Working in social finance, I’m motivated by a desire to help create a society that is more equitable across gender, race, and class—and my fellow financial activists are too. We know one thing we need to address is unconscious bias. We want to combat it, and yet, we have work to do in even recognizing it. A recent humbling experience showed me how far I—and I suspect many of us—have to go on that score.

In order to really do the work of social finance, I have had to acknowledge how systemically flawed the current financial system is and that it was built on gender and racial bias. It’s also clear that the people who are building the social finance space still come from a position of power and could easily recreate the system that we are trying to dismantle.

As the head of credit at RSF, I have a lot of power and great responsibility. And I recently had the opportunity to re-examine my commitment to equity when I was conducting due diligence on about 25 organizations being considered for the first cohort of enterprises funded through our Women’s Capital Collaborative. After several rounds of phone calls and reviewing preliminary financial information, I was asked to select my top five organizations. So I chose them. And then I took a step back. I realized that all the organizations I had chosen were led by women who looked like me, with the exception of one. Their leaders had similar educational backgrounds to mine and they spoke like I do.

It was one of those “aha” moments. Had I been making credit decisions my whole career with this unconscious bias as a layer? Had I unconsciously assessed people as more or less risky because they looked like me or had a master’s degree—or didn’t? What opportunities had the organizations and businesses I worked for missed out on because of this bias? In the middle of evaluating these applicants, I realized I was not living up to my own standards.

Taking a second look

Mortified, I went back and looked at all the entrepreneurs again. I realized that a number of them were building businesses based on their roots: they were working with products or supply chains involving the countries they or their families had immigrated from. In some circumstances, these women were first-generation Americans. As a first-generation American myself, I could identify with the strong work ethic and can-do attitude of many children of immigrants. These women, primarily women of color, were also having impact across multiple countries, which in most cases is not easy to manage—or to assess with a typical underwriting lens. Finally, they were building their businesses slowly and steadily, assessing opportunities for mission fit as opposed to growth at all costs.

They were taking a risk-based approach that I had seen work successfully with other RSF entrepreneurs: hold true to your mission and grow at a sustainable rate. I could identify with that as well. After this second look, I chose again and ended up with women who did not all look like me and whose organizations clearly had the most impact.

This process encouraged me to examine each credit decision to see how my biases may be playing out. For example, am I favoring male-led organizations over female-led organizations because I have grown my career in male-dominated fields (accounting and banking) where men are disproportionately in leadership positions? Do I ask our female clients to explain more about their businesses or question their expertise more because that is what has happened to me? Am I holding women of color to a higher standard than white women because we have different lived experiences? These are all questions I have to consciously ask myself.

Questioning the system’s foundation

This experience also woke me up to how deeply flawed the financial system is and how “best practices” were created by white men with a particular perspective. I am starting to look at our credit policies, which were taken from the best practices of banking. Who are these practices excluding because of how the system identifies risk? Who needs to be at the table with me as I talk through building a credit policy that is inclusive? What can I learn from peers in my community who are thinking about risk differently? These are big questions and they need answers; otherwise the social finance space will just recreate the system we have instead of building the inclusive system we want.

This is not just a problem for the finance world—unconscious bias affects every sector. For example, who in the tech industry is building the algorithms that determine marketing targets and so much else? What biases could those developers be bringing to their process? How does the restaurant industry choose its ingredient suppliers? In any business, who is vetting candidates and making hiring decisions? If the answer is a homogeneous group of people, unconscious bias is almost certainly at work, closing off opportunities. Addressing it will require being open to whole different perspectives on the world, a sometimes uncomfortable level of self-awareness, and a commitment to choosing equity over comfort.


Lynne Hoey is senior director of credit at RSF Social Finance, an innovative lending, giving, and investing organization based in San Francisco. @RSFSocFinance



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