the past seven years are the Pew Charitable Trusts and the MacArthur Foundation, which in 2012, named CRL as a recipient of the MacArthur Award for Creative and Effective Institutions. That award is about more than a nice plaque. It comes with $1 million.

Naturally, the Ford Foundation is also a major friend to CRL, giving the center $3.5 million since 2009. Ford's history here goes way back, since it heavily funded Self-Help, which incubated CRL, and is one of the nation's largest community development lenders. And Ford has long been involved in the fight for fair housing, and continues to fund in this area, as we reported recently.

Other consistent high level funders of CRL include F.B. Heron, the Open Society Foundations, and the Z. Smith Reynolds Foundation. Notable community foundation backers include the California Community Foundation, the San Francisco Foundation, and the Silicon Valley Community Foundation.

With inequality on the rise, and many forms of discrimination taking subtle forms, disparate impact laws are arguably more needed now than ever.

And, of course, the Center for Responsible Lending is not the only group fighting to preserve disparate impact. A range of other groups are also working on this issue, including the National Fair Housing Alliance, the ACLU, the Leadership Conference on Civil and Human Rights, and the American Dream. Many of the same funders that back CRL also support these groups.

The court is expected to rule on disparate impact this summer. Until then, advocates will be pushing to keep the disparate impact laws on the books and protect core civil rights principles that ensure housing and lending practices are not excluding those who need their services most.

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