ServiceNow Racial Equity Fund: Making an impact

When Tim Muindi, vice president of treasury for ServiceNow, wanted to make a difference in the wake of the George Floyd murder, he spent hours educating himself on systemic issues that have played a big role in racial wealth disparity.

Then he came up with a bold idea and nervously approached the company’s leadership about starting a racial equity fund to help Black communities build sustainable wealth.

Leadership quickly embraced the idea and launched the ServiceNow Racial Equity Fund in January 2021, committing to invest $100 million to fund homeownership, affordable multifamily housing, entrepreneurship, and neighborhood revitalization in Black communities across the United States.

Fast-forward nearly three years, and the impact of these efforts is apparent. Brian Fairhurst, managing director of institutional sales west for RBC Global Asset Management, the manager of the ServiceNow Racial Equity Fund, interviewed Muindi on "The Navigator" podcast to learn more about the fund and its impact.

Spearheading change

The largest expense for most people is a home, but it’s also how most Americans build wealth. Because of that, the Racial Equity Fund prioritizes investing in mortgages. “We’ve had, I’d say, probably close to 90% of the portfolio just allocated to homeownership,” Muindi explains.

“What’s really resonated with the stakeholders and was one of our initial objectives,” he continues, “was to target the low- to moderate-income homeowners. Essentially, almost 98% of borrowers made less than 80% of the area’s median income.”

Secondarily, the fund focuses on affordable rental housing units and small businesses. Since its launch, the Racial Equity Fund has helped finance 360 mortgages and 2,500 rental units. Additionally, it’s supplied more than 20 small businesses with capital.

“In the two-plus years that we’ve had this fund in place, it’s returned on average almost $87,000 for each homeowner,” Muindi notes. “On average, they’ve built about 20% equity. When I do the math, with about 360 mortgages, that’s about $30 million in wealth creation.”

Saving a business

One small business owner, Dan Lyons, attributes the Racial Equity Fund with saving his business. After being denied a loan multiple times by various financial institutions, Lyons had exhausted most of his savings and was on the verge of closing his pharmacy.

The ServiceNow Racial Equity Fund came into existence right around that time. The $250,000 loan Lyons received helped him “provide a really critical service to the people in his neighborhood, because it was a low-income neighborhood,” Muindi says.

This story takes Muindi back to the key theme and purpose behind the fund and everything ServiceNow does: to make the world work better for everyone. The fund, he adds, “is not just for the business owner, but it’s for the broader community.”

Dreaming big

Muindi would do a couple of things differently if he had to start the fund all over again. “I would have done it sooner,” he says. “Sometimes you have an opportunity sitting right in front of you, and you don’t see it.”

Secondly, he’d ask for more money. He admits that $100 million is a big number that has made a difference, but there’s still a lot of need. “Having an even larger commitment, I think we could continue to make even more impact,” Muindi says.

“I don’t think I’d really change anything about the structure itself and the areas that we decided to target,” he adds. “I think those are the right areas we decided to target, and it’s bearing out in some of the impact stories.”

Paying it forward

Even if you don’t work at a large, global company, "you could still make a difference,” Muindi says. “It doesn’t have to be $100 million. It could be $5 million or $10 million. I think you just have to be creative about it.”

The important things are to begin conversations, gauge interest in helping a larger cause, and explore the opportunities to get involved. Maybe you could pool together with other entities. “You don’t have to recreate the wheel,” Muindi says.

He also encourages educating yourself on inequalities and talking to peers to bounce ideas around that eventually can make an impact.

Find out more about how ServiceNow is making an impact on racial equity.